E-commerce and tech giant Amazon (NASDAQ:AMZN) will pay $2.5B in penalties to settle allegations brought by the Federal Trade Commission after the company signed up millions of customers for Prime subscriptions without their permission and also made it difficult to cancel them.
The U.S. government agency said Thursday Amazon will pay $1B in civil penalties, refund $1.5B to customers who were deceived by the company, and cease unlawful enrollment and cancellation practices for Prime.
“The evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription,” FTC Chairman Andrew Ferguson said in a public statement.
The FTC has ordered the company to make clear disclosures about all material terms of a Prime membership during enrollment and have a third-party supervisor to monitor the company’s compliance with the consumer redress distribution process.
The regulator has also ordered the company to remove its “No, I don’t want Free Shipping” button and introduce a new button for customers to decline Prime membership easily.