Federal Trade Commission Chairman Andrew Ferguson explains Amazon’s billion-dollar settlement with the Federal Trade Commission on ‘Making Money.’
Amazon is set to pay a historic $2.5 billion settlement after it was accused of enrolling customers in Prime subscriptions without their consent and making it hard to cancel. The Federal Trade Commission (FTC) announced the settlement on Thursday and said that Amazon will pay a $1 billion civil penalty, as well as $1.5 billion in refunds to impacted customers.
“Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again,” FTC Chairman Andrew Ferguson said in a statement.
“The Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay.”
AMAZON SETTLES FTC LAWSUIT OVER PRIME SUBSCRIPTION PRACTICES FOR RECORD $2.5B SETTLEMENT
An Amazon Prime Now delivery van and driver in downtown Manhattan. (Getty Images)
Subscribers who qualify for the refund must have signed up for Prime between June 23, 2019, and June, 23, 2025. Consumers impacted by the policy will receive payouts in two waves, Axios reported. The first group will get an automatic payout within 90 days, while the second will need to fill out a form after the payout period ends.
Those in the first group of customers are subscribers who signed up for Prime through a “challenged enrollment flow” and used no more than three Prime benefits in any 12-month period. These payments will be capped at $51.
The Trump administration announced that Amazon paid a $1 billion civil penalty. (iStock / iStock)
AMAZON WILL RESTRICT PRIME BENEFIT STARTING OCTOBER 1
The second group of customers is made up of those who signed up through a challenge enrollment flow or unsuccessfully tried to cancel their Prime memberships during the five-year period, Axios reported. Additionally, customers in this group only qualify if they have not used more than 10 Prime benefits during any 12-month period of enrollment.
Customers in the second group will receive a form from Amazon within 30 days of the end of the automatic payouts, according to Axios. Amazon will then have up to 30 days to review and make decisions on the claim. These payments are also capped at $51.
An image of an Amazon Prime package. (MARCO BERTORELLO/AFP via Getty Images / Getty Images)
Beyond the payouts, the settlement requires Amazon to make several changes, including a clear button for customers to decline Prime, disclosures of Prime terms during the enrollment process and creating an easy cancellation method. Additionally, Amazon must pay a third party to monitor its compliance with the settlement.
GET BUSINESS ON THE GO BY CLICKING HERE
Fox Business reached out to Amazon for comment.
