The Federal Trade Commission (FTC) announced a monumental $2.5 billion settlement with Amazon this Thursday, resolving accusations of deceptive practices linked to its Amazon Prime membership service. The lawsuit, initiated by the FTC in June 2023, claimed that Amazon covertly enrolled millions of consumers into Amazon Prime, complicating the process of membership cancellation.

Under the judgment from Judge John H. Chun of the Western District of Washington, a substantial $1.5 billion of the settlement is slated for distribution to consumers adversely impacted by these practices. Additionally, Amazon will pay a $1 billion civil penalty to the FTC. The settlement also mandates an overhaul of the Prime service cancellation process to make it more straightforward for users.

The FTC's allegations centered on Amazon’s use of "dark patterns," a term referring to design tactics that manipulate customer behavior to secure consent for subscriptions unwittingly. These tactics, according to the FTC, exploited psychological biases, which is a violation of the Federal Trade Commission Act and the Restore Online Shopper’s Confidence Act (ROSCA).

Specifically, the court found Amazon guilty of violating ROSCA’s stipulations against "Negative Option Marketing," which demands clear disclosure of subscription terms, informed consent from consumers, and an easy method to cancel recurring charges. While Amazon met some of these requirements, it failed to adequately disclose all necessary terms before obtaining consumer consent.

This FTC action against Amazon is not an isolated case. Previously in 2023, the FTC concluded a settlement where Fortnite’s creator, Epic Games, agreed to pay $245 million due to similar manipulative practices targeting children in game purchases.

Further attention to FTC’s authority surfaced when the US Supreme Court decided to rule on the presidential power to dismiss FTC commissioners—a matter sparked by former President Donald Trump’s dismissal of FTC Commissioner Rebecca Slaughter in March.

The resolution of this case marks a significant step in governmental efforts to regulate subscription practices and ensure consumer protection.