By Jay Bemis | Advertising Systems Inc.
Whether they might call it a Christmas gift or bonus or just another hassle, Amazon Prime members learned last week that they’re entitled to a settlement share of $51 in a deceptive-practices case brought against Amazon by the Federal Trade Commission.
The FTC announced that in a “historic” settlement, Amazon has agreed to pay $1.5 billion in refunds to an estimated 35 million customers affected by what the government called “deceptive enrollment practices.” Amazon also agreed to pay $1 billion in civil penalties.
The settlement of $2.5 billion in payments overall and $51 to Prime members will hardly bring the internet retail giant to its knees, considering that the company made $638 billion last year.
Nonetheless, “This settlement definitely sends a message,” Frank McKenna, chief innovation officer for Point Predictive, a San Diego-based fraud-prevention company, told AARP.
“When the FTC can secure $2.5 billion from one of the world’s most powerful companies, it essentially puts every other business on notice that these practices are no longer acceptable.”
What Did Amazon Do That Was Wrong?
Specifically, the government accused Amazon of enrolling customers in $139 annual Amazon Prime memberships without their consent — or, as the FTC described it, “knowingly duped millions of consumers into unknowingly enrolling in Amazon Prime.” It also said that Amazon made it “exceedingly difficult” for customers to cancel their Prime memberships.
It noted that during the checkout process, for example, the button presented to consumers to complete their transaction sometimes didn’t make it clear that clicking that option meant they were agreeing to sign up for Prime. Such practices are “not only frustrating” for users, they “also [cost] them significant money,” said then-FTC Chair Lina M. Khan when the case was filed in 2023.
In a statement following last week’s settlement, Amazon didn’t admit to any wrongdoing, but said: “Amazon and our executives have always followed the law, and this settlement allows us to move forward and focus on innovating for customers.”
Along with the $2.5 billion that Amazon will pay in penalties and refunds, the mega-retailer also will be required to follow these steps, according to AARP:
- Include a clear and conspicuous button for customers to decline Prime. Amazon can no longer have a button that says, “No, I don’t want Free Shipping.”
- Include clear and conspicuous disclosures about all material terms of Prime during the Prime enrollment process, such as the cost, the date and frequency of charges to consumers, whether the subscription auto-renews, and cancellation procedures.
- Create an easier way for consumers to cancel Prime, using the same method that consumers used to sign up. The process cannot be difficult, costly or time-consuming and must be available using the same method that consumers used to sign up.
- Pay for an independent, third-party supervisor to monitor Amazon’s compliance with the consumer redress distribution process.
How to Get Paid As Part of the Settlement
Here’s where Amazon Prime members may find that getting their $51 refund becomes too much of a hassle. Fortune magazine outlines these steps:
Automatic refunds: Certain customers who enrolled in Prime “via a challenged flow and used limited Prime benefits” should get an automatic refund for membership fees paid, capped around $51, with no claim form needed after final approval.
Claims process: Others — such as those with slightly higher usage or those who unsuccessfully tried to cancel — will be prompted by email, mail or a settlement website to submit a claim within the stated window.
Expect the settlement administrator to handle notifications and processing, with payments following final court approval; keep an eye on official communications to avoid scams.
Consumers should watch for official notices after final approval, then either do nothing (if told an automatic refund is coming) or submit the claim by the stated deadline via the official, to-be-announced settlement portal.
Payments are anticipated after approval and processing; the administrator will outline specific timelines in the notice and on the settlement site.
