Amazon to settle allegations that it duped customers into enrolling in Prime
Global News
At the heart of the case is the Restore Online Shoppers’ Confidence Act, a 2010 law designed to ensure that people know what they’re being charged for online.
Amazon has reached a historic US$2.5 billion settlement with the Federal Trade Commission, which said the online retail giant tricked customers into signing up for its Prime memberships and made it difficult for them to cancel after doing so.
The Seattle company will pay $1 billion in civil penalties — the largest fine in the agency’s history — and $1.5 billion will be paid back to consumers who were unintentionally enrolled in Prime, or were deterred from canceling their subscriptions, the agency said Thursday.
The surprise settlement comes just days after the trial began in U.S. District Court in Seattle this week. At the heart of the case is the Restore Online Shoppers’ Confidence Act, a 2010 law designed to ensure that people know what they’re being charged for online.
FTC officials said Amazon had its back against the wall and the consumer refund amount exceeded even the agency’s expert projections.
“I think it just took a few days for them to see that they were going to lose. And they came to us and they paid out,” said Chris Mufarrige, director of the Bureau of Consumer Protection, on the settlement negotiations.
Amazon, however, said it was confident it would win case but that it chose to resolve it quickly instead of going through potentially years of trial and appeals. The company admitted no wrong-doing in the case, which was first filed two years ago.
“Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers,” said spokesman Mark Blafkin in a statement. “We work incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership, and to offer substantial value for our many millions of loyal Prime members around the world.”
Certain Prime customers who are eligible for automatic refunds of up to $51 include those who may have signed up for a membership via the company’s “Single Page Checkout,” among other links, between June 23, 2019, to June 23, 2025. Those customers will be reimbursed within 90 days of the settlement order.
