Sept. 26 (UPI) — Amazon has reached a $2.5 billion settlement with the Federal Trade Commission that is raising concerns from Democrats who say the tech giant was given a slap on the wrist.
The FTC announced the settlement Thursday in a case that was brought against Amazon in June 2023 during the Biden administration.
The settlement resolves allegations that Amazon misled millions of Americans to enroll in its Prime subscription via deceptive user interfaces and then made it difficult for them to cancel.
The announcement was made days after the trial began. The agreement requires approval by a district judge before it can go into effect.
“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 Chair Andrew Ferguson said in a statement.
“Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again.”
Amazon, however, claims it did nothing wrong, and the settlement makes this issue no longer a distraction.
“Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers,” it said in a statement.
“We work incredibly hard to make it clear and simple for consumers 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.”
Under the agreement, Amazon will pay a $1 billion civil penalty, which the FTC said was the largest ever in an FTC rule-violation case, as well as refund $1.5 billion to consumers, the second-highest restitution award obtained by the FTC.
Despite the agreement’s benchmark, Democrats are saying the monetary compensation is not enough as Prime aided Amazon in generating $11.7 billion in subscription services in the first quarter of this year alone. It also does not hold executives accountable, they said.
“The Trump administration’s settlement fails to hold Amazon executives accountable for their actions,” Sen. Elizabeth Warren, D-Mass., said in a statement.
“This fine is less than 1% of Amazon’s revenue last year — it’s effectively a slap on the wrist.”
Lina Khan, the former FTC chairwoman, who brought the case against Amazon, described the settlement as “rescuing” Amazon from being found liabel in the trial and allowing it “to pay its way out.”
“A $2.5 billion fine is a drop in the bucket for Amazon and, no doubt, a big relief for the executives who knowingly harmed their customers,” she said in a statement.