Amazon Hit With $2.5 Billion Bombshell as FTC Cracks Down on Prime Tactics

Amazon.com AMZN has moved to close a major chapter in its regulatory battles, agreeing to a $2.5 billion settlement with the US Federal Trade Commission. The agreement includes $1 billion in civil penalties and $1.5 billion in customer refunds, addressing allegations that the company pushed millions of users into Prime subscriptions and made cancellations deliberately cumbersome. The settlement also places restrictions on executives Neil Lindsay and Jamil Ghani, who are now prohibited from repeating the practices at the center of the case. The decision came only days after a Seattle jury was empaneled, avoiding the risk of a prolonged trial with potentially larger penalties.

Prime continues to be the backbone of Amazon's consumer ecosystem, with adoption still climbing. As of March, an estimated 196 million people in the US lived in households with Prime, a 9% increase year-over-year, according to Consumer Intelligence Research Partners. Members pay $139 annually, or $15 a month, for benefits ranging from free shipping to streaming services, and have historically spent more than non-members. That engagement translated into $12.2 billion in subscription revenue globally for the June quarter, up 11% from the prior year, underlining the program's role as a stable growth driver.

The outcome highlights the delicate balance between big tech and Washington as regulatory pressures remain uneven under President Donald Trump's administration. While the White House has promoted lighter oversight on artificial intelligence, other firms such as Meta META have yet to resolve their disputes with the FTC. For Amazon, this settlement removes an immediate overhang but signals that regulatory exposure could continue to shape investor sentiment, particularly as scrutiny of digital platforms intensifies both in the US and abroad.