The lawsuit stemmed from allegations saying the retail giant tricked customers into signing up for Prime memberships, then made it difficult for them to cancel.
WASHINGTON — Before the year is out, Amazon customers could get more than $50 as part of the largest settlement payout ever awarded to the FTC.
The settlement comes after Amazon agreed to a $2.5 billion payout over alleged violations of a consumer protection law.
Approximately $1.5 billion will be paid out to customers, under the agreement Amazon reached with the Federal Trade Commission in September, with payments going out starting sometime in the fall.
The lawsuit stemmed from allegations saying the retail giant tricked customers into signing up for Prime memberships, then made it difficult for them to cancel.
How much will Prime customers get?
According to settlement documents posted by the Federal Trade Commission, payouts will be capped at $51.
Prime users won’t need to sign up for these payouts, and they’ll be paid out to qualifying customers sometime before Dec. 24.
Who is eligible for the payouts from Amazon?
Eligible Prime customers include those who may have signed up for a membership via the company’s “Single Page Checkout” between June 23, 2019 and June 23, 2025.
It’s unclear how many people are included in that group, but Amazon gets around 8.8 million orders per day, according to some estimates.
There are a few caveats, however. According to the court order, customers will only be eligible for payment if they tried to cancel their Prime subscription during that timeframe, or signed up for Prime through a “challenged enrollment flow,” which means any of the company’s alternate signup forms such as the ones through Single Page Checkout or Prime Video.
Customers also have to have used four or fewer “Prime Benefits” within that six-year period. Those benefits include Prime 2-day shipping and access to Amazon Prime Video or Amazon Music.
If the payouts don’t meet $1 billion given back to customers, the FTC said it would expand the criteria, first to five or fewer benefits and so on until at least $1 billion has been distributed to Amazon customers.
Why was Amazon being sued by the FTC?
The Federal Trade Commission sued Amazon in U.S. District Court in Seattle two years ago alleging more than a decade of legal violations. That included a violation of the Restore Online Shoppers’ Confidence Act, a 2010 law designed to ensure that people know what they’re being charged for online.
Amazon has denied any wrong-doing in the settlement.
Amazon Prime provides subscribers with perks that include faster shipping, video streaming and discounts at Whole Foods for a fee of $139 annually, or $14.99 a month.
It’s a key and growing part of Amazon’s business, with more than 200 million members. The company reported in July that it booked more than $12 billion in net revenue for subscription services, a 12% increase from the same period last year. That figure includes annual and monthly fees associated with Prime memberships, as well as other subscription services such as its music and e-books platforms.
The company has said that it clearly explains Prime’s terms before charging customers, and that it offers simple ways to cancel membership, including by phone, online and by online chat.
“Occasional customer frustrations and mistakes are inevitable — especially for a program as popular as Amazon Prime,” Amazon said in a trial brief filed in August.
But the FTC said Amazon deliberately made it difficult for customers to purchase an item without also subscribing to Prime. In some cases, consumers were presented with a button to complete their transactions — which did not clearly state it would also enroll them in Prime, the agency said.
Getting out of a subscription was often too complicated, and Amazon leadership slowed or rejected changes that would have made canceling easier, according to an FTC complaint.
The Associated Press contributed to this report.
