Amazon's $2.5 Billion FTC Settlement Rattles Subscription Marketers

"Marketers in the $208 billion U.S. subscription economy have been put on notice after Amazon settled a Federal Trade Commission suit against what the FTC termed "deceptive" practices to sign up customers for Prime memberships and making it "exceedingly" difficult to cancel subscriptions. In the settlement, Amazon agreed to pay a $1 billion civil penalty and refund $1.5 billion to approximately 35 million customers who were impacted by unwanted Prime enrollment or deferred cancellation."

"It's a historic settlement on both fronts: the largest civil penalty ever enacted by violation of an FTC rule and the second-highest restitution award after an FTC action. The settlement came only days after the civil trial started in Seattle. In the agreement, Amazon admitted no wrongdoing. However, the FTC begged to differ. "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 chairman Andrew Ferguson said in a statement. "The Trump-Vance FTC made history and secured a record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel.""

"Ironically, last October, the FTC finalized a "click to cancel" rule that would have made it as easy for customers to cancel a subscription as to sign up for one. However, a Federal appeals court overturned that ruling, which many in the industry opposed, claiming it would cost businesses $2.7 billion to enact. Nonetheless, the FTC is likely to hold other marketers accountable to the spirit of the "click to cancel" rule, even if it can't enforce the law."

Amazon agreed to pay a $1 billion civil penalty and refund $1.5 billion to about 35 million customers affected by unwanted Prime enrollments or deferred cancellations. The settlement followed a Federal Trade Commission suit alleging deceptive enrollment practices and deliberately difficult cancellation processes. Amazon admitted no wrongdoing in the agreement, and the settlement occurred shortly after the civil trial began in Seattle. The penalty is the largest ever for violation of an FTC rule and the restitution is the second-highest in FTC history. The FTC emphasized that marketers across the $208 billion subscription economy face scrutiny under the spirit of the 'click to cancel' rule.

Read at Forbes