Lessons from the FTC’s Record-Breaking Settlement with Amazon

The Federal Trade Commission (FTC) recently announced a historic settlement with Amazon.com, Inc., along with two senior Amazon executives, resolving allegations that the company deceptively enrolled millions of consumers in Amazon Prime subscriptions and made cancellations unnecessarily difficult.

This case is noteworthy not only because of its scale—Amazon will pay a $1 billion civil penalty and provide $1.5 billion in consumer refunds—but also because of what it signals about the FTC’s evolving priorities and the risks facing subscription-driven business models.

The case also sheds light on what companies should be mindful of to avoid missteps.

Why This Case Matters

At its core, the Amazon settlement is about consumer choice and transparency. The FTC alleged that Amazon used so-called “dark patterns”—manipulative online design techniques—to lead consumers into enrolling in Prime without fully understanding what they were agreeing to. Once subscribed, many consumers encountered cancellation procedures so cumbersome that regulators concluded they were intentionally designed to deter cancellations.

This was not a matter of isolated missteps. According to the FTC, Amazon executives were aware of the issues and nonetheless permitted practices that effectively trapped consumers in subscriptions they did not want or could not easily exit.

The result: one of the largest consumer redress packages in FTC history, as well as sweeping reforms to how Amazon must structure its subscription offerings going forward.

The Broader Regulatory Context

The Amazon case is part of a much larger trend. Regulators, both in the U.S. and abroad, are increasingly focused on subscription models—particularly where automatic renewals, free trials, or bundled services are involved. The legal landscape is shifting in several important ways:

• Dark Patterns Are Under the Microscope: The FTC and state regulators are scrutinizing user interface design more closely than ever. Features that once seemed like clever marketing tactics may now be viewed as manipulative and deceptive trade practices.
• ROSCA Enforcement Is Expanding: The Restore Online Shoppers’ Confidence Act (ROSCA) has historically been underutilized. This case shows regulators are prepared to wield it more aggressively, with significant financial penalties.
• Global Alignment: European regulators are taking similar actions under the Digital Services Act and other frameworks. Companies operating internationally must harmonize compliance across multiple jurisdictions.

Practical Lessons for Businesses

The Amazon case offers important takeaways for any company that relies on subscriptions, memberships, or recurring billing models:

1. Simplify Cancellation: Make sure consumers can cancel as easily as they subscribed. If sign-up is one click, cancellation should be the same.
2. Be Transparent About Terms: Clearly disclose costs, renewal dates, and cancellation procedures at the point of enrollment. Hidden or confusing disclosures create unnecessary risk.
3. Avoid Manipulative Design: Don’t rely on interface tricks—such as misleading button labels, pre-checked boxes, or maze-like cancellation flows—that could be construed as “dark patterns.”
4. Audit Regularly: Businesses should routinely review their subscription and cancellation flows to ensure compliance not just with the letter of the law, but with the spirit of transparency regulators are now enforcing.
5. Expect Greater Accountability: Executives were named in the Amazon complaint. Leaders should take seriously the possibility of personal liability if deceptive practices are knowingly allowed to continue.

Looking Ahead

The Amazon settlement underscores that subscription-based growth must be built on trust, not friction. Companies that prioritize clarity and fairness in their consumer relationships will not only avoid regulatory scrutiny but also foster long-term customer loyalty.

For businesses, the message is clear: now is the time to proactively evaluate subscription practices. What worked five years ago may not pass regulatory or reputational scrutiny today. As the FTC continues to expand its enforcement toolkit, businesses should view transparency not as a compliance burden but as a strategic advantage.