On September 25, 2025, the Federal Trade Commission announced it had reached a settlement with Amazon.com, Inc. and two company executives, resolving allegations that the company's enrollment and cancellation processes for Amazon Prime subscription memberships violated Section 5(a) of the Federal Trade Commission Act (FTC Act) and the Restore Online Shoppers' Confidence Act (ROSCA).
Previously, on September 17, 2025, the District Court for the Western District of Washington ruled on the parties' cross-motions for summary judgment, denying Defendants' motion and granting the FTC's motion in part. Amazon had maintained that Prime was not a "negative option" subject to ROSCA's terms, because consumers actively enrolled in Prime by clicking a sign-up button. However, the Court held that ROSCA regulated Prime, because Prime customers were automatically charged until they affirmatively canceled, and Prime trial memberships were automatically converted into paid memberships. Accordingly, the Court determined that Prime was sold through a "negative option" feature and thus within the purview of ROSCA. The Court further held that genuine disputes of material fact existed as to whether Amazon provided "clear and conspicuous" disclosures regarding Prime's material terms, citing language in the enrollment flow stating that the service was "FREE" and came with "no commitments," as potentially violating this requirement. The Court further determined that a dispute of material fact existed as to whether Amazon obtained consumers' express informed consent prior to enrollment in light of evidence suggesting that the enrollment flow did not clearly provide an alternative option to complete the purchase without signing up for Prime and contained inconspicuous text with the relevant terms and conditions.
The Court also determined that there was a dispute of material fact as to whether Amazon offered a simple cancellation method because clicking the "End Membership" button did not, in fact, end the membership. Instead, customers were required to reaffirm their desire to cancel three times during the cancellation process before the cancellation would become effective. Additionally, the Court granted summary judgment to the FTC on several issues, finding that (1) Amazon collected a customer's billing information before disclosing material terms, (2) that two out of three individual defendants were liable to the extent Amazon was found liable for ROSCA and FTC Act violations given their actual knowledge of, or reckless indifference to, the alleged issues, (3) that Defendants' equitable defenses failed, and (4) that Defendants' as-applied and facial vagueness challenge failed.
A jury trial commenced on September 22, 2025. The parties reached a settlement on the fourth day of trial. Under the terms of the settlement, Amazon agreed to pay a $2.5 billion monetary judgment, which includes a $1 billion civil penalty to the FTC, and $1.5 billion as monetary relief for eligible customers. The two individual defendants are not subject to any monetary judgments, but they are required to comply with the consent order for three years. Amazon also agreed to various forms of injunctive relief, which include providing clear and conspicuous disclosures about the Prime enrollment and cancellation process, obtaining express informed consent before charging consumers, and providing consumers with simple mechanisms for cancelling Prime. In particular, Amazon is required to present customers with a clear button to cancel their Prime membership, consistent with the original Negative Option Rule, 16 C.F.R. § 310.2(w), and to provide simple cancellation mechanisms through the same medium the customer used for enrollment. This settlement is the third recent action brought under ROSCA in which the FTC has obtained a civil penalty.
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