The United States Federal Trade Commission (FTC) announced that the Amazon had decided to pay $2.5 billion to settle its lawsuit to lure users into paying for the services of Prime members. Last week, a United States federal judge ruled that Amazonia had violated consumer protection laws when dealing with Prime subscriptions.
In June 2023, under the Biden regime, the FTC sued the Amazon for cheating on tens of millions of consumers to register Prime subscriptions and for obstructing users from breaking up. If the jury supports the FTC, the three Amazon executives may face individual accountability. Under the settlement agreement, the Amazon would pay $1 billion in civil fines to the FTC and refund $1.5 billion to some 35 million users affected by the “involved registration or delayed release”. FTC states that the Amazon is required to pay a maximum of $51/person to eligible users within 90 days. FTC noted that the settlement agreement did not imply that the Amazon recognized misconduct, but prohibited it from distorting the Prime clause, requiring that the terms of the service be clearly disclosed at the time of registration and that the user ‘ s express consent be obtained prior to the charge, while providing easy avenues for cancellation. The majority of the changes requested by the Technical Committee in response to the Amazon were implemented years ago, and reconciliation had to maintain only the existing process.
As a condition for reconciliation, Jamil Ghani, Chief of Operations in Amazonia and Prime, and Neil Lindsay, Senior Vice-President, who had been in charge of Prime, were prohibited from committing offences. FTC Chairman Andrew Ferguson called it a “milestone victory” for institutions under the Trump administration, stressing that “when a business tries to deceive ordinary people, the FTC will respond back”. The Amazon spokesman, Mark Braffkin, declared that the company and its executives “have always complied with the law and that reconciliation has allowed us to focus on innovation for our clients”. The fine was the second highest in the history of the FTC, after the $5 billion privacy ticket issued by Meta in 2019. For the Amazon, however, the fine represented only 0.1 per cent of the market value of some $20.4 billion. After the news was released, Amazon stock prices rose slightly. The Prime membership, launched in 2005, has evolved into one of the most popular subscriptions in the world, with over 200 million members, and an annual fee of $139 includes benefits such as free freight and streaming media. Data show that Prime members consume more frequently than non-members.
The Amazon is still facing larger-scale litigation by the FTC: in 2023, the FTC State of Union 17 charged it with illegally curbing the competition of electric operators, abusing “monopoly power” to raise prices, reduce the quality of services and crowd out rivals. Although the case was partially dismissed, a hearing was scheduled for 2027. Earlier this month, the presiding judge of the Google Antimonopoly case rejected the most severe punishment proposed by the Ministry of Justice, including the forced sale of the Chrome browser, and Google was able to retain its core assets despite its defeat.