Amazon begins $2.5 billion payouts to Prime members after FTC settlement - Who is eligible?

Amazon has begun sending payments to eligible Prime members as part of a $2.5 billion settlement related to federal claims that it misled customers.

In September, the e-commerce giant agreed to the payouts to settle a lawsuit filed by the Federal Trade Commission in 2023. The lawsuit claimed that Amazon misled customers into enrolling in Prime and made it difficult for them to cancel their memberships.

According to the settlement, Amazon agreed to provide $1.5 billion in refunds to customers, but the company neither admitted nor denied the FTC's allegations. In an earlier statement, the company said, “Amazon and our executives have always followed the law.”

Who is eligible for refunds?

Refunds will only be provided to US customers who signed up for Amazon Prime between 23 June 2019 and 23 June 2025 and used not more than three Prime benefits in any 12-month period following enrollment.

As many as 3.50 crore Prime customers in the US are eligible for refunds, according to a Reuters report.

How much is the refund amount?

All eligible subscribers can receive refunds of up to $51 per person for their Amazon Prime fees.

How will customers receive refunds?

Amazon will process automatic refunds through PayPal or Venmo, which customers must accept within 15 days of receiving the payment. If subscribers prefer a cheque instead of PayPal or Venmo, they should ignore the refund email. In that case, Amazon will send a cheque to the default address linked to the Prime account. Customers are advised to cash the cheques within 60 days.

About the Amazon-FTC settlement

Amazon has reached a historic settlement of $2.5 billion with the Federal Trade Commission, which stated that the online retail giant deceived customers into signing up for its Prime memberships and made it difficult for them to cancel after doing so.

The Seattle-based company will pay a civil penalty of $1 billion, the largest in the agency’s history for a rule violation. Additionally, $1.5 billion will be reimbursed to consumers who were unknowingly enrolled in Prime or discouraged from cancelling their subscriptions.

The FTC began investigating Amazon’s Prime subscription practices in 2021 during the Trump administration, but the lawsuit was not filed until 2023 under the leadership of FTC Chair Lina Khan, an antitrust authority appointed by Biden.