Amazon’s $2.5 Billion FTC Settlement: A Case Study in “Dark Pattern” Design and Regulatory Enforcement

In a landmark decision with significant implications for corporate digital practices, Amazon has agreed to pay $2.5 billion to settle a lawsuit brought by the U.S. Federal Trade Commission (FTC). The suit alleged that the tech giant employed deceptive user-interface designs, known as “dark patterns,” to enroll millions of consumers into its Prime subscription service and subsequently created a deliberately complex process to cancel it.¹ Announced on September 25, 2025, just days after the trial began, this settlement represents one of the largest consumer protection penalties in the agency’s history and serves as a stark warning to companies about the legal and financial risks associated with manipulative design choices.^{2, 3}

Settlement Breakdown and Legal Proceedings

The $2.5 billion settlement is structured to address both punitive and compensatory aspects of the case. According to reports from NPR and CNN, the total amount is divided into a $1 billion civil penalty paid directly to the U.S. Treasury and a $1.5 billion fund for consumer redress.^{1, 3} This restitution is slated for distribution to an estimated 35 million affected consumers, which amounts to approximately $51 per person. The FTC has highlighted this as the agency’s second-highest restitution award ever.^{3, 4} The legal action originated from a lawsuit filed by the FTC in June 2023 in the U.S. District Court for the Western District of Washington. The settlement was reached swiftly after the trial commenced on September 24, 2025, before Judge John Chun, averting what was expected to be a month-long proceeding.^{1, 2} As is standard in such agreements, Amazon settled the case without admitting guilt.¹

Deconstructing the “Dark Patterns” and “Cancellation Maze”

The FTC’s complaint detailed a systematic use of manipulative design elements. On desktop interfaces, a prominent, high-contrast button enrolled users in Prime, while the option to decline was presented as a “comparatively inconspicuous link.”^{7, 9} On mobile platforms, critical terms such as price and auto-renewal details were often placed at the bottom of the page, outside the initial viewport. A particularly egregious example cited was the use of deceptive language, such as a button labeled “No, I don’t want Free Shipping,” which was designed to nudge users toward enrollment by framing the choice negatively.^{7, 9} Beyond enrollment, the FTC alleged Amazon constructed a “convoluted, multi-step cancellation process” intended to “sabotage” user attempts to quit the service. Internal documents revealed that Amazon had developed a simplified cancellation flow but backtracked after tests indicated it led to a higher rate of subscriber cancellations.^{1, 2, 7} The company also reportedly refused to allow cancellations through the Prime Video app or on Amazon FireStick devices, further complicating the process for users.⁷

Internal Knowledge and Key Testimony

A pivotal element of the FTC’s case was evidence suggesting Amazon’s internal awareness of these problematic practices. Internal communications described the enrollment scheme as an “unspoken cancer” within the company.⁹ The settlement was announced shortly after testimony from a key FTC witness, former Amazon user experience researcher Reid Nelson. His testimony, supported by internal emails and text messages, indicated that he and his team had repeatedly flagged the design tactics as misleading to consumers. In one message, Nelson stated that Amazon’s business goals would be difficult to achieve with more transparent and ethical designs.⁵ During cross-examination, Amazon’s legal team disclosed that the company had spent over $10 million in efforts to address customer frustration related to cancellation issues, an admission that underscored the scale of the problem.⁵

Operational Mandates and Broader Implications

The settlement imposes strict new requirements on Amazon’s subscription practices. The company must now provide “clear and conspicuous disclosures” about Prime’s cost, charge dates, and auto-renewal terms at the point of enrollment.^{1, 3, 9} It is also mandated to implement simple cancellation methods, ensuring users can cancel using the same medium they used to sign up, such as the web or a mobile app. The use of deceptive language like the “No, I don’t want Free Shipping” button is explicitly prohibited, requiring Amazon to provide a “clear and conspicuous button for customers to decline Prime.”⁹ An independent, third-party supervisor will be retained to monitor compliance with the consumer-redress distribution. It is important to note that this settlement does not resolve a separate, broader FTC lawsuit filed in September 2023, which accuses Amazon of operating an illegal monopoly; that case is expected to go to trial in early 2027.¹

FTC Chairman Andrew Ferguson characterized the settlement as a “record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel.”^{3, 9} Throughout the legal battle, Amazon maintained that it had not engaged in unlawful conduct, arguing its sign-up and cancellation flows were clear and compliant with industry standards. Following the settlement announcement, major news outlets noted that Amazon did not immediately provide a public comment.^{1, 3} This case sets a significant precedent for regulatory oversight of subscription practices and serves as a clear indicator of the FTC’s focus on combating “dark patterns” in the consumer technology industry.^{3, 4, 8}

References

1. “Amazon to pay $2.5 billion to settle U.S. lawsuit that it ‘tricked’ people into Prime,” NPR (via WHQR), Sep. 25, 2025.
2. “Amazon reaches $2.5 billion settlement with FTC over ‘deceptive’ Prime program,” CNBC, Sep. 25, 2025.
3. “Amazon to pay historic $2.5 billion settlement for allegedly tricking customers into signing up for Prime,” CNN Business, Sep. 25, 2025.
4. “Amazon to Pay $2.5 Billion to Settle Claims It Tricked Prime Customers,” The New York Times, Sep. 25, 2025.
5. WHQR, Republishes and confirms NPR reporting, Sep. 25, 2025.
6. Yahoo Finance, Aggregator confirming the core news event, Sep. 25, 2025.
7. “Amazon to Pay $2.5 Billion to Settle FTC Lawsuit Over Prime ‘Cancellation Trickery’,” The Hollywood Reporter, Sep. 25, 2025.
8. “Amazon, FTC Reach $2.5 Billion Deal in Prime Subscription Case,” Bloomberg, Sep. 25, 2025.
9. “Amazon to Pay $2.5 Billion to Settle FTC Charges Over Prime Membership,” Variety, Sep. 25, 2025.