Amazon’s $2.5 billion settlement with the Federal Trade Commission (“FTC”)—which comes on the heels of the district court’s recent summary judgment ruling in favor of the FTC on critical claims in the same case—underscores just how critical auto-renewal compliance is for companies offering subscriptions and memberships.
In addition to paying $1 billion in civil penalties and $1.5 billion in customer refunds, Amazon also agreed to notable injunctive relief that will directly impact their forward-facing subscription practices and design choices. Although the settlement’s price tag is driving much of the attention, the case against Amazon, summary judgment order, and eventual settlement are also notable in relation to its treatment of individual Amazon executives who the FTC aimed to hold personally liable for the company’s violations.
The litigation began back in June, 2023, when the FTC filed suit against Amazon and several of its executives for allegedly using deceptive user designs (“dark patterns”) to enroll customers into Prime subscriptions and make it difficult to cancel those subscriptions. The lawsuit alleged that these practices violated Section 5 of the FTC Act as well as the Restore Online Shoppers’ Confidence Act (“ROSCA”), which requires online retailers to disclose the material terms of a transaction clearly and conspicuously before any billing information is collected.
On September 19, 2025, the district court issued a partial summary judgment ruling that sided with the FTC on several claims, including:
- Amazon is subject to ROSCA because its Prime subscription includes a provision by which a consumer’s silence results in de facto continuance of the consumer’s Prime membership, making it a “negative option feature”.
- Amazon violated Section 4 of ROSCA by collecting a customer’s billing information before the material terms of the Prime subscription were disclosed to that customer.
From a substantive standpoint, this portion of the ruling is likely to be the most impactful in future ROSCA enforcements. Subscription and membership sellers need to closely assess (i) when in their flows they present key disclosures in relation to the collection of payment information and (ii) how they leverage billing information that they previously collected from the consumer (e.g., in the context of upgrades, downgrades, and save offers).
- Two of the named Amazon executives can be held personally liable for Amazon’s violations based on their authority to control the underlying Prime practices.
Just a week after the summary judgment ruling, only a few days into the jury trial, Amazon and the FTC reached a settlement. Beyond the historic monetary relief, Amazon agreed to make several changes to its Prime enrollment and cancellation policies. Here are some of the highlights:
- Disclosure of Material Terms: Amazon must clearly and conspicuously disclose all material terms in a transaction involving a Negative Option Feature before obtaining the customer’s billing information. The settlement also requires Amazon to use the word “renews” (or something similar) on all sign-up pages for an offering with an auto-renewing features.
- Consent Obligations: Amazon must obtain the consumer’s “express, affirmative consent to the Negative Options Feature offer.” The settlement also mandates that Amazon include language in the relevant call to action that references the Prime membership by name (e.g., “Join Prime”) and imposes other specific design and disclosure requirements and constraints, such as requiring a button to decline the negative option feature that does not use manipulative language (i.e., the decline button cannot say “no thanks, I don’t want free shipping”).
- Cancellation: Amazon must present Prime customers with a simple method to cancel their subscription through the same medium the consumer used to enroll that must not be “difficult, costly, confusing or time consuming.”
- Compliance Reporting: Amazon must submit a compliance report to the FTC one year after the settlement describing, in part, the activities of each Prime negative option feature (including the means of advertising, sales, enrollment, and cancellation) and its steps to comply with the settlement. Additional compliance reporting obligations persist for a total of five years.
Some commentators and companies may have thought that the federal government would ratchet down its auto-renewal enforcement in the wake of the Eighth Circuit’s vacatur of the amendments to the Negative Option Rule earlier this year. But the Commission’s partial summary judgment victory and its subsequent settlement with Amazon, in addition to a barrage of ROSCA enforcements and settlements earlier this year (e.g., the FTC’s complaints against Uber, LA Fitness, and IYOVIA and settlements with Cleo AI and Paddle) signal that the FTC will continue to leverage the tools at their disposal to address perceived subscription deficiencies and bad acts.
Businesses should act now to evaluate their subscription and membership practices, with a specific eye towards their enrollment flows, consent mechanisms, and cancellation processes (for ROSCA compliance) as well as several other touchpoints, such as marketing, landing pages, confirmation email, and renewal notices (for state law compliance). If product or marketing teams push back, accentuating the “B” in “2.5 Billion dollar settlement” should get their attention; as should the prospect of regulators winning on their claims placing personal liability on individual executives.
