Report from the New York Times
In Brief – Amazon has reached a $2.5 billion settlement with the Federal Trade Commission (FTC) over allegations it tricked people into signing up for Prime subscriptions and made it difficult to cancel. The digital giant agreed to pay $1.5 billion in refunds to some Prime customers as well as a $1 billion fine to the government. Amazon did not admit or deny wrongdoing as part of the settlement. The company will refund $51 to anyone who signed up for Prime through a deceptive sign-up process and used the service three times or less in a 12-month period, as well as send a form to other subscribers to give them a chance to apply for a refund as well. The deal comes at the end of the first week of a jury trial in front of US District Judge John Chun on the consumer protection lawsuit filed by the FTC In 2023.
Context – Judge Chun delivered several quick wins to the FTC just before the trial started, ruling on summary judgement that Amazon and two senior executives violated the Restore Online Shoppers’ Confidence Act when the company collected consumers’ billing information before it disclosed the material terms of its Prime subscription service. The trial then began on two more alleged violations and whether the FTC was entitled to civil penalties. The company settled similar “dark patterns” complaints with EU regulators in 2022 and made major changes to its online subscription and cancellation flows there. Judge Chun is also overseeing a collection of far more consequential antitrust lawsuits targeting Amazon, including one by the FTC, which he has set for trial next fall. They allege that Amazon harmed online consumers and small business sellers by pushing online sellers to raise the prices they offer on other websites to match the higher prices they set on Amazon’s dominant marketplace to account for high Amazon fees, creating an elevated virtual price floor across the internet. Chun is also handling two similar private antitrust lawsuits, one from defunct online marketplace Zulily, as well as a consumer class-action, and he has rejected Amazon motions to dismiss in each case.