Amazon fined 2.5 billion $ for manipulative Prime pricing

The US Federal Trade Commission (FTC) has slapped Amazon with a record $2.5 billion fine for deliberately misleading customers about Prime subscriptions and making the cancellation process extremely difficult. The investigation, which began in 2023, found that Amazon concealed key information about Prime pricing and terms and used complicated algorithms to drive subscriptions. According to the FTC, about 35 million users fell victim to “dark patterns” that inadvertently signed them up for a monthly fee of $14.99.

The so-called “Iliad Flow”—a four-page, six-click, fifteen-choice path to canceling a subscription—was particularly criticized. Internal documents show that even Amazon’s top management referred to the process as “dark arts,” and CEO Andy Jesse himself jokingly referred to it as “the dark practices officer.”

As part of the settlement, the company will pay $1 billion in civil penalties and $1.5 billion in compensatory damages to victims. Amazon was also ordered to completely overhaul its Prime subscription and cancellation processes, making them “simple and transparent.”

Amazon launched Project Iliad in 2017 and helped reduce Prime cancellations by 14%, saving the company hundreds of millions of dollars. The FTC said the practices violated the Restore Online Shoppers’ Confidence Act, which requires transparent terms and conditions and easy cancellations.

The decision was the second-largest fine in FTC history and sent a clear message to the industry that manipulative business models will no longer go unpunished. Amazon will now be required to create an independent oversight body to oversee compliance with the terms of the agreement and the distribution of compensation to users.