Amazon Prime Refunds Expanded: Millions More Eligible for Up to $200 - Newsweek

Millions of Amazon Prime customers could soon receive larger refunds under a revised Federal Trade Commission settlement with Amazon.

The FTC announced Thursday that Amazon will expand the refunds from its $2.5 billion Prime settlement, raising the maximum payment consumers can receive from $51 to as much as $200.

“The revised order will ensure more consumers who were harmed by Amazon’s deceptive enrollment and cancellation practices benefit from the FTC’s historic settlement,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection in the release.

The updated order will help more customers affected by what the FTC alleged were deceptive Prime enrollment and cancellation practices. According to the agency, Amazon has already distributed more than $845 million to consumers, but millions more could now qualify for automatic payments.

The case is one of the largest consumer protection settlements ever obtained by the FTC against a tech company.

The FTC alleged that Amazon enrolled millions of customers into Prime subscriptions without their consent and made it unnecessarily difficult for members to cancel.

The settlement includes up to $1.5 billion in consumer refunds and a separate $1 billion civil penalty. Amazon denied wrongdoing but agreed to the settlement last year.

The settlement stems from an FTC lawsuit alleging Amazon used misleading enrollment processes that signed consumers up for Prime memberships without their consent and then subjected customers to unnecessarily difficult cancellation procedures.

The agency alleged Amazon's practices violated federal consumer protection laws governing online subscriptions.

“Other companies can take from this that while it's fine to make subscribing to services easier, regulators increasingly also expect cancellation and pricing disclosures to be equally as simple,” Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek.

Newsweek reached out to Amazon for comment via email.

Amazon has denied violating the law but agreed to resolve the case through settlement.

The biggest change involves the benefit usage threshold. Previously, refunds were generally limited to consumers who used fewer than 10 Prime benefits.

Under the updated order, consumers who used between 11 and 20 Prime benefits during a one-year period may now qualify as well, increasing the pool of eligible recipients by millions of people.

The FTC also increased the maximum refund amount. While earlier payments were capped at $51, eligible consumers may now receive up to $200 in total under the revised distribution plan.

“For consumers, payments of up to $200 could provide substantial relief for Prime fees the FTC alleged resulted from deceptive enrollment or difficult cancellation practices, while for Amazon the $2.5 billion settlement is both a major financial penalty and a sign that one of the world's biggest companies may need to rethink certain interactions it has with customers,” Beene said.

One of the most important aspects of the revised order is that consumers do not need to submit paperwork or respond to notices to receive future payments.

The FTC says Amazon will automatically distribute payments to eligible consumers through mailed checks or electronic payments, including Venmo and PayPal.

“This expanded claim will allow many people who may have forgotten to opt out, or thought they had opted out and were unaware they were still being charged, to receive a refund,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek.

However, the agency also warned consumers about potential scams. According to the FTC, it is not contacting people about refunds, and neither the FTC nor Amazon will ask consumers to pay money in order to receive a payment.

Under the revised court order, Amazon is expected to begin issuing payments to newly eligible consumers starting October 1.

Those payments will be made automatically without any extra action from recipients.

The FTC said more than $845 million has already been distributed to consumers.

If enough settlement funds remain after the next phase of payments, some customers who previously received refunds could qualify for supplemental payments, potentially increasing their total compensation to as much as $200.

“This is essentially restitution and will have very little impact on Amazon as a whole,” Thompson said. “Will they make it slightly easier to opt out or cancel? Possibly. But when you look at the revenue generated by the Prime business, one could say the juice is worth the squeeze.”

Newsweek’s reporters and editors used Martyn, our AI assistant, to produce this story. Learn more about Martyn here.

Contact Newsweek editors on this story: Samantha Beech and Gray R. Thomas