In a historic settlement, Amazon has agreed to pay $2.5 billion to settle a lawsuit brought by the Federal Trade Commission (FTC) that alleged the company used ‘dark patterns’ to trick customers into signing up for Amazon Prime. The FTC accused Amazon of employing deceptive design features and misleading prompts on its website that made it difficult for users to cancel their Prime memberships.

The settlement marks one of the largest ever paid by a company to resolve a consumer protection case. Amazon has agreed to provide refunds to impacted customers and make changes to its website to ensure clearer and more transparent sign-up and cancellation processes for Prime. The company also has to pay $500 million in fines to the FTC.

‘Dark patterns’ refer to misleading or manipulative design choices on websites and apps that push users towards certain actions without their full understanding or consent. These practices have come under increasing scrutiny from regulators and lawmakers in recent years.

The FTC’s investigation into Amazon’s Prime sign-up process found that the company used confusing language, hidden options, and pre-checked boxes to enroll customers in Prime memberships without their explicit consent. This led to many customers unknowingly signing up for a subscription service they did not want.

Amazon has agreed to implement changes to its design practices to prevent such ‘dark patterns’ in the future and ensure that customers have a clear understanding of the terms and conditions of their Prime memberships. The settlement sends a strong message to other tech companies about the importance of transparency and consumer protection.

The $2.5 billion payout represents a significant financial penalty for Amazon, but the company has stated that it is committed to making the necessary changes to regain the trust of its customers and comply with regulations. The settlement is a reminder that businesses must prioritize ethical design practices and respect consumer rights in an increasingly digital world.