Amazon and the $2.5 Billion Lesson for Businesses

Amazon’s $2.5 billion FTC settlement is not “an Amazon-only problem.” It is a warning about a very specific business pattern: getting people into a subscription through confusing design, then making it hard to leave. The FTC says that pattern is unlawful. The settlement includes $1.5 billion in consumer refunds and a $1 billion civil penalty, and it forces permanent changes to Prime enrollment and cancellation.

If you are a content creator or business owner who sells memberships, paid communities, paid newsletters, coaching, software tools, templates, or free trials that turn into paid plans, you should treat this case as directly relevant. The same rules apply to you, even if you are a small business.

What made Amazon’s enrollment “misleading”

One of the most important details in the FTC’s settlement is the language Amazon used on a key decision screen. The FTC required Amazon to stop using a decline option that said: “No, I don’t want Free Shipping.” Why does that matter? Because it reframes the decision as if the customer is rejecting a benefit, instead of rejecting a paid, recurring Prime membership. The settlement says Amazon must provide a clear option to decline Prime and cannot use manipulative language like that.

This is a common pattern on the internet. Many subscription pages do the same thing in different words: “No thanks, I don’t want to grow my business,” “I’ll stay broke,” “I don’t care about results,” “I’ll pass on the discount,” or “I don’t want free bonuses.” The problem is not marketing creativity. The problem is that the user is not clearly consenting to the real transaction: a paid recurring charge with renewal.

The legal rule behind the case

The case was brought under ROSCA, a federal law that targets online “negative option” selling. In plain language, ROSCA requires two big things: first, the business must clearly and conspicuously disclose all material terms before obtaining billing information; second, the business must obtain the customer’s express informed consent before charging.

“Material terms” are not just the price. They include what the customer is actually enrolling in, the frequency and timing of charges, whether the plan auto-renews, and how cancellation works. The FTC’s press release and the court order emphasize these points and require Amazon to present them clearly during enrollment.

What made cancellation “unlawfully hard”

The FTC did not treat cancellation as a “customer service feature.” It treated cancellation as part of the legal compliance requirement. If your business makes money from recurring billing, you must provide a simple mechanism to stop future charges. The Amazon settlement requires an easy, not time-consuming, not costly cancellation path, and it requires changes to the way Amazon designs cancellation experiences.

For creators and small businesses, this is where risk often hides. People sign up quickly, but when they try to cancel they hit friction: a maze of steps, repeated confirmation screens, confusing labels, or a requirement to email support to cancel. These are the subscription “traps” regulators are targeting.

Why this matters for content creators and online businesses

Many creators are not trying to trick anyone. But their tools can easily create the same outcome. A common example is a checkout built on a platform that defaults to auto-renew, combined with copy that focuses on benefits (“free bonuses,” “discount,” “community access”) while the paid renewal terms are visually quieter or appear late in the flow.

Another common example is a “free trial” offer where the user sees the word “free,” enters payment details, and only later discovers the exact conversion date, the exact monthly price, or the fact that the plan renews automatically. The Amazon case is a reminder that “free trial” is not a shield. If your design causes reasonable surprise billing, you are accumulating legal risk.

Also important: you cannot blame Stripe, Shopify, Kajabi, Substack, or your funnel builder. Those are tools. Regulators evaluate what the user sees and experiences: your words, your buttons, your screens, your flow.

What the settlement forced Amazon to change (and what you should do)

The settlement requires Amazon to present clear, conspicuous disclosures of Prime’s material terms during enrollment, including cost, frequency of charges, whether it auto-renews, and cancellation procedures. It also requires a clear option to decline Prime, and it specifically prohibits manipulative decline language like “No, I don’t want Free Shipping.”

For a small business, the best takeaway is not “be afraid of the FTC.” The best takeaway is: fix your flow before scaling ads. Make the terms obvious before payment details. Make consent explicit. Make cancellation simple and online. And keep records (screenshots or archived versions) of what your customers see.

How I help

I review digital content for creators and online businesses and point out where the user experience creates legal risk such as: unclear renewal terms, consent language that does not match the transaction, and cancellation friction. The goal is not to over-lawyer your brand. The goal is to keep your growth clean, reduce disputes and chargebacks, and avoid the Amazon pattern.