Advertising Law Blog

Amazon’s recent massive $2.5 billion settlement with the Federal Trade Commission (“FTC”) regarding its Prime subscription model is a game-changer with respect to the exposure for difficult cancellation paths. It is also a strong reminder that the FTC, under Commissioner Ferguson and the Trump/Vance administration, intends to enforce the consumer protection laws in effect. 

As we have previously written, in 2023, the then Democrat-led FTC filed a high-profile complaint against Amazon.com, Inc. (“Amazon”) related to the company’s Prime enrollment and cancellation processes. Specially, the FTC alleged that Amazon used “dark patterns” to trick consumers into enrolling in automatically renewing Prime subscriptions and made it incredibly difficult for consumers to cancel those subscriptions. The FTC had alleged that Amazon previously required Prime customers who wanted to cancel to go through a "four-page, six-click, fifteen-option cancellation process." The FTC alleged that Amazon itself named its cancellation “process ‘Iliad,’ which refers to Homer's epic about the long, arduous Trojan War."

Fast forward to September 2025. After years of litigation and several days into a jury trial in Seattle, the FTC announced that the parties had reached a settlement. Among agreeing to cease unlawful enrollment and cancellation practices, Amazon agreed to pay $2.5 billion to settle the FTC’s charges. Beyond the substantial monetary penalty, the settlement carries broader implications—particularly when viewed in the context of shifting FTC leadership and other recent enforcement actions.

Since the complaint was initially filed, the political and regulatory landscape has changed considerably. During President Trump’s second term, the two Democratic Commissioners were dismissed, leaving a Republican-only Commission. As the now Republican-led FTC looked to take different positions than its Democratic predecessors, many questioned what the priorities of the new administration would look like and if the FTC would continue to prosecute preexisting cases initiated by its Democratic predecessors, especially high-profile cases against large tech companies. The FTC’s decision to move forward with the trial and ultimately secure a $2.5 billion settlement suggests that, at least in some areas, the FTC is maintaining consistency with respect to certain consumer protection issues. Further, even under new leadership, certain issues, like automatic renewal practices, appear to remain part of the FTC’s enforcement agenda.

Automatic renewal has been a particularly active area for the FTC recently. Earlier this year the FTC faced a setback on its updated Negative Option Rule when the Eighth Circuit struck it down. As the Rule was promulgated under the prior administration, many questioned whether this Republican-led FTC would continue to defend it or would attempt to amend the Rule or promulgate an alternative. The Amazon settlement provides some helpful indications. First, the settlement demonstrates that the FTC is continuing to pursue enforcement action related to subscription practices. Second, and perhaps more interestingly, the settlement itself references a potentially revised Negative Option Rule, requiring Amazon to comply with the requirements of any potential amended Rule. The language could potentially signal that the FTC may attempt to introduce an amended Negative Option Rule.

Moreover, this Amazon settlement is not the only matter that the FTC has pursued recently regarding automatic renewal compliance. Earlier this month, the FTC reached a settlement with Chegg Inc., an education technology provider, over similar charges related to automatic renewal and difficult cancellation processes. Chegg agreed to pay $7.5 million to settle the FTC’s allegations that the company made it very difficult to cancel automatic renewing subscriptions and failed to honor cancellation requests from consumers. In particular, the FTC alleged that since 2000, Chegg charged nearly 200,000 customers after they had requested cancellation. Further, the FTC alleged that the online cancellation process was buried on Chegg’s website, was difficult to locate, and even once located, was very confusing and cumbersome to navigate. In addition to paying $7.5 million, Chegg agreed to provide a simple cancellation mechanism.  

Viewing the Amazon settlement within this context, it appears that the FTC has maintained an ongoing interest in automatic renewal and subscription compliance. While it is still unclear whether the FTC will attempt to promulgate an alternative to the now struck down Negative Option Rule, the FTC continues to demonstrate that it will pursue enforcement actions against companies engaged in “dark patterns,” with a particular focus on those automatic renewal programs that are very difficult for consumers to cancel.

Takeaway: Marketers overall should not be under the misimpression that the FTC will not be active on consumer protection issues under the current leadership and the Trump/Vance administration.  This settlement and other recent FTC settlements involving negative option programs and cancellations should also serve as a strong reminder for marketers to revisit their cancellation paths to make sure they are consistent with applicable federal and state legal requirements.