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$1.5 billion of the total will be going back to consumers, who could collect about $50 each

By Bob Unruh

When a corporation is huge, like Amazon, there are benefits. The customer base is millions, not hundreds or thousands.

But there are drawbacks, too, as Amazon discovered when it was accused of tricking many, many of those consumers into paying for its “Prime” program.

The result is that it has agreed to a $2.5 billion settlement with the Federal Trade Commission, of which some $1.5 billion will be returned to customers, at about $50 per.

The provisions of the deal call for Amazon to pay the FTD $1.5 billion as monetary relief for customers, and $1 billion as a civil penalty.

The corporation apparently will have about two weeks to pay $500 million, and then the next payment of $500 million will come due in about 18 months.

The issue was the subject of a trial that was launched just days ago, when the FTC said in opening arguments that the corporation would lure consumers into buying products, but then force them to go on a detour that would push the Prime enrollment page in front of them.

Then, the FTC alleged, Amazon would use previously submitted billing information to sign up customers, even if they didn’t want it. And then billings would be ongoing.

“Amazon knowingly intended to trick consumers into Prime subscriptions without their consent and trapped their consumers by making it difficult to cancel,” Jonathan Cohen, an FTC lawyer, said.

“The obsession was with the number of customers, not about treating them right.”

The company also must provide consumers a simple cancelation procedure for the Prime service charges, and end those automatic billings that were not authorized.

It also must remove a type of coercion that appeared for customers, when they had to say, “No thanks, I don’t want free shipping” in order the progress in their ordering.

Prompting the settlement was a decision from U.S. District Judge John Chun who concluded the company violated consumer protection requirements.

“Today, the Trump-Vance FTC made history and secured a record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel,” said Andrew Ferguson, chief of the FTC. “The evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription.”

Amazon agreed to the solution, even while insisting its executives followed the law all the time.

Spokesman Mark Blafkin said the company works hard to “make it clear and simple” for consumers to sign up, or cancel.

“We will continue to do so.”

Reports said the $1 billion fine actually is the largest in the FTC’s history.

Amazon insisted in the settlement it did nothing wrong.

The case was launched two years ago, and the trial had just begun in Seattle.

The fees the company had been collecting for Prime amounted to about $15 per person per month, or about $140 annually.

It recently confirmed it took in $12 billion on “subscription services.”

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