How do you hold a large corporation – and its executives – accountable for deceiving customers? Last week, the FTC was satisfied with a multi-billion dollar fine and restitution to consumers without forcing the alleged “culprits” (Amazon and two of its executives) to admit guilt to what the agency called deceptive practices. In settling the case, Amazon maintains it did nothing illegal.
But is $2.5 billion (with a “b”) enough to keep corporations on their best behavior? Former FTC commissioner Lina Khan, who originally brought the charges against Amazon, doesn’t seem to think so. On Twitter (X.com), she posted the following tweets:
“In 2023, we sued Amazon and several top executives for tricking people into Prime subscriptions and then making it absurdly difficult to cancel.
“This week marked the start of a historic jury trial, where American citizens would hear details of Amazon’s business practices and determine if it had broken the law.
“A couple of days into trial @FTC announces it has settled all charges, rescuing Amazon from likely being found liable for having violated the law and allowing it to pay its way out.
“A $2.5 billion fine is a drop in the bucket for Amazon and, no doubt, a big relief for the executives who knowingly harmed their customers.”
As Khan referenced, a trial was already underway in the case, and some believed Amazon was certain to lose. Thanks to the settlement, the two Amazon executives who were also defendants no longer face the possibility of personal liability and penalties.
On September 23rd, Stacy Mitchell, Co-Director at the Institute for Local Self-Reliance, had tweeted of the trial:
“It’s also a big deal because two executives, including the head of Prime, Jamil Ghani, could be held personally liable. One reason corporate crime is so rampant is that executives are rarely held accountable.”
Two days later after the settlement was announced, she tweeted the following:
“The FTC was in the midst of a trial in which it had already landed big wins – including a decision by the judge that two Amazon executives would be liable if the jury found Amazon broke the law. The FTC’s settlement today includes no penalties for those executives.”
The FTC said the judgment included the following:
- a $1 billion civil penalty, which is the largest ever in a case involving an FTC rule violation;
- $1.5 billion in consumer redress, providing full relief for the estimated 35 million consumers impacted by unwanted Prime enrollment or deferred cancellation. This is the second-highest restitution award ever obtained by FTC action.
“Additionally, the settlement requires Amazon to stop their unlawful practices and make meaningful changes to the Prime enrollment and cancellation flows,” the FTC wrote in its September 25th press release, which included the Judge’s order outlining the settlement terms.
Amazon released the following statement after the settlement:
“Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers. We work incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership, and to offer substantial value for our many millions of loyal Prime members around the world. We will continue to do so, and look forward to what we’ll deliver for Prime members in the coming years.”
