Amazon agrees to a $3 million refund settlement for eligible Arizona Prime customers.
Amazon has agreed to pay $3 million to eligible customers in Arizona following allegations that it made cancelling its Prime memberships unnecessarily difficult. The agreement requires Amazon to provide $3 million to the Attorney General’s Office for distribution among eligible consumers, according to a report by the Arizona Daily Star. The company will also pay $1.5 million towards a fund used to investigate consumer fraud and educate residents about protecting themselves, along with another $1.5 million to cover the state’s legal expenses. Additionally, Amazon has agreed to donate $1 million to charitable organisations selected by Mayes, all of which work towards providing food to people in need. The lawsuit, filed by Mayes in 2024 under Arizona’s consumer fraud laws, focused on Amazon’s online Prime membership cancellation process. In her legal filings, Mayes claimed that the cancellation system had helped Amazon reduce membership cancellations by 14% at one point, as fewer customers managed to reach the final cancellation page. Amazon continues to fight another lawsuit filed by Mayes in 2024 While the Prime cancellation dispute has reached a settlement.
Customers were required to: Log in to Prime Central, according to the Attorney General’s legal filings. The settlement comes after Arizona Attorney General Kris Mayes accused the retail giant of using a complicated cancellation system that allegedly prevented customers from easily ending subscriptions they no longer wanted. The state alleged that customers had to navigate at least six separate steps to end their subscriptions, despite the company’s advertisements claiming that members could cancel anytime. Click on ‘Manage membership’. Select ‘End membership’. Click on ‘Continue to cancel’. Again select ‘Continue to cancel’. Finally, click on ‘End now’. Mayes argued that the process created unnecessary hurdles for customers attempting to leave the subscription service. The state alleged that the system was designed to discourage cancellations and retain members who might otherwise have ended their subscriptions. Amazon Prime’s alleged six-step cancellation process became the centre of Arizona’s consumer fraud lawsuit. The separate case, pending before Maricopa County Superior Court, concerns how products and sellers are displayed on Amazon’s website. Amazon has denied the accusations, arguing that the lawsuit was filed without reviewing a single company document and reflects a fundamental misunderstanding of how its business operates. No hearing date has been set in the separate case, which Amazon continues to contest. You use AI every day. Now get your AI Quotient. Take the AIQ test.
Amazon Prime costs $139 annually in the US and offers benefits such as free delivery, sometimes on the same day, along with other membership services. Mayes also highlighted the financial significance of the subscription programme, claiming that Prime members spend an average of $1,400 annually on Amazon purchases, more than twice the amount spent by non-Prime customers. Her filings further cited approximately $25 billion in annual Prime subscription revenue, with around three-quarters of that amount coming from US subscribers. That deal included a $1 billion civil penalty and $1.5 billion in customer refunds.
Because shoppers may assume that the prominently displayed offer represents the best available price, the lawsuit further claims that nearly 98% of purchases are made through the Buy Box. In a statement, Mayes said, “Arizonans should be able to cancel a subscription as easily as they signed up for it, without jumping through endless hoops.
Richie Taylor, spokesperson for the Arizona Attorney General’s Office, said the state’s objective was to recover as much money as possible for consumers affected by the alleged practices. Sellers who do not participate in the programme may receive less prominent placement, even when they offer identical products at lower prices, according to the lawsuit. The state also argued that customers were not informed about these hurdles when signing up for the service. However, Mayes continued with her own lawsuit, arguing that the federal settlement might not cover everyone who experienced difficulties cancelling Prime memberships or compensate them for all their costs. She added that the settlement would provide restitution to eligible residents and that her office would continue standing up for consumers dealing with unwanted subscriptions. However, Amazon has denied engaging in any activity that violates Arizona law. Under the consent judgment, the company does not admit wrongdoing, and attorneys representing the state have agreed not to claim that its past, present or future business practices are illegal. Amazon faces a separate Arizona lawsuit over allegations concerning its product listings and Buy Box feature. The Attorney General alleges that the company’s product listings are designed to make shoppers believe that the first offer displayed is the best available deal, even when other sellers may be offering the same product at a lower price. The lawsuit specifically challenges Amazon’s Buy Box feature, which allows customers to add a selected seller’s product to their shopping cart with a single click. Mayes claims that the algorithm behind the feature favours products sold directly by Amazon or third-party sellers participating in its Fulfillment by Amazon programme. The programme charges retailers fees for services including inventory storage, packaging, shipping, returns and customer communication. The state alleges that this could lead customers to pay more than necessary.
The Arizona agreement follows a separate settlement between Amazon and the Federal Trade Commission last year, which required the company to change its cancellation practices.
