Amazon agrees to pay $3M to Arizona customers allegedly trapped in complicated Prime membership cancellation process

Amazon has agreed to pay $3 million in refunds to eligible Arizona customers who allegedly faced hurdles while trying to cancel their Prime memberships, following a settlement with the state's Attorney General's Office, the Arizona Daily Star reported.

The settlement follows a lawsuit filed in 2024 by Arizona Attorney General Kris Mayes, who accused the e-commerce giant of making it deliberately difficult for customers to end their subscriptions.

Under a new consent judgment, Amazon will provide $3 million to the Attorney General's Office for distribution among eligible consumers who attempted to cancel their $139-a-year Prime memberships but encountered obstacles in the process, Richie Taylor, spokesperson for the Attorney General's Office, said.

Amazon to pay another $4 million in settlement-related costs

Besides the $3 million earmarked for consumer refunds, Amazon will pay another $1.5 million into a fund used by the Attorney General's Office to investigate consumer fraud and educate residents about consumer protection.

The company will also pay $1.5 million towards the state's legal fees.

Additionally, Amazon has agreed to make $1 million in charitable donations to organisations selected by Mayes, all of which are involved in providing food to people in need.

Why was Amazon sued over Prime membership cancellations?

The lawsuit centred on Amazon's online Prime membership cancellation process, which allegedly required customers to complete at least six separate steps to end their subscriptions.

According to Mayes' 2024 lawsuit, customers had to:

1. Log in to Prime Central.

2. Click on "Manage Membership".

3. Select "End Membership".

4. Click on "Continue to Cancel".

5. Again select "Continue to Cancel".

The process was allegedly designed to discourage customers from completing cancellations, despite Amazon advertising that users could "cancel anytime".

Mayes reportedly claimed in legal filings that the system had helped Amazon reduce cancellations by 14% at one point, as fewer members managed to reach the final cancellation page.

The lawsuit also alleged that customers were not informed about the complicated cancellation process when signing up for Prime, which costs $139 annually and offers benefits such as free delivery, sometimes on the same day.

Mayes argued that retaining Prime subscribers was financially valuable to Amazon because members spend an average of $1,400 annually on purchases, more than twice the amount spent by non-Prime customers.

She also claimed that Amazon generates around $25 billion annually from Prime subscription fees, with approximately three-quarters of the revenue coming from US subscribers.