U.S. Judge Rules Amazon Broke Shopper Protection Law Over Prime Subscriptions

Amazon.com Inc. (AMZN, Financials) violated a federal consumer protection law by gathering billing information from Prime customers before fully disclosing the service's terms, a U.S. judge ruled Wednesday.

The decision by District Judge John Chun gives the Federal Trade Commission an early advantage as it pursues claims that Amazon misled consumers into signing up for Prime and made cancellations deliberately difficult. The FTC says tens of millions of people were enrolled without consent and that similar numbers faced obstacles trying to leave the program.

The case centers on the Restore Online Shoppers' Confidence Act, which requires clear disclosure of subscription terms before billing. Judge Chun also ruled that two Amazon executives can be held personally liable if the FTC proves its claims, while rejecting Amazon's argument that the law does not apply to Prime signups.

An Amazon spokesperson said the company disagrees with the ruling, adding that neither the firm nor its executives acted improperly. We always put customers first, the spokesperson said.

The trial will determine whether Amazon must provide restitution and change its subscription practices. For investors, the outcome could shape how subscription models across the tech sector are regulated going forward.