What the Numbers Say About the Amazon Prime Settlement

By Paul Steidler: The Amazon Prime settlement, announced yesterday between Amazon and the Federal Trade Commission (FTC), shows that there was exceedingly little, if any, harm to Amazon Prime customers. This is evidenced by an examination of the numbers.

–$8.33 is the average settlement to Amazon Prime’s 180 million U.S.- customers for what the FTC alleges were “years-long” practices.

–$1,400 is what the average Amazon Prime customer spends annually.

–$139 is the annual charge for Amazon Prime, which customers typically quickly recoup through lower or no shipping costs, video and music streaming benefits, savings at Whole Foods, and other benefits.

–27 months is how long the FTC litigated the case in the U.S. District Court.

–40 percent, or $1 billion, is the FTC’s take of the total $2.5 billion settlement, better than what most trial attorneys would make.

The settlement raises a host of important questions that policymakers should ask the FTC. These include:

–Why does the FTC believe it is better for it to have these funds than for them to be part of a settlement with consumers?

–Will the FTC be keeping this money, which is more than twice its annual budget, or applying it to the U.S. Treasury for general debt reduction?

–What were the costs to the FTC and taxpayers of this lawsuit, and what other matters were delayed or not addressed because of this case?