Amazon is resolving claims that it incorrectly processed returns with a proposed settlement valued at over $1 billion, as reported earlier by Reuters and Bloomberg Law. The settlement includes $600 million in refunds, along with an additional $309.5 million in payments to affected customers.

Initially filed in 2023, the class action lawsuit claims that while Amazon advertises “free, no hassle returns,” it often “fails to issue refunds or re-charges customers who have returned items.” It also alleges that Amazon knows customers aren’t aware of the return issues, leading to “substantial unjustified monetary losses by consumers.” Last year, Amazon began issuing refunds to customers who didn’t get their money back for returned items.

Amazon has also agreed to commit $363 million toward improving its return and refund practices, but it denied any wrongdoing. “The monetary relief from the settlement will likely represent a full recovery for every class member — plus interest,” lawyers for the class write in the settlement. It’s still awaiting approval by US District Court Judge Jamal Whitehead.

“Following an internal review in 2025, we identified a small subset of returns where we issued a refund without the payment completing, or where we could not verify that the correct item had been sent back to us, so no refund had been issued,” Amazon spokesperson Maxine Tagay said in an emailed statement to The Verge. “We started issuing refunds in 2025 for these returns and are providing additional compensation and refunds to eligible customers per the settlement agreement.”

In addition to this settlement, Amazon is on the hook to pay $2.5 billion to resolve the Federal Trade Commission’s lawsuit that accused the company of tricking millions of people into signing up for Prime. Customers impacted by these alleged practices can file a claim now.

Update, January 27th: Added a statement from Amazon.