Australian watchdog sues Amazon over Prime Video contract terms
Amazon faces legal action after requiring Prime Video users to pay an additional fee to maintain an advert-free viewing experience.
Australia’s consumer watchdog has launched legal action against Amazon, alleging the company used unfair contract terms when introducing advertisements to Prime Video.
The Australian Competition and Consumer Commission claims that Amazon’s standard-form contracts allowed the company to make materially adverse changes to Prime services and contract terms without giving annual subscribers a contractual right to refunds or other meaningful redress.
The case concerns contracts with more than one million annual Amazon Prime subscribers between 1 November 2023 and 18 August 2025.
Prime Video had been delivered largely advertisement-free before 2 July 2024. Amazon then introduced advertisements and required subscribers to pay an additional $2.99 per month to keep watching Prime Video content without ads.
According to the ACCC, more than 850,000 annual Prime subscribers had already paid for their subscription when the change took effect. The regulator alleges that those subscribers received degraded service for the remainder of their prepaid term unless they paid extra for the ad-free option.
The ACCC says the relevant contract terms created a significant imbalance between Amazon and consumers, were not reasonably necessary to protect Amazon’s legitimate interests and could cause consumer detriment.
Amazon has since amended some terms to introduce a right to a pro rata refund where annual Prime subscribers cancel their service in response to materially adverse changes.
The case will test how Australian consumer law applies when digital subscription platforms change paid services after customers have already committed to annual plans.
Why does it matter?
The lawsuit raises a broader consumer protection question in the digital economy: how much flexibility should subscription platforms have to change paid services after customers have already paid? As streaming, cloud, gaming and software services increasingly rely on subscription models, regulators are paying closer attention to whether users receive fair notice, real choice and meaningful remedies when platforms alter service quality, pricing or advertising conditions.
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