Amazon is facing legal action in Australia after the country’s consumer watchdog accused the tech giant of unfairly altering the terms of its Prime subscription by introducing advertisements on Prime Video and charging customers an additional fee to continue watching without ads.
The Australian Competition and Consumer Commission (ACCC) has filed proceedings against Amazon Australia in the Federal Court, alleging that the company relied on unfair contract terms to make significant changes to its streaming service after customers had already paid for annual Prime memberships. The regulator is seeking financial penalties, consumer compensation and other court orders against the company.
The lawsuit stems from Amazon’s decision to introduce advertisements on Prime Video in Australia in July 2024. Before the change, the platform was largely ad-free for Prime subscribers. Once ads were introduced, customers who wanted to continue watching uninterrupted were required to pay an additional A$2.99 per month on top of their existing Prime subscription.
According to the ACCC, the move disproportionately affected customers who had already paid A$79 upfront for an annual Prime membership. These subscribers were allegedly left with no practical choice, they could either accept advertisements on a service they had originally purchased as ad-free or pay extra to restore the viewing experience they believed was already included in their subscription.
The consumer watchdog claims that Amazon’s standard-form Prime contracts contained five unfair terms that gave the company broad powers to make substantial changes to its services without giving subscribers an equivalent right to reject those changes or receive compensation. According to the ACCC, these clauses created a significant imbalance between the company and consumers, allowing Amazon to reduce the value of an existing subscription while avoiding any obligation to provide refunds or other remedies.
ACCC Chair Gina Cass-Gottlieb said businesses should not be able to rely on unfair contract terms to make detrimental changes after consumers have committed to a service. She argued that customers who wished to continue enjoying an ad-free experience effectively had to pay twice for the same benefit, raising broader concerns about fairness in digital subscription services.
Amazon Australia has acknowledged the legal proceedings, stating that it is reviewing the case in detail. The company said it had cooperated with the ACCC throughout its investigation and remains focused on providing the best experience for Australian customers. It has not yet outlined its legal defence.
