ACCC Takes Amazon Australia to Court Over Prime Subscription Terms
The Australian Competition and Consumer Commission (ACCC) has filed legal proceedings in the Federal Court against Amazon Australia, alleging that contracts for its Prime subscription service contained unfair terms. The case concerns the introduction of advertising to Prime Video in July 2024.
Background and Allegations
The ACCC alleges that between November 2023 and August 2025, Amazon Australia's contracts with over one million annual Prime subscribers contained five unfair terms. These terms, according to the regulator, allowed Amazon to unilaterally make material changes to the service without offering subscribers a refund if they chose to cancel as a result.
Specifically, the ACCC alleges that Amazon relied on these contract terms when it introduced advertising to Prime Video in July 2024. Subscribers were then required to either accept the advertisements or pay an additional A$2.99 per month to remain ad-free.
More than 850,000 subscribers who had already paid for a full year of Prime service were affected, receiving an ad-supported service for the remainder of their prepaid term unless they paid the extra fee.
The ACCC also alleges that Amazon US was involved in drafting the contracts and in the decision to introduce advertising globally.
Statements from Parties
ACCC Chair Gina Cass-Gottlieb stated: "We allege that Amazon AU included multiple unfair terms in its contracts with Australian annual Prime subscribers, and it then relied on some of these terms to bring ads onto Amazon Prime Video. Consumers who wanted to avoid ads were left with no choice but to pay more to maintain the service they'd initially signed up for."
An Amazon Australia spokesperson said: "We are reviewing the case filed by the ACCC in detail. We have cooperated with the ACCC throughout its investigation and remain focused on providing the best experience for our Australian customers."
Legal Context and Remedies Sought
The case tests whether unilateral variation clauses in consumer contracts are unfair under Australian Consumer Law, particularly when they do not provide pro-rata refunds for consumers who terminate due to adverse changes.
The ACCC's own guidance on unfair contract terms had not explicitly required pro-rata refunds, which Amazon may use in its defense.
Amazon has since updated its practice to offer pro-rata refunds upon adverse changes.
The ACCC is seeking penalties against both Amazon Australia and Amazon US, as well as consumer redress, declarations, and costs. The maximum penalty for unfair contract terms is the highest of:
- A$50 million
- Three times the value of the benefit obtained
- 30% of adjusted turnover during the breach period
Recent History and Broader Context
This lawsuit is separate from a previous ACCC case concerning non-compliant button battery safety warnings on children's backpacks sold by Amazon.
Prime Video launched in Australia in 2018 as an ad-free benefit of Amazon Prime and is currently the country's second most popular streaming service after Netflix.
Amazon has faced regulatory scrutiny in other jurisdictions, including:
- Legal action by the US Federal Trade Commission (FTC) over Prime sign-up and cancellation practices
- A recent fine related to customer redress for online shopping fraud
- Investigations by the UK government into product listing practices and fake reviews
The outcome of this Australian case is being watched internationally, particularly in the UK and EU, which have similar unfair contract term laws.