Australia’s competition watchdog has sued Amazon’s Australian unit, alleging it used unfair contract terms to introduce advertisements on Prime Video and later charged subscribers an extra fee to keep the service ad-free.
The Australian Competition and Consumer Commission (ACCC) has filed proceedings in the Federal Court against Amazon Commercial Services Pty Ltd and Amazon.com Services LLC. It alleges that between November 2023 and August 2025, Amazon’s standard-form contracts with more than one million annual Prime subscribers contained unfair terms that allowed the company to make adverse changes to its services without offering refunds or other meaningful compensation.
What the ACCC Alleges: According to the ACCC, Amazon relied on some of these terms when it rolled out ads on Prime Video in Australia on July 2, 2024. Amazon required subscribers who wanted to continue watching without ads to pay an additional A$2.99 per month, even though annual members had already paid A$79 upfront.
The regulator argues that the contracts gave Amazon the unilateral right to change Prime services, including Prime Video, and modify contract terms during a subscriber’s prepaid annual membership. It alleges that customers had no contractual right to a pro rata refund or other meaningful redress if those changes reduced the service’s value.
According to the court filings, Amazon announced in September 2023 that it would introduce ads to Prime Video in 2024. In May 2024, Amazon informed subscribers the change would take effect on July 2, 2024, and they only needed to act if they wanted the ad-free option. The ACCC says more than 850,000 annual subscribers had already paid for their memberships when the change took effect, leaving them with an ad-supported service for the remainder of their subscription unless they paid extra.
Relief sought and Amazon US’ role: The ACCC has also alleged that Amazon.com Services LLC drafted the Australian contract terms, decided to introduce Prime Video ads globally, and helped implement the changes in Australia. It argues that the US entity knowingly participated in the alleged breaches.
The regulator is seeking declarations, financial penalties, consumer redress, legal costs and other orders. It said the case is among the first contested matters brought under Australia’s new penalty regime for unfair contract terms, which came into effect for contracts made or renewed from November 9, 2023.
ACCC and Amazon respond: “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,” ACCC Chair Gina Cass-Gottlieb said.
“Consumers who wanted to avoid ads were left with no choice but to pay more to maintain the service they’d initially signed up…
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