The Australian Competition and Consumer Commission (ACCC) has initiated legal proceedings against Amazon Australia, alleging that the e-commerce giant unfairly introduced advertisements on its Prime Video service for customers who had already paid for an annual Prime membership.
ACCC Alleges Unfair Contract Terms
According to the ACCC, Amazon leveraged what the watchdog describes as unfair terms in its Prime subscription contracts. These terms allegedly allowed the company to make significant changes to the streaming service without offering adequate compensation or refunds to its subscribers.
The regulator's case, filed in the Federal Court, focuses on Amazon's rollout of advertisements on Prime Video in 2024. The ACCC claims that more than 850,000 prepaid annual Prime members in Australia were affected when their ad-free service was switched to an ad-supported version. To regain an ad-free experience, these subscribers were then required to pay an additional A$2.99 per month, despite having already paid an upfront annual fee of A$79.
Impact on Prepaid Amazon Prime Video Subscribers
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." The commission argues that Amazon relied on five specific unfair contract terms to implement these major service changes without providing meaningful redress.
The lawsuit also implicates Amazon.com Services LLC, alleging its involvement in drafting the Australian subscription contracts and knowingly participating in the conduct. The ACCC is seeking various remedies from the court, including declarations, financial penalties, consumer redress for affected subscribers, and coverage of legal costs.
Amazon Prime, which launched in Australia in 2018, had offered an ad-free Prime Video experience for over a decade as a core component of its membership globally. Amazon began introducing ads on Prime Video across several international markets in early 2024.
An Amazon Australia spokesperson confirmed the company is "reviewing the case filed by the ACCC in detail" and has cooperated with the regulator throughout its investigation into the matter.