The Australian Competition and Consumer Commission (ACCC) has launched legal proceedings against Amazon Australia in the Federal Court, accusing the e-commerce giant of breaching Australian consumer law by introducing advertisements to Prime Video without adequate compensation. The case, which affects more than 850,000 subscribers, has already drawn international attention, particularly from the United Kingdom and the European Union, where similar unfair contract term laws exist.
ACCC Alleges Unfair Contract Terms
The ACCC claims that between November 2023 and August 2025, Amazon Australia's Prime subscription contracts contained terms allowing Amazon to make changes to the service, provided consumers were notified of adverse changes. In July 2024, Amazon introduced ads to Prime Video and offered subscribers the option to pay an additional A$2.99 per month to remain ad-free. The ACCC argues that this constituted a negative change, particularly for the more than 850,000 subscribers who had paid an annual fee upfront, leaving them with a degraded service for the remainder of their subscription period.
Furthermore, the ACCC alleges that consumers who chose to cancel their subscriptions were not offered a pro rata refund or other meaningful redress, making the contract terms unfair. The regulator also claims that Amazon US was knowingly involved in the decision to introduce advertising globally and in implementing it in Australia.
Amazon's Response and Potential Penalties
An Amazon Australia spokesman stated that the company is reviewing the ACCC's case and has cooperated with the investigation, emphasizing its focus on providing the best customer experience. The ACCC is seeking penalties against both Amazon Australia and Amazon US, as well as consumer redress and costs. The maximum financial penalty could be the higher of A$50 million, three times the value of the benefit obtained from the conduct, or 30% of adjusted turnover during the breach period.
Legal Complexity and Potential Defence
Legal experts note that the case is legally tricky due to the ACCC's own guidance on unfair contract terms. The ACCC's website suggests that a fair contract should allow consumers to terminate without penalty if they do not accept a unilateral change, but it does not explicitly require pro rata refunds. Amazon may argue that its contract terms were consistent with this guidance, as customers were notified of changes and could terminate at any time. The Federal Court will need to determine whether pro rata refunds were essential for fairness.
Interestingly, Amazon has since updated its Prime Video subscription terms to offer pro rata refunds following adverse changes, a change the ACCC noted in its filing. The case is set to be closely watched both in Australia and internationally, as it tests the boundaries of consumer law protections against large corporations.
