Australia’s consumer watchdog is suing Amazon for allegedly using “unfair contract terms” to introduce advertising and force users to pay more to avoid ads on its Prime Video streaming service.
The Australian Competition and Consumer Commission (ACCC) filed legal action against Amazon in the Federal Court on Monday, in which it alleges the company breached Australian Consumer Law.
The regulator claimed that despite more than 850,000 subscribers of Prime Video having paid $79 upfront for an annual subscription, Amazon used its contract terms to introduce ads in July 2024 “without any contractual entitlement to a pro rata refund or other meaningful redress”.
Despite having already paid for an ad-free service, those Amazon customers were asked to pay an additional $2.99 per month to remain on an ad-free plan, ACCC alleged.
There were five “unfair contract terms” in Amazon Australia’s Prime contracts between November 2023 and August 2025 which “allowed [Amazon] to unilaterally make negative changes during the contract period”, the regulator said.
ACCC also alleges Amazon’s American arm was involved in drafting the allegedly unfair contracts, and was behind the advertising rollout.
If Amazon is found to have breached Australian Consumer Law, it could face a penalty in the tens of millions of dollars.
An Amazon spokesperson told Information Age the company is “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,” they said.
Consumers ‘left with no choice but to pay more’
ACCC Chair Gina Cass-Gottlieb said Prime Video users who did not want ads but had already paid an annual subscription for an ad-free service “were left with no choice but to pay more to maintain the service they’d initially signed up for”.
“All businesses are required to balance rights and obligations in their standard form contracts with consumers to ensure they are fair,” she said.
“Contraventions of unfair contract term protections are subject to significant penalties.
“We strongly encourage all businesses, particularly those offering subscriptions, to review their contracts to ensure they comply with the Australian Consumer Law.”
ACCC said it began investigating Amazon’s contracts with its Australian customers after consumers reported concerns about the introduction of ads on Prime Video in 2024.
It has sought declarations, penalties, consumer redress, and costs from Amazon.
ACCC says around 850,000 annual Prime subscribers were asked to pay more to remain ad-free. Image: Shutterstock
New penalties for unfair contract terms
ACCC’s latest case against Amazon is one of its first under a new penalty regime for unfair contract terms, which began in November 2023 after the regulator spent years advocating for such changes.
Since then, significant penalties have applied for new, renewed, or varied contracts which are found to be unfair toward consumers.
For businesses, the maximum financial penalty is the greater of 30 per cent of the company’s adjusted turnover during the breach, three times the benefit it obtained from the conduct, or $50,000,000.
ACCC previously sued Amazon in May over the sale of children’s backpacks on its online store which allegedly did not have mandatory button battery warnings.
The regulator also argued in 2025 that Amazon’s cloud computing arm Amazon Web Services (AWS) had become a threat to competition in the cloud and artificial intelligence markets, along with Microsoft and Google.
