Amazon is facing Federal Court action after the ACCC alleged it relied on unfair contract terms to introduce advertising to Prime Video for hundreds of thousands of Australian subscribers without offering refunds.
Amazon is being sued by Australia’s consumer watchdog over claims it relied on unfair contract terms to add advertising to Prime Video while leaving annual subscribers unable to recover part of their prepaid fees.
The case, filed in the Victorian District Registry on June 29th, 2026, centres on contracts held by more than one million annual Prime subscribers between November 1st, 2023 and August 18th, 2025. The ACCC alleges five terms in those standard-form contracts allowed Amazon AU to unilaterally degrade services or alter contract conditions, with no obligation to provide pro rata refunds or other redress.
The crux of the enforcement action concerns events from mid-2024. Amazon AU announced in September 2023 it would introduce advertising to Prime Video in Australia. On May 21st, 2024, subscribers were notified the change would take effect from July 2nd, 2024 – and that maintaining an ad-free experience would require an additional $2.99 per month.
As at July 2nd, 2024, more than 850,000 annual subscribers – more than 600,000 of whom had signed up or renewed since November 9th, 2023 – were shifted onto an ad-supported service for the remainder of their prepaid term. Annual subscriptions cost $79 upfront; monthly plans cost $9.99.
The ACCC alleges Amazon AU relied on the disputed variation terms to implement the change, in contravention of section 23(2C) of the Australian Consumer Law (ACL). It further alleges Amazon US – which it says made the global decision to introduce advertising and assisted in its Australian implementation – was knowingly involved in the contraventions and is also liable for pecuniary penalties.
ACCC Chair Gina Cass-Gottlieb said the terms granted Amazon AU unilateral power to alter services without meaningful constraint.
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“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,” 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 for.”
The watchdog argues the terms caused a significant imbalance in parties’ rights and obligations, were not reasonably necessary to protect Amazon AU’s legitimate interests, and would have – and did – cause consumer detriment. It points to Amazon AU’s subsequent amendment of its contract terms to include a pro rata refund right as evidence the original terms were not commercially necessary.
The ACCC is seeking declarations, penalties, consumer redress, costs, and other orders. Cass-Gottlieb used the announcement to put subscription businesses on notice.
“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.”
The ACCC has flagged the case is among the first contested matters brought under the new penalty regime for unfair contract terms, which applies to contracts made or renewed from November 9th, 2023. Unfair contract terms – with a focus on harmful cancellation terms – are an ACCC compliance and enforcement priority for 2026–27.
Amazon launched Prime in Australia in June 2018. Both Amazon AU and Amazon US are subsidiaries of the US parent Amazon.com, Inc.
From Mediaweek