The Australian Competition and Consumer Commission (ACCC) has filed a lawsuit against Amazon Commercial Services Pty Ltd, the local operator of Prime, over the introduction of advertisements to Prime Video without proper subscriber consent. According to the ACCC's statement, the regulator alleges that Amazon breached Australian Consumer Law by including five unfair contract terms in Prime subscription agreements that allowed significant changes to Prime services without offering refunds or adequate compensation to subscribers. The case focuses on annual Prime contracts used between November 1, 2023, and August 18, 2025, with the ACCC alleging that Amazon relied on these terms to bring ads onto Amazon Prime Video. The case was filed on 29 June in the Victorian District Registry of the Federal Court, marking a significant escalation in regulatory action against the tech giant.
The regulatory action affects a significant portion of Amazon's Australian customer base. As reported by the ACCC, more than 850,000 annual Prime subscribers were affected when advertisements were introduced, including more than 600,000 who had subscribed or renewed after Australia's unfair contract term penalty regime took effect on November 9, 2023. Over more than one million annual Prime subscribers were exposed to the relevant terms during the wider period. Prime Video in Australia was almost entirely ad-free before July 2, 2024, when Amazon told subscribers in May 2024 that anyone who wanted to keep watching without ads would need to pay an additional A$2.99 per month, even though annual Prime customers had already paid A$79 upfront. If the court sides with the ACCC, more than a million Australians could be entitled to compensation for the roughly year-and-a-half period during which they were shown ads they had not agreed to.
The ACCC's case extends beyond the introduction of advertisements to encompass broader contractual issues. According to the regulator's statement, the case focuses on contracts that let Amazon make materially adverse changes to Prime services or the contracts themselves, including Prime Video, without giving annual subscribers a contractual right to a pro-rata refund or other meaningful redress. The ACCC alleges that Amazon.com Services LLC was involved in drafting the Australian subscription contracts and knowingly participated in the conduct. The watchdog launched its investigation after receiving consumer complaints about the ad rollout and is seeking court declarations, financial penalties, consumer redress, legal costs, and other orders against Amazon. The regulator argues that the unfairness lies in the contract that let Amazon degrade a paid service mid-term and charge to restore it, with recent amendments to Australian consumer law making unfair contract terms subject to civil penalties rather than mere unenforceability.
In response to the legal action, an Amazon Australia spokesperson told Reuters that the company is 'reviewing the case filed by the ACCC in detail' and had cooperated with the regulator throughout the investigation. The spokesperson's statement indicates that Amazon is taking the allegations seriously and plans to provide a detailed response to the regulatory claims. The Prime Video case adds to Amazon's regulatory challenges, as the company has faced scrutiny in multiple jurisdictions over Prime sign-up and cancellation practices, and separately agreed to pay $2.25 million in the United States to settle claims it failed to give identity-theft victims required records. Prime Video had been offered as an ad-free streaming service for more than a decade as part of Amazon's wider Prime membership, which bundles shopping benefits, faster deliveries and entertainment services. Prime launched in Australia in 2018, while Amazon began rolling out advertisements on Prime Video across several markets globally in early 2024.
The Australian case differs significantly from US legal proceedings regarding the same ad rollout. In July 2025, a Washington federal judge dismissed a proposed US class action with prejudice, ruling that Amazon's addition of ads was a permitted benefit modification rather than a subscription price increase. Subscribers have since appealed to the Ninth Circuit. The US case focused on whether Amazon's addition of ads was a permitted benefit modification, while Australia's case asks if a company can write contracts that let it make paid services worse after people have already handed over a year of money. The Australian case represents a different legal approach, focusing on contractual unfairness and consumer protection rather than the specific pricing structure of the ad-supported tier.
