Updated ,first published
The consumer watchdog is taking Amazon to court for burying allegedly unfair terms in the contracts of Prime subscriptions, which the e-commerce behemoth used to introduce advertisements to Prime Video’s Australian customers.
The Australian Competition and Consumer Commission (ACCC) launched legal action against the Seattle-headquartered company’s Australian business on Monday, claiming that more than 1 million subscribers had signed up to contracts containing five terms that Amazon used to make unilateral changes between November 2023 and August 2025.
Amazon, which entered the Australian market in 2017, launched Prime subscriptions to local customers in June 2018. It introduced ads to Prime Video on July 2024, and told customers – who had already paid the annual subscription fee of $79 upfront – they had to pay an extra $2.99 a month to keep it ad-free.
“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,” ACCC chair Gina Cass-Gottlieb said.
Amazon introduced the ads globally in mid-2024. In Europe and the UK, however, it offered customers prorated refunds to anyone who wished to cancel, but this was not offered to Australian customers, she added.
“Amazon did not think that our consumer law had that requirement,” Cass-Gottlieb told this masthead. “We consider it does.”
After the ACCC began its investigation in March 2025, Amazon revised its contract terms to say that they “may” provide a prorated refund, then amended the terms again in August 2025 to guarantee the refund. The company implemented a brief scheme to refund subscribers who had cancelled their membership, but this scheme wasn’t based on a contractual requirement and wasn’t widely publicised, Cass-Gottlieb said.
“Not all consumers would have been covered, not all were aware of a refund,” she said. “By that time in August 2025, it was a year after the action was taken in July 2024.”
Global companies should not assume that in-principle prohibitions in Australian consumer law mean they can get away with giving local customers fewer protections than customers in other jurisdictions, she continued.
Under Australian consumer law, contract terms are considered unfair if they cause a major imbalance in the rights and obligations of parties to the contract, aren’t necessary to protect the interests of the party that gets an advantage, or would cause financial or other kinds of harm to a party if enforced. This case is one of the first to test the introduction of harsher penalties for unfair contract terms, and is a key priority for the ACCC in the 2026 financial year.
Amazon’s contract terms were so broad that the online giant could “unilaterally degrade” its services “without any meaningful constraint”, the ACCC alleges, and Prime subscribers had no path to redress.
“Those subscribers were provided with a degraded, ad-supported Prime Video service for the balance of their prepaid term unless they paid for the ad-free option,” the ACCC said in legal documents.
“As a result, they were deprived of the service offered and paid for at the time of contracting, without any contractual entitlement to a pro rata refund or other meaningful redress.”
The regulator is also claiming that US parent company, Amazon.com Services, knew about the conduct, was involved in drafting the Australian contract terms and oversaw rolling out Amazon Prime in Australia.
Cass-Gottlieb said the ACCC was taking aim at large national and international companies because of their sizeable customer base and to focus on areas of greatest harm done to Australian consumers.
“We want to make sure global companies see that Australia sets a high standard of behaviour and compliance to protect our consumers,” she said.
An Amazon Australia spokesperson said it had co-operated with the ACCC during its investigation.
“We are reviewing the case filed by the ACCC in detail,” the spokesperson said in a statement.
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Jessica Yun is a business reporter covering retail and food for The Sydney Morning Herald and The Age.Connect via X or email.
