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Australia’s competition watchdog has launched legal action against Amazon.com Inc. (NASDAQ: AMZN), alleging the company violated Australian consumer law by using unfair contract terms to introduce advertising on its Prime Video streaming service and charging customers extra to remove those ads.
The Australian Competition and Consumer Commission (ACCC) announced on Tuesday that it had filed proceedings in the Federal Court, claiming Amazon included unfair clauses in its Prime subscription agreements and later relied on those terms to change the service customers originally signed up for.
According to the ACCC, Amazon used five allegedly unfair contract terms in Prime subscription agreements between November 2023 and August 2025. The regulator argues that these provisions allowed the company to modify the service by introducing advertisements to Prime Video in July 2024 without giving subscribers a meaningful choice.
The watchdog said customers who wanted to continue watching content without advertisements were required to pay an additional A$2.99 per month, despite already paying an annual Prime membership fee of A$79. The ACCC claims this left consumers with little option but to accept a lower-quality service or pay more for the ad-free experience they had initially purchased.
ACCC Chair Gina Cass-Gottlieb said consumers were unfairly disadvantaged because they were effectively forced to spend more to maintain the streaming experience they expected when subscribing to Amazon Prime.
As part of the lawsuit, the ACCC is seeking court declarations, financial penalties, consumer compensation, legal costs, and other orders against Amazon. However, the regulator has not yet detailed the specific form of consumer restitution it will pursue if the court rules in its favor.
In response, an Amazon Australia spokesperson said the company is reviewing the legal proceedings and noted that it has cooperated with the ACCC throughout the investigation. The case adds to growing regulatory scrutiny of digital subscription services and streaming platforms, with consumer protection authorities increasingly examining whether contract terms and pricing changes comply with fair trading laws.
