Australia's consumer watchdog has taken Amazon to court, alleging the company unfairly introduced advertisements to Prime Video and forced annual Prime subscribers to pay extra to continue watching ad-free, despite having already paid upfront for the service.
The Australian Competition and Consumer Commission (ACCC) has filed proceedings in the Federal Court against Amazon Australia, alleging the company's Prime subscription contracts contained unfair terms that allowed it to make significant changes to the service without compensating customers. According to the regulator, more than one million annual Prime subscribers were affected between November 2023 and August 2025.
The case centres on Amazon's decision to roll out advertisements on Prime Video in 2024. The ACCC said customers who had already prepaid A$79 for an annual Prime membership were shifted to an ad-supported version of the streaming service. Subscribers who wished to continue watching without advertisements were required to pay an additional A$2.99 per month.
"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," ACCC Chair Gina 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", she added.
According to the regulator, more than 850,000 Australian subscribers had already prepaid for a year's Prime membership when the advertisements were introduced in July 2024. The ACCC argued these customers were effectively provided with a downgraded version of the service for the remainder of their prepaid subscription unless they agreed to pay the additional monthly fee.
"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 a filing.
The watchdog alleged Amazon relied on five unfair contract terms that permitted the company to unilaterally make materially adverse changes to Prime services, including Prime Video, without providing subscribers refunds or other meaningful compensation.
"Those contracts included five terms permitting [Amazon Australia] to unilaterally make materially adverse changes to its services (including, but not limited to, Prime Video) and the terms governing those services, without any contractual entitlement for subscribers to receive refunds or other meaningful redress," the ACCC said.
The regulator also alleged that Amazon.com Services LLC helped draft the Australian subscription contracts and knowingly participated in the conduct. It launched its investigation after receiving consumer complaints over the introduction of advertisements on Prime Video.
The ACCC is seeking court declarations, financial penalties, consumer redress, legal costs and other orders against Amazon.
Responding to the lawsuit, an Amazon Australia spokesperson said the company is "reviewing the case filed by the ACCC in detail" and had cooperated with the regulator throughout the investigation.
"We have cooperated with the ACCC throughout its investigation and remain focused on providing the best experience for our Australian customers", the spokesperson added.
Prime Video had been offered as an ad-free streaming service for more than a decade as part of Amazon's broader Prime membership, which also includes shopping benefits and faster deliveries. Prime launched in Australia in 2018, while Amazon began introducing advertisements on Prime Video across several global markets in early 2024.
The legal action adds to broader regulatory scrutiny of Amazon. In the United States, the Federal Trade Commission has previously sued the company over alleged deceptive Prime subscription practices, while UK authorities have also examined its online marketplace practices, including product listings and fake reviews.