Australia's competition regulator yesterday filed Federal Court proceedings against Amazon, alleging the company included five unfair contract terms in its Prime subscription agreements and then used those terms to introduce advertising into Prime Video without offering subscribers any meaningful remedy.

The Australian Competition and Consumer Commission filed the case in the Victoria District Registry against Amazon Commercial Services Pty Ltd (Amazon AU) and Amazon.com Services LLC (Amazon US). The concise statement, dated 29 June 2026 and prepared by counsel Andrew McClelland KC and Sarah Zeleznikow, sets out the ACCC's claim under the Australian Consumer Law (ACL).

What the case involves

According to the ACCC, the proceeding concerns standard form consumer contracts between Amazon AU and more than one million annual Prime subscribers during the period from 1 November 2023 to 18 August 2025. During that window, the contracts contained five terms that, the ACCC alleges, allowed Amazon AU to make materially adverse changes to its services - and to the terms governing those services - without giving subscribers any contractual entitlement to a pro rata refund or other meaningful redress.

The relevant period is significant not only in scope but in timing. Australia introduced enhanced penalties for unfair contract terms in November 2023. This case is, according to the ACCC, one of the first contested matters to fall under that new penalty regime - applying only to contracts made or renewed from 9 November 2023. That makes the action a test of the strengthened enforcement framework, not just a dispute about streaming fees.

During the period, an annual Prime subscription cost $79 per year. A monthly subscription cost $9.99 per month. The alleged contraventions concern only annual contracts.

The five terms under challenge

According to the concise statement, the contracts in force at the start of the relevant period were built on three documents: Conditions of Use dated 20 October 2023, Prime Video Terms of Use dated 31 October 2023, and Prime Terms and Conditions dated 23 October 2023 (later revised on 31 March 2025).

The ACCC groups the challenged terms into two categories. The first, variation of services terms, gave Amazon AU the right to change what subscribers received. Clause 15 of the Conditions of Use stated: "We reserve the right to cease providing any Amazon Service, or any part thereof, to discontinue any Amazon Service and to make changes to any Amazon Services, including adding or removing content from Amazon Services at any time." Clause 6(d) of the Video Terms and clause 4 of the Prime Terms carried equivalent provisions for the streaming and membership services respectively.

The second category, variation of agreement terms, allowed Amazon AU to alter the contracts themselves. Clause 16 of the Conditions of Use reserved the right "to make changes to any Conditions of Use and Service Terms at any time by posting the changes on Amazon.com.au." Clause 6(e) of the Video Terms mirrored this for the Prime Video agreement.

Each term required Amazon AU to give advance notice of materially adverse changes. The ACCC argues that this notice requirement did not remedy the underlying imbalance. Subscribers could cancel, but had no contractual right to a refund for the unused portion of their prepaid annual subscription.

The advertising rollout

According to the concise statement, on 22 September 2023 Amazon AU announced it would introduce advertisements into Prime Video movies and television shows in Australia in 2024. On 21 May 2024, subscribers received notification - attributed in the filing to Amazon US, alternatively Amazon AU - that the change would take effect from 2 July 2024. To continue accessing advertisement-free content, subscribers would need to pay an additional $2.99 per month, described as the Ad-Free Option.

On 2 July 2024, Amazon AU implemented the change. Prior to that date, almost all Prime Video content had been delivered advertisement-free. As at 2 July 2024, over 850,000 Prime subscribers had paid annual fees for their subscriptions. Of those, over 600,000 had subscribed or renewed since 9 November 2023 - the date from which the new penalty regime applies.

Those subscribers were given a degraded, ad-supported service for the rest of their prepaid term. If they wanted to avoid advertisements, they faced an additional monthly charge. If they cancelled, they had no contractual entitlement to recover the unused portion of their $79 annual fee.

The ACCC alleges Amazon AU relied, or purported to rely, on one or more of the variation of services terms when implementing this change - a contravention of section 23(2C) of the ACL. The introduction of Prime Video ads in Australia followed a global rollout that began in the United States in January 2024 and expanded to multiple markets throughout that year.

Why the terms are alleged to be unfair

Under section 24 of the ACL, a term in a standard form consumer contract is unfair if it causes a significant imbalance in the parties' rights and obligations, is not reasonably necessary to protect the legitimate interests of the party who benefits from it, and would cause detriment if relied upon.

According to the concise statement, the relevant terms meet all three criteria. They granted Amazon AU unilateral power to make materially adverse changes without any meaningful constraint. Annual subscribers, having made a substantial prepayment, had no equivalent right to vary, refuse, or recover funds. The ACCC contends that notice of changes - without the right to a refund - does not address that imbalance.

The ACCC also points to what happened after the events in dispute as evidence the terms were unnecessary. According to the filing, Amazon AU subsequently amended clause 4 of the Revised Prime Terms and clauses 6(d) and 6(e) of the Video Terms to introduce a right to a pro rata refund where annual subscribers cancelled in response to materially adverse changes. The ACCC argues this amendment demonstrates the terms were never required to protect Amazon AU's legitimate interests; the company was able to run its business under revised terms that offered subscribers a remedy.

Accessorial liability for Amazon US

The proceeding names Amazon.com Services LLC as a second respondent, alleging it was directly or indirectly knowingly concerned in Amazon AU's contraventions. According to the concise statement, Amazon US was involved in drafting the relevant terms. It was also responsible for deciding to introduce advertising into Prime Video globally - including in Australia - and assisted in planning, announcing, and implementing that decision in the Australian market.

As a result, the ACCC alleges Amazon US is also liable to pay a pecuniary penalty under section 224(1)(e) of the ACL.

Both Amazon AU and Amazon US are owned by the US entity Amazon.com, Inc. Amazon launched Prime subscriptions in Australia in June 2018.

Scale and the harm alleged

According to the ACCC, more than one million annual Prime subscribers were exposed to the risk that Amazon AU would rely on the relevant terms to unilaterally degrade their services. Because of the terms' breadth, the ACCC contends, Amazon AU could do so without meaningful constraint and in a way that significantly altered the services or the contractual framework itself.

In relation to the specific advertising rollout, the ACCC's harm case rests on the 850,000-plus annual subscribers who had paid upfront as at 2 July 2024. Those subscribers received a materially degraded service for the balance of their subscription. They were, in the ACCC's framing, deprived of the service they paid for at the time of contracting - without any contractual entitlement to redress.

What the ACCC is seeking

The ACCC is seeking declarations that the terms were unfair and that Amazon AU contravened the ACL, along with financial penalties, consumer redress, costs, and other orders. The regulator has not specified a penalty figure. Contraventions of the ACL's unfair contract terms provisions since November 2023 carry significant civil penalties.

ACCC Chair Gina Cass-Gottlieb stated that "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 also noted that "contraventions of unfair contract term protections are subject to significant penalties" and said the ACCC would encourage all businesses offering subscriptions to review their contracts for ACL compliance.

The ACCC investigated Amazon AU's contracts after receiving consumer reports about the introduction of advertisements in 2024.

Broader context for the digital advertising market

The case arrives at a moment when the ACCC has set unfair contract terms - particularly in subscription services - as a compliance and enforcement priority for 2026-27. The regulator has in recent months pursued a range of enforcement actions against digital businesses, from subscription traps by JustAnswer to product safety cases against Amazon's fulfilment operations.

For advertisers and media buyers operating in the Australian market, the case raises a structural question about how streaming platforms can change their inventory and pricing models midway through subscriber contracts. Amazon's Prime Video advertising business has expanded substantially since the January 2024 launch. Prime Video's global ad-supported audience reached 315 million viewers by Q4 2025, and the ad-free option in Australia was later repriced when Amazon introduced the Prime Video Ultra tier at $4.99 per month in early 2026 - a 67% increase from the original $2.99 rate that sits at the centre of this litigation.

The ACCC's earlier five-year Digital Platform Services Inquiry, which concluded in March 2025 with 35 recommendations, had already identified lack of transparency and the ability of platforms to degrade service quality as a key consumer risk. That inquiry also found that 72% of Australian consumers surveyed had encountered potentially unfair marketplace practices in a 12-month window. The Amazon proceedings can be read as a concrete enforcement step following years of inquiry-level concern.

For businesses running subscription models that bundle multiple services - and that may need to change those services over time - the case is a direct signal that standard form contracts cannot give one party unlimited unilateral variation rights without a corresponding mechanism for consumer redress.

Timeline

  • June 2018 - Amazon launches Prime subscriptions in Australia
  • 20 October 2023 - Amazon AU publishes Conditions of Use, including clauses 15 and 16
  • 23 October 2023 - Prime Terms and Conditions published, including clause 4
  • 31 October 2023 - Prime Video Terms of Use (AU) published, including clauses 6(d) and 6(e)
  • 1 November 2023 - Start of the relevant period as defined in the ACCC filing
  • 9 November 2023 - Date from which the new ACL penalty regime for unfair contract terms applies; ACCC alleges Amazon AU's contraventions of s 23(2A) begin on this date
  • 22 September 2023 - Amazon AU announces it will introduce advertisements to Prime Video in Australia in 2024
  • 21 May 2024 - Amazon US (or Amazon AU) notifies annual Prime subscribers that advertisements will start from 2 July 2024 and that ad-free access will cost $2.99 per month extra
  • 2 July 2024 - Amazon AU introduces advertisements to Prime Video in Australia; over 850,000 annual subscribers affected; over 600,000 had subscribed or renewed since 9 November 2023
  • 31 March 2025 - Amazon AU publishes Revised Prime Terms, which introduce a right to a pro rata refund for materially adverse changes - terms not present in the original contracts
  • 18 August 2025 - End of the relevant period as defined in the ACCC filing
  • 29 June 2026 - ACCC files concise statement in the Federal Court of Australia, Victoria District Registry; case is dated and certified 29 June 2026
  • 30 June 2026 - ACCC publishes media release confirming the proceedings

Summary

Who: The Australian Competition and Consumer Commission (ACCC) as applicant; Amazon Commercial Services Pty Ltd (Amazon AU) and Amazon.com Services LLC (Amazon US) as respondents.

What: Federal Court proceedings alleging Amazon AU included five unfair contract terms in its standard form annual Prime contracts - terms that allowed Amazon to change services or contract conditions unilaterally, without providing subscribers any contractual entitlement to a refund or redress. The ACCC also alleges Amazon AU relied on those terms to introduce advertisements to Prime Video from 2 July 2024 and charge $2.99 per month extra for ad-free access. Amazon US is alleged to have been knowingly involved in the contraventions. The ACCC is seeking declarations, penalties, consumer redress, and other orders.

When: The alleged contraventions span 1 November 2023 to 18 August 2025. The core advertising change took effect on 2 July 2024. The concise statement was filed and certified on 29 June 2026.

Where: Federal Court of Australia, Victoria District Registry. The conduct at issue concerned Amazon Prime subscriptions sold in Australia.

Why: The ACCC contends that standard form contracts cannot give one party unlimited power to degrade services paid for in advance, without providing consumers a meaningful remedy. The case is one of the first contested actions under Australia's enhanced unfair contract terms penalty regime, which took effect in November 2023, and falls within the ACCC's stated 2026-27 enforcement priorities targeting subscription traps and harmful cancellation terms.