The challenge falls under the new penalty regime for unfair contract terms
The ACCC has initiated proceedings against Amazon Commercial Services Pty Ltd (Amazon AU) in Federal Court over the inclusion of what the commission said were “unfair” contract terms in Prime subscriptions contracts.
The terms reportedly enabled Amazon to introduce ads into its Amazon Prime Video streaming service in July 2024; previously, the service was largely free of ads. Subscribers who sought to remove them were required to fork over an extra $2.99 per month although annual contracts already cost them $79.
According to the ACCC, this case is among the first contested matters it took that falls under the new penalty regime for unfair contract terms. The regime impacts contracts entered into or renewed as of 9 November 2023.
The commission commenced the investigation into Amazon AU contracts after consumers filed reports about the ads introduction. The Amazon Prime contracts in question were entered into over November 2023-August 2025.
The ACCC highlighted five terms that it said violated Australian Consumer Law (ACL) and permitted Amazon to unilaterally implement negative changes during the contract period without providing a remedy to consumers. The commission said the contracts were unfair per s 24(1) of the ACL; moreover, they contravened s 23(2A) and s 23(2C). The terms generated a major imbalance in parties’ rights and obligations, were not reasonably necessary to guard Amazon AU’s legitimate interests and could be detrimental to consumers.
When Amazon.com Services LLC (Amazon US) and alternatively Amazon AU informed consumers of the ads inclusion on 24 May 2024, the company indicated that there was an ad-free version and said subscribers need not take action.
As reported in the Australian Financial Review, the commission noted that Amazon customers in the UK and Europe received pro rata refunds, but Australian customers did not.
“Amazon Australia did not proceed on the basis that the Australian Consumer Law gives the same protections as they thought were applying in these other jurisdictions”, ACCC chair Gina Cass-Gottlieb said in a statement published by the AFR.
The commission claimed that Amazon US was behind the decision to include ads in Prime Video worldwide. The US division had also reportedly contributed to the drafting of the Australia contracts. Thus, Amazon US was directly or indirectly knowingly concerned in or party to Amazon AU’s breaches.
The commission is seeking declarations, penalties, consumer redress, costs and other orders from Amazon AU. The commission added that it was seeking for Amazon US to pay a pecuniary penalty under s 224(1)(e) of the ACL.
Cass-Gottlieb said in a statement published by the AFR that she sought a penalty that would “set a real specific deterrence for large global companies”.
“We will look for a penalty that is significant in the context of Amazon’s business in Australia, so it’s not simply a cost of doing business in Australia, it is a true deterrent”, she said.
An Amazon AU spokesman said in a statement published by the AFR that the company had cooperated with the ACCC’s investigation and that it was assessing the commission’s case.
“All businesses are required to balance rights and obligations in their standard form contracts with consumers to ensure they are fair. Contraventions of unfair contract term protections are subject to significant penalties. We strongly encourage all businesses, particularly those offering subscriptions, to review their contracts to ensure they comply with the Australian Consumer Law,” Cass-Gottlieb said.
The commission said one of its compliance and enforcement priorities for 2026-2027 is unfair contract terms in consumer and small business contracts. Examples of potentially unfair contract terms are listed in s 25 of the ACL.
Last month, the ACCC also filed Federal Court proceedings against Amazon AU over its sale of children's backpacks without the required button battery warning labels.
