Updated June 30, 2026 — 10:51am,first published June 30, 2026 — 9:24amThe 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 is being sued by the ACCC.AmazonAmazon, 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.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 warned businesses that they were responsible for ensuring contracts with consumers were fair and flagged harsh penalties for contraventions.“We strongly encourage all businesses, particularly those offering subscriptions, to review their contracts to ensure they comply with the Australian consumer law,” she said.An Amazon Australia spokesperson said it had cooperated with the ACCC during its investigation.“We are reviewing the case filed by the ACCC in detail,” the spokesperson said in a statement.The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.Jessica Yun is a business reporter covering retail and food for The Sydney Morning Herald and The Age.Connect via X or email.From our partners