Subscription contracts under scrutiny: ACCC commences proceedings against Amazon

The Australian Competition and Consumer Commission (ACCC) has reaffirmed its commitment to cracking down on unfair conduct, recently commencing Federal Court proceedings against Amazon Commercial Services Pty Ltd (Amazon AU) for allegedly breaching the Australian Consumer Law (ACL) by including unfair contract terms in its Amazon Prime subscriptions contracts, and later relying on those terms to introduce advertising to its streaming service, Amazon Prime Video.

Amazon AU offers a subscription service for members to subscribe to ‘Amazon Prime’ for access to Amazon Prime Video and other shopping and delivery benefits. Subscribers choose to pay either a monthly or annual subscription fee when entering the contract with Amazon AU.

Prior to July 2024, the Amazon Prime Video service was predominantly ad-free. In July 2024, Amazon AU introduced ads and offered members ad-free streaming for an additional $2.99 per month, despite annual subscribers having already paid their annual fee of $79 for the ad-free service for that year.

The ACCC alleges that the subscription contracts contained unfair contract terms, including allowing Amazon AU to make unilateral changes, which were relied upon by Amazon AU when making annual subscribers pay extra to maintain the ad-free subscription they had originally purchased, with no entitlement to a pro-rata reimbursement or other remedy. More than one million annual subscribers have been subject to Amazon AU’s conduct, and the ACCC is seeking penalties against Amazon AU as well as consumer redress, costs and other orders.

This matter provides a timely reminder that businesses are required to balance the rights and obligations of the parties in standard form contracts with consumers and, where a business relies on unfair contract terms, they may be subject to enforcement action from the ACCC and significant penalties may be imposed where a breach of the ACL is established.

What you need to do

Businesses should ensure that any standard form contracts made with consumers do not contain unfair contract terms. Page Seager can advise on compliance with the ACL, including review of standard form contracts.