The consumer watchdog is suing Amazon’s streaming service Prime, alleging customers had no choice but to pay more if they wanted to avoid ads under allegedly unfair contract terms.

The Australian Competition and Consumer Commission revealed on Tuesday it had commenced Federal Court proceedings against Amazon AU, alleging it used unfair contract terms to make negative changes to Prime without offering customers a remedy.

The lawsuit alleges contracts with more than a million Prime subscribers contained five unfair contract terms, one or more of which it relied on to introduce ads in July 2024.

After July 2024, subscribers who wanted to stay ad-free had to pay an additional $2.99 a month, despite already having paid $79 for the year upfront.

”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.

It is alleged that Amazon US was involved in drafting the Australian contracts that contained the terms that the watchdog says are unfair, and decided to introduce advertising to Prime globally.

”All businesses are required to balance rights and obligations in their standard form contracts with consumers to ensure they are fair,” Cass-Gottlieb said.

The watchdog is seeking penalties for Amazon and consumer redress, among other remedies.

The ACCC investigated Amazon AU’s contracts after receiving consumer complaints about the introduction of ads to Prime.

-AAP