The ACCC included Unfair Contract Terms as an enforcement priority for 2025/26. However, this is the first time the ACCC has commenced court proceedings since the amendments took effect in November 2023.

The relevant Prime subscription model

Amazon offers its ‘Prime’ subscription program, which includes the streaming service ‘Prime Video’. Subscribers to Prime could enter into an annual or monthly subscription for $79 per year or $9.99 per month (during the relevant period). The ACCC’s allegations only relate to the annual subscription. Subscribers agreed to Amazon’s Subscription Terms, which included terms that allowed Amazon to vary: 

• the Amazon Services at any time, with advance notice where a change is materially adverse to the subscriber; or
   
• the Subscription Terms, without affecting the subscriber's right to cancel membership auto-renewal and with advance notice where a change is materially adverse to the subscriber.

(the Variation Terms). 

The ACCC is concerned with conduct between 1 November 2023 and 18 August 2025. As at 2 July 2024 (the date that Amazon sought to rely on the Variation Terms), more than 850,000 annual Prime subscribers had paid an annual subscription fee. At least 600,000 subscribers had subscribed or renewed after 9 November 2023. 

The ACCC’s claim

The ACCC alleges that the Variation Terms included in Amazon’s Subscription Terms are unfair contract terms, as they permit Amazon to make changes to its services or Subscription Terms without any contractual entitlement for subscribers to receive refunds or other meaningful redress. The ACCC alleges that the Variation Terms contravene the ACL. 

The ACCC further alleges that Amazon contravened the ACL when it relied on the Variation Terms to introduce:

• advertisements into its Prime Video service (when the Prime Video service was largely free from advertisements previously); and 
   
• an add-on for a monthly fee of $2.99 that allowed subscribers to access Prime Video without ads from 2 July 2024. 

The ACCC contends that these were significant changes to Amazon’s Prime Video service without offering a pro-rata refund or meaningful redress to subscribers. 

As at the date of publication of this update, Amazon hasn’t filed a defence, so we don’t know how it intends to respond to the ACCC’s claims.   

Unfair contract terms carry real financial consequences

Each instance of an unfair contract term in a consumer contract is considered a separate contravention, and the ACCC is alleging: 

• each time Amazon proposed its Subscription Terms which contained the Variation Terms is a separate contravention; and
   
• each occasion Amazon relied on or purported to rely on the Variation Terms with subscribers who subscribed or renewed their subscription from 9 November 2023 is a separate contravention.

Advance notice and a termination right may not be enough

The Variation Terms that the ACCC alleges are unfair contract terms include a unilateral right for Amazon to amend the terms and services. While Amazon is required under the terms to provide prior notice of a materially adverse change (as reasonably determined by Amazon), the ACCC alleges that this requirement is not sufficient to address the imbalance, as the terms did not provide the subscriber with an entitlement to a pro-rata refund or other meaningful redress. 

ACCC Chair Gina Cass-Gottlieb shared that:

“[c]ontraventions 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.”

Businesses that use standard form consumer or small business contracts should closely review their terms for clauses that allow for unilateral variation. The ACCC’s concise statement suggests that businesses should consider including an entitlement to a pro-rata refund or other meaningful redress if a consumer or small business terminates due to such a variation.

Amazon’s legitimate interests

The ACCC’s concise statement argues that the Variation Terms were not reasonably necessary to protect Amazon’s legitimate interests. Amazon altered some of the Variation Terms in March 2025. The ACCC refers to the March 2025 amendment to support its argument that the relevant terms were not reasonably necessary to protect a legitimate interest.

There have been few examples of a respondent successfully arguing that an unfair contract term is reasonably necessary to protect its legitimate interests. Prior to the November 2023 amendments to the Australian Consumer Law, unfair contract terms were merely void. Now that the stakes are higher, we expect Amazon may well contest the ACCC’s allegations. Hopefully, these proceedings will provide useful insights into the circumstances in which a business can rely on an unfair contract term being reasonably necessary to protect its legitimate interests.