A digital test of Australia's unfair contract terms regime
21 July 2026
Clickwrap agreements are an easy hiding place for potentially unfair contracts and Amazon’s clickwrap terms have bumped up against Australia’s unfair contracts regime.
The Australian Competition and Consumer Commission (ACCC) has commenced Federal Court proceedings against $US2.6 trillion e-commerce giant, Amazon, alleging its terms are unfair.
The ACCC alleges that Amazon relied on unfair contract terms to fundamentally alter the nature of its Prime Video (Prime) streaming service.[1] Central to the dispute is Amazon's 2024 decision to introduce advertisements to its streaming service - a service that until then had been entirely ad-free.
The ACCC’s concerns
The ACCC alleges that Amazon has included unfair terms in its standard form consumer contracts.
The ACCC say these terms allow Amazon to unilaterally make adverse changes to its services during the subscription period without offering consumers any meaningful remedy, such as pro rata refunds or the ability to terminate the contract without disadvantage.[2]
The ACCC claims Amazon relied on these terms when introducing advertisements to its Amazon Prime subscription service. Existing annual Prime subscribers who wished to continue accessing and viewing content without advertisements were required to pay an additional $2.99 per month, despite having already paid an annual membership fee of $79 upon subscribing to the service.[3]
When Amazon implemented the change 850,000 consumers, who previously purchased an annual subscription on the basis it was an ad-free streaming experience, were effectively presented with two options: accept advertisements for the remainder of their prepaid subscription or pay an additional monthly fee to retain the level of service they initially purchased.
ACCC Chair Gina Cass-Gottlieb has stated that consumers were ’left with no choice but to pay more to maintain the service they'd initially signed up for’, illustrating what the regulator considers to be a significant imbalance in the contractual relationship between Amazon and its subscribers.[4]
Below are two of Amazon’s ‘Variation of Agreement’ terms the ACCC considers unfair:
Conditions of Use (20 October 2023) clause 16 – ’We reserve the right to make changes to any Conditions of Use and Service Terms at any time by posting the changes on Amazon.com.au, or such other website or application that is used to provide the Amazon Services. Where we make a materially adverse change to these Conditions of Use or any applicable Service Terms, as reasonably determined by us, Amazon will provide advance notice to you.’
Prime Video Terms of Use (AU) (31 October 2023) clause 6(e) – ‘Amazon reserves the right to amend any part of this Agreement in accordance with clause 16 of the Amazon Conditions of Use. Where we make a materially adverse change, as reasonably determined by us, we will provide you with written notice via email, or if no email is available, via reasonably substitutable means.’[5]
The inclusion of these unfair terms in Amazon’s contracts in and of itself reflects a contravention of s 23(2A) of the Australian Consumer Law (ACL). However, the reliance on these terms to impose an additional fee for ad-free services represents a secondary contravention of s 23(2C) of the ACL. This outlines an important delineation between having unfair terms and actually relying on them.
What are unfair terms?
The proceedings are based on the unfair contract terms (UCT) regime in Part 2-3 of the ACL.
The UCT protections apply to standard form consumer contracts (contracts for the supply of goods or services) and will deem a contract term unfair if:
- it would cause a significant imbalance in the parties’ rights and obligations arising under the contract
- it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term, and
- it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.[6]
Unfair terms are void and illegal. The penalty imposed for unfair contract terms can be up to a maximum of:
- $50 million
- three times the value of the benefit obtained from the illegal conduct, or
- 30% of adjusted turnover during the contract period,
whichever is the highest.
Key learnings
Whist there has been no decision on this matter as yet, the implication are clear - almost all digital platforms use click wrap agreements where the user has little if any option but to accept the terms to obtain the service. This makes the obligation on the provider to ensure their contracts are fair. Unilateral rights may be a ’nice to have’ to enable changes down the road. However they are almost certainly unfair and will fall foul of the UCT regime.
The action against Amazon also reinforces the ACCC's Compliance and Enforcement Priorities for 2026–27. Among other things, the ACCC has prioritised regulation of digital and data-enabled markets, recognising the emergence of practices such as ’subscription traps and other dark patterns that manipulate consumer behaviour and unfairly impact consumer choice’.[7]
[1] Australian Financial Review, 30 June 2026, ACCC alleges unfair Amazon Prime Video contract terms regarding ad-free subscriptions.
[2] Federal Court of Australia, 29 June 2026, Concise Statement.
[3] Australian Broadcasting Corporation, 30 June 2026, ACCC sues Amazon over alleged unfair conduct for introducing Prime streaming service ads - ABC News.
[4] Australian Broadcasting Corporation (n 4).
[5] Federal Court of Australia (n 3).
[6] Competition and Consumer Act 2010 (Cth), Schedule 2 – Australian Consumer Law ss 23-24, 30 June 2026, Competition and Consumer Act 2010 - Federal Register of Legislation.
[7] Australian Competition and Consumer Commission, 19 February 2026, ACCC's compliance and enforcement priorities update 2026-27 address | ACCC.
