Amazon is pushing back against a lawsuit accusing it of misleading Prime subscribers by charging them an additional fee to stream movies and TV shows without ads.
In a bid to dismiss the proposed class action, the company argues that it previously disclosed that the bundle of Prime benefits is subject to change. It says that it “never guaranteed that any particular” perk of the package would “remain available indefinitely.”
“Amazon never promised—to Prime members or anyone else—that Prime Video would be always, or entirely, ad-free,” the Friday filing states.
Prime is alleged by the Federal Trade Commission to be a vital component to Amazon’s retail dominance because it keeps users locked into the company’s marketplace by offering them perks, including access to Prime Video. The streaming service doesn’t have to be a lucrative arm of its business; it just needs to be a part of a profitable ecosystem of services.
Last year, Amazon pivoted to making its ad tier the default for its over 100 million subscribers, which instantly turned the service into a streaming-ad juggernaut and the largest ad-supported subscription streamer. Users must pay an additional $2.99 per month to watch without ads.
The move sparked a lawsuit from users who had signed up for annual subscriptions. They claimed breach of contract and violations of state consumer protection laws over the alleged “bait and switch.”
In a motion to dismiss the case, Amazon points to its terms, which state that it “may choose in its sole discretion to add or remove Prime membership benefits.” It cites an order in another case from a federal judge, who in July tossed a similar class action accusing the e-commerce giant of misleading consumers about the benefits of Prime by making them pay an allegedly hidden $9.95 delivery fee for some purchases from Whole Foods. Those subscribers claimed to have relied on advertisements for “free” and “rapid” delivery.
Even if it touted Prime Video as ad-free, the company is “free to change or eliminate that feature, at its discretion, at any time,” it says. “To hold otherwise would deprive Amazon of the benefit of its bargain.”
The lawsuit also pointed to language in the Amazon Prime Video terms that “any increase in subscription fees will not apply” until the plan is renewed. In response, the company says that the provision only applies to subscribers of Prime Video as a standalone service, which is separate from Prime.
The proposed class action seeks at least $5 million and a court order barring the Amazon MGM Studios owner from engaging in further deceptive conduct on behalf of users who subscribed to Prime prior to Dec. 28, 2023. It brings claims for breach of contract, false advertising and unfair competition, among other alleged violations of consumer protection laws in California and Washington.
Amazon Prime has drawn scrutiny from lawmakers. Last year, the FTC sued the tech giant for allegedly duping consumers into signing up for its Prime service and then impeding them from canceling their subscriptions. The suit argued Amazon employs a “manipulative” and “coercive” interface to trick users into enrolling in automatically renewing subscriptions. It also alleged that many subscribers intended to sign up solely for Prime Video, which is a lower-cost option.
Additionally, Amazon was sued in 2020 for unfair competition and false advertising over the company reserving the right to end consumers’ access to content purchased through Prime Video. A federal judge in 2022 dismissed the proposed class action, siding with Amazon on arguments that its terms of use tell users that movies and TV shows they purchased may become unavailable due to provider licensing restrictions.