Amazon Prime Video Ad Tier Class Action Lawsuit Dismissed
February 7, 2025
A lawsuit accusing Amazon of misleading Prime subscribers by charging them an additional fee to stream movies and TV shows without ads has been dismissed.
U.S. District Judge Barbara Rothstein on Friday found that the e-commerce giant previously disclosed that the bundle of Prime benefits is subject to change. She said that Amazon “never promised subscribers” that its service would remain ad-free.
“In contrast, both the Prime Terms and the Video Terms repeatedly reserve to Amazon the right to modify, add, or remove benefits associated with memberships,” Rothstein wrote.
Amazon last year 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 were required to pay an additional $2.99 per month to watch without ads.
The move sparked a proposed class action 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 Friday’s order, the court pointed to the company’s terms, which state that Amazon “may choose in its sole discretion to add or remove Prime membership benefits” and that it “reserves the right” to discontinue parts of the service “at any time and without notice.”
Lawyers for the subscribers stressed that Amazon’s move to make the ad-tier the default effectively constituted an increase in price outside the scope of the company’s terms. The court disagreed, finding that subscribers purchased access to Prime rather than an ad-free version of the service.
“It is true that Amazon’s introduction of commercials to its streaming service, for those Prime members who chose to pay more to keep their streaming ad-free, ultimately had an effect on those subscribers’ wallets tantamount to a ‘price increase,’” the order stated. “The Court, however, is compelled to maintain the distinction between a benefit removal and a price increase.”
That distinction, Rothstein found, is repeatedly reinforced in Amazon’s terms, which allow benefit modifications and removals. She stressed, “the introduction of commercials to Prime Video alone did not result in any out-of-pocket price increase whatsoever. The subscription fee for subscribers who took no action did not change at all.”
The only subscribers who experienced any price increase were those who voluntarily chose to incur one by opting in to the additional charge to avoid ads, the court said.
In the ruling, the court gave an opportunity for the subscribers’ lawyers to fix their claims in the lawsuit. It comes after another federal judge last year dismissed a proposed class action accusing Amazon 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 also claimed to have relied on advertisements for “free” delivery.
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