Amazon wants to dismiss class action lawsuit over Prime Video Ads

Amazon seeks dismissal of class action lawsuit over Prime Video advertising tier

Amazon is currently trying to dismiss a class-action lawsuit that claims the company misled Prime subscribers by imposing an additional fee for ad-free streaming of movies and TV shows. The tech giant argues that its terms of service allow it to “add or remove Prime membership benefits” at its discretion. This legal action comes in response to claims that recent changes to the Prime Video service involve deceptive practices.

Amazon’s defense against the lawsuit

In its motion to dismiss, Amazon emphasizes that it has always informed customers that Prime benefits could change over time. The company claims: “Amazon has not promised Prime members or anyone else that Prime Video will always or be completely ad-free.” This statement reinforces Amazon’s position that the company does not blind its customers to the availability of ad-free streaming options misled.

The Federal Trade Commission (FTC) views Amazon Prime as a key part of the company’s dominance in the retail market. By providing various benefits, including access to Prime Video, Amazon effectively binds users to its marketplace. The FTC has found that while the streaming service is not a highly profitable segment on its own, it plays a critical role in contributing to Amazon’s overall lucrative ecosystem.

Transition to ad-supported streaming

Last year, Amazon made its advertising tier the default option for its over 100 million Prime subscribers, turning the service into a major player in the streaming advertising market. Therefore, users have to pay an additional fee of $2.99 ​​per month for an ad-free viewing experience. That decision led to a class action lawsuit from annual subscribers who claim that the implementation of the fee breaches their contract and violates state consumer protection laws.

Amazon points to a federal judge’s ruling in a similar case in July that dismissed a class action lawsuit over misleading Prime benefits claims related to a hidden delivery fee for certain Whole Foods purchases. The judge found that the plaintiffs had relied on advertising that touted “free” and “fast” delivery. Amazon argues that even if Prime Video is marketed as ad-free, it reserves the right to change or remove this feature at any time without violating the contract.

Legal and consumer protection implications

The proposed class action seeks at least $5 million to prevent Amazon MGM Studios from continuing deceptive practices toward users who subscribed to Prime before December 28, 2023. The lawsuit includes, among other things, claims for breach of contract, false advertising and unfair competition, alleging violations of consumer protection laws in California and Washington.

Amazon has faced increased scrutiny from lawmakers in recent years. In 2023, the FTC filed a lawsuit against the company, accusing it of luring consumers into subscribing to Prime while making it difficult to cancel their subscriptions. The FTC alleged that Amazon used a “manipulative” interface that tricked users into signing up for auto-renewing subscriptions, particularly those who wanted to subscribe exclusively to the cheaper Prime Video.

Additionally, in 2020, Amazon was sued for unfair competition and false advertising related to its policy of reserving the right to block access to content purchased through Prime Video. A federal judge dismissed this proposed class action in Amazon’s favor in 2022, arguing that its terms of service clearly inform users that purchased films and television shows may no longer be available due to licensing restrictions.

Diploma

As Amazon seeks to dismiss the class action lawsuit over Prime Video’s advertising levels, the outcome could have a significant impact on its Prime membership and overall business practices. Given ongoing scrutiny from regulators and consumers, Amazon’s ability to overcome these legal challenges will be critical as the company looks to further develop its streaming services and maintain its competitive edge in the market.