Class-Action Suit Against Amazon For Putting Ads On Prime Video Dismissed By Federal Judge

A federal judge in Washington state has dismissed a class-action lawsuit against Amazon for putting ads on Prime Video.

In a ruling issued Wednesday (read it HERE), U.S. District Judge Barbara J. Rothstein rejected the claim that Amazon’s decision to start running ads in 2024 effectively represented a price increase for Prime members. Only by paying an additional $2.99 per month (on top of the annual $139 fee for Prime) could members opt out of advertising on film and TV titles, which the plaintiffs said forced them to pay more in order to continue the same video experience.

The addition of ads “constituted a change in subscription benefits as opposed to a price increase,” Rothstein countered. All subscribers agree to a contract when they join Prime, she said, giving Amazon the ability to alter the nature of the services provided under the contract.

“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,’” she added. “The Court, however, is compelled to maintain the distinction between a benefit removal and a price increase for several reasons. First, this distinction is repeatedly reinforced in the contracts themselves. Benefit modifications and removals are expressly authorized throughout both contracts; price increases are circumscribed and allowed only according to certain conditions. The expressly distinct treatment of these things makes little sense if one could turn a benefit removal into a price increase by simply recharacterizing it as such.”

Furthermore, the addition of ads did not result in “any out-of-pocket price increase whatsoever,” the judge added. “The subscription fee for subscribers who took no action did not change at all. The only subscribers who experienced any increase in price were those who voluntarily chose to incur one by affirmatively opting in to the $2.99-a-month charge to avoid ads.”

The case is one of several to arise of late as streaming continues to gain prominence as a media delivery vehicle. Earlier this week, Los Angeles County announced it had reached a settlement with Peacock, with the NBCUniversal streaming service agreeing to pay $3.6 million to resolve complaints from customers about its auto-renewal policy. In a similar vein, the Federal Trade Commission has been pursuing “click to cancel” regulations that would require digital and streaming outlets to simplify the process of discontinuing subscriptions.

Amazon’s strategy for advertising on Prime Video differs markedly from that of Netflix, which phased in a lower-priced subscription tier with ads while maintaining ad-free plans. Netflix Co-CEO Greg Peters said in 2024 that the streaming giant had considered making advertising the default option. “But given our long history of not having ads, we thought it was better for members, rather than forcing them into a change and get them mad.”