Amazon will not have to face a lawsuit accusing it of misleading Prime subscribers by charging an additional fee to stream movies and TV shows without ads.
U.S. District Judge Barbara Rothstein on Wednesday dismissed the lawsuit, finding that the addition of commercials don’t constitute a price increase but rather a modification to the subscription package. Amazon disclosed in its terms that the bundle of Prime benefits is subject to change, the court said.
Amazon last year pivoted to making its ad tier the default for its over 100 million subscribers, turning the service into a streaming-ad juggernaut. Users were required to pay an additional $2.99 per month to watch without ads, which they argued constituted a mid-subscription price increase.
The move sparked a proposed class action from consumers who had signed up for annual subscriptions. They claimed breach of contract and violations of consumer protection laws over the alleged “bait and switch.”
The ruling was grounded in the notion that subscribers purchased access to Prime Video rather than an ad-free version of the service. The introduction of commercials didn’t result in any out-of-pocket price increase to subscribers who didn’t pay the additional fee to watch without ads, the court said.
Rothstein pointed to Amazon’s terms, which state that the company “reserves the right to suspend or discontinue… any part of the service” and that there may occasionally be changes. These terms give Amazon broad authority to modify Prime benefits, including Prime Video, at its discretion and without notice, according to the order.
“The Court concludes that Amazon’s introduction of advertisements to Prime Video was not a price increase; it was a benefit modification, and such modification was specifically contemplated and authorized by the parties’ governing agreements,” Rothstein wrote.
Amazon didn’t immediately respond to a request for comment.
Policies and methods governing streaming subscriptions have been coming under increasing scrutiny. NBCUniversal on Wednesday agreed to pay $3.6 million to settle a lawsuit accusing it of failing to provide users an easy mechanism to cancel automatically renewing Peacock subscriptions. This came after a federal appeals court struck down the FTC’s “click to cancel” rule, which would’ve barred companies from making it more difficult to cancel a subscription than it is to sign up.
