Amazon Sued over Prime Video Ads: Class-Action Suit Alleges Deception
variety.com
variety.com
“But last month, Amazon changed the deal. To stream movies and TV shows without ads, Amazon customers must now pay an additional $2.99 per month… This is not fair, because these subscribers already paid for the ad-free version; these subscribers should not have to pay an additional $2.99/month for something that they already paid for.”
I was also a Stadia subscriber, and while they probably legally didn't have to, they refunded every single penny I spent on games and hardware.
I didn't know that. I watched an old movie the other day (Whisper 2007). It looked like complete shit and found that strange.
So I'm not sure there's any case here at all? Since even with annual subscriptions, it seems you can cancel at any time and get a prorated refund.
The fact is, online subscription services change their benefits/features all the time. And companies seem to handle it two ways: grandfather existing customers for the rest of their subscription period, or offer prorated refunds for people who want to cancel. And while the former is definitely going to make customers happier, I think they're both acceptable from a legal standpoint? So I'm not sure this lawsuit has any chance of succeeding at all.
presumably they wouldn't like it if I unilaterally decided to say, pay them $7/month instead of $8.99/month halfway through the commitment
how is it acceptable the other way round?
if they don't want to provide the service that was committed to they should refund the entire purchase amount (not just pro-rata)
So in your example, there is no difference. It would work the same both ways.
(Gym memberships sometimes won't cancel in the middle, nor will cell phone contracts that subsidize your initial phone -- but in my experience most monthly subscriptions and utilities will just cancel you.)
Contracts are enforceable because society is much worse off if they aren’t. Imagine if your bank could arbitrarily cancel a car loan and ask for the outstanding balance back at any time simple because they felt like it.
Multiply that by everyone with an annual prime membership and your talking 1/2 billion dollars or so.
If that's 0.1% of 200 million subscribers who cancel, that's about $400K in supposed interest. Not half a billion. A rounding error for Amazon.
But interest just doesn't generally factor into small consumer "returns". If you buy shoes online and then return them 25 days later because they don't match the photos exactly, you don't get interest on that either. At these amounts, it's not worth worrying about.
Also when you return something you got the utility of the item and deprive the seller of the item for that time period. Larger up front payment for services not rendered is simply a net loss.
Of course it's relevant. If someone doesn't cancel, there's nothing being refunded, so there's no theoretical interest to be paid back. They accept that, going forwards, the deal is still worth it for them.
The refund-with-interest you brought up isn't about compensation for no longer having video without ads, it's about the remainder of your payment having been tied up during your previous usage. If you continue the subscription, that means you want to continue to keep the upfront payment in exchange for the lower annual rate. There's no interest on anything to be paid back. It wouldn't make any conceptual sense.
People doing nothing isn’t consent. ~0.1% of their customers die each month, you can’t argue the dead are accepting a new deal.
Further, if you’re unwilling to preform a full refund, they are asking if the service is worth $69.50 not the $71.59 or whatever they actually owe you. A slightly worse service for slightly less money isn’t a true test here.
> If you continue the subscription, that means you want to continue to keep the upfront payment in exchange for the lower annual rate.
Order and pay for a burger and fries from McDonalds and accepting a burger from them isn’t saying they don’t still owe you the fries.
There is no continuing a contract that’s already been broken. You can accept a new contract going forward but that’s a different question.
You were originally talking about getting a small amount of interest refunded on top of them already refunding your unused portion. And I simply pointed out that it's a negligible amount of money that doesn't really matter. Amazon is not stealing half a billion dollars from people like you claimed.
Now you seem to be talking about refunds or something, but I can't tell what. Obviously you don't get a refund for your past months of annual, because you used them already on free shipping and video-watching. And Amazon already will refund your future months if you don't like the change. That's fair. It's like when you try to order something online and then two days later they tell you it's out of stock and they aren't carrying it anymore in the future either and they refund you. A refund is acceptable compensation.
Contracts are binding, that’s the entire point. The interest bit is just one small part of that, but it’s illustrative of what gets done to compensate people for breaching a contract.
Getting out legally is no big deal. Provide services until the end of the contract and then cancel the automatic renewal until the new terms are agreed upon is the least contentious option. But obviously no company wants to do this as many dead accounts are still automatically renewing. Thus lawsuits just like this one which companies often though not always lose.
There's a big difference between a custom contract concerning billions of dollars involving teams of lawyers, and a annual consumer subscription a little over a hundred dollars.
Quite simply, you can't show any substantial damages here. Nobody got harmed because a subscription option ceased to be available (the way shareholders would have been harmed if Twitter hadn't sold).
Contract law doesn't treat all contracts equally importantly. Contracts aren't some ironclad unbreakable perfect guarantee. To go back to your example -- if you pay for a burger and fries, and then they discover they're out of fries, they don't have an obligation to deliver fries to your house tomorrow. They can just refund you.
In this particular case, it's just not a big deal. Contracts get broken all the time, and the correct legal remedy is very often simply to ensure payment for services previously rendered and a refund for any other payment. Especially if there's no provision in the contract for fines or penalties. Remember, the Twitter deal had penalties built in to the contract. Amazon's obviously doesn't.
A few dollars for one person can add up quickly in aggregate.
Again, they could have easily rolled this out as existing subscriptions expired. Further the existence of that option sets them up for meaningful penalties not simply reimbursement.
> Contracts get broken all the time, and the correct legal remedy is very often simply to ensure payment for services previously rendered and a refund for any other payment.
No. That’s often what one side offers as a low ball, but it is the legal system is who ultimately gets to decide on remedies when each side disagrees and it’s relatively rare for them to accept a partial refund of the remaining term.
Amazon could have offered a nominal refund say 1$ or say an extra week extension for free. Anyone accepting that wouldn’t have been able to sue. But the existence of a partial refund policy on its own isn’t a remedy.
This isn't some major contract between two companies where there's a pre-negotiated penalty for breaking it.
And with these kinds of small consumer transactions, nobody cares about interest.
> And with these kinds of small consumer transactions, nobody cares about interest.
Amazon defiantly cares about the ~half billion per year in interest they collect collectively on these subscriptions. It’s backed into the annual discount they are willing to give.
Balancing that benefit is the entire point of class action lawsuits. Where one person isn’t going to chase after 2$, a law firm is happy to chase after a slice of x00 million in damages. On the surface X people get some trivial payout, but society is vastly better off when companies can’t illegally nickel and dime people without any consequences.
Even if the lawsuit is successful, I suspect it will cost Amazon much less than what they are projecting to make.
Furthermore, Amazon has already written this argument with its actions: They didn't only introduce ads, they also introduced a higher-priced ad-free tier. By the Amazon's very action - which happens to be the context for this entire argument - the ability to watch without ads has a dollar value. That means the inability to watch without ads must have the inverse value, i.e. equivalent harm.
What's the point then? It appears only lawyers stand to gain from this, as usual.
As soon as fines and legal infractions are viewed merely as the 'cost of doing business', enforcing regulations becomes futile. At that point, might as well transition to a 'free for all' market rather than maintain a faux judicial system.
Not living in a world where bait and switch / illegal business practices are 10x as common is the benefit of class action lawsuits not the occasional random check for $1.37 or worse a coupon etc. Long term they could have rolled out adds as people resubscribe and there’s no lawsuit, and next time they may consider doing so.
"lawyers stand to gain from this"
Do you know why amount is always ridiculously low. Are these lawsuits primarly for the lawyers to make a buck, I dont see how anyone else would be motivated otherwise.
You, Big Business Co, do something that injures a bunch of people for a small amount. A lawyer files a lawsuit on behalf of a purported class - i.e. "Everyone Bezos Hurt vs. Amazon". There's a whole thing about class certification and other things I don't have time to get into, but let's say the judge agrees that this is a class whose harms can be adjudicated together.
At some point, if you actually have a claim, Amazon wants to pay money for it to go away. This is an accepted part of the legal system, because US courts are adversarial courts[0]. The judge is just the referee. That means that if the plaintiff and defendant agree to take their business elsewhere, the judge can't get involved and continue to prosecute a dead case[1].
First problem: lawyers don't work for free. In fact, pretty much all of them are in massive amounts of student debt until their 40s and 50s, because their ability to command insane amounts of money for their services is priced into the cost of their education. Normally, a lawyer either gets paid by their client, or the client agrees to the lawyer taking a percentage cut of the damage award if one were to exist. Problem is, there's no client yet - we're suing on behalf of an abstract group of people that may or may not want to be involved in the case.
Second problem: we don't know who's a member of the class, or even how many people are a member of it. Settlement agreements typically involve cash payments of a fixed amount. You have to divvy that fixed amount up to an unknown number of people.
So as a result every class action settlement works like this: first, the lawyer gets a cut of the settlement, then the class splits it up however many ways. People have to respond to a settlement offer in order to be included in the class. If more people sign up than we have money for, however, then the class members are diluted. Amazon's liability does not increase just because they harmed more people than they thought.
This is, effectively, a weird kind of double protection racket, in which the person shaking Amazon down for money is also taking money from Amazon to shake them down for less so the mob (us) doesn't get as much. All of it is enabled by fairly understandable and straightforward rules being chained together to arrive at a terrible result.
[0] The opposite of this is inquisitorial courts. Inquisitorial as in NOBODY EXPECTS THE SPANISH INQUISITION!
[1] There are certain situations in which a judge can object to a settlement that is unfair to the class, but they can't outright demand the case be brought to trial.
Perhaps the plaintiffs get only a dainty payout as a result of a settlement, but their lawyers will make some decent coin, and that provides the motivation to work to prove Amazon is breaking the law.
How much ad revenue does Amazon make per Prime customer on average. Is it more or less than $2.99/month. We might find out the answer to questions like these during discovery. IIRC, in past litigation we learned that Google makes about $5.50/month per user from ads.
What is the alternative. Plaintiffs could finance their own lawsuits against Amazon. Perhaps they could recover more than $.32. But how much would they have to spend on legal fees and costs to reach a settlement. Chances are, Mr. Napoleon and the other plaintiffs are not paying anything.
People who do not appreciate being harassed by ads by Amazon can engage lawyers to work for them "for free" to stop Amazon from further harassment. Plus, those people might get a check for $.32.
What's the alternative. Keep getting harassed by Amazon and complain on HN expecting something will change. That sounds even less effective and more ridiculous than class action lawsuits and $.32 settlement checks.
They need an additive punitive damage getting everyone $100.
In any case, sensationalist headlines aside, some lawyer is gonna make a lot of money.
And I'm guessing the case will be settled so we can't just go to small claims court and sue them for 3k each.
Instead, I'll complain about commercials: why can't we just have something that's truly paid and ad-free? Do we actually value our time less than advertisers do?
Same thing happened with cable TV when it first came out, it was advertised as ad free. Then it filled up with ads, and the streaming services came along promising no ads. Now the circle is repeating itself.
Here is the NYTimes in 1981 on the topic https://www.nytimes.com/1981/07/26/arts/will-cable-tv-be-inv...
> ...critics say that the use of sponsorship could make cable programmers more vulnerable to censorship or control by advertisers, particularly in light of recent efforts by organizations such as the Moral Majority and its offshoot, the Coalition for Better Television.
40+ years later I think it's pretty clear this was an accurate prediction.
> A much-cited - and widely disputed - study by the Benton & Bowles advertising agency found that the public would accept advertising if it meant a reduction or a holding-of-the-line on subscription fees...
This is great until a year later when YoY revenue growth is flat and prices are increased anyway.
In reality, cable TV had ads from day one, decades before this article was published. Originally every cable TV station had ads, because they were just retransmissions of broadcast stations which ran ads. The first nation-wide cable TV station had ads, and many of the early cable-only channels (CNN, USA, others) had ads.
how does it work for HBO then.
So, to answer your question. I think we do value our time less than advertisers do. Worse, is I suspect your eyeballs becomes more valuable to advertisers the more your willing to pay to not see ads...
This same attitude is also why I stopped doing any business with Amazon years ago. They became intolerable.
No one can afford to compete with large media corporations, because Copyright explicitly turns media corporations into monopolies.
If your assertion is that the concept of monopoly somehow keeps itself exclusive to that specific context, then I sincerely disagree. The system is what the system is made of.
That's fine, but you're using a strange definition. Monopoly is something that's bad. I own my house, which could be called a monopoly. I am my kids' dad - another monopoly, in the world of strange definitions. It's not useful to use words with specific meanings, particularly negative meanings, and repurpose them for everyday, non-negative situations. It's the opposite of useful. And that's why I hope you retain your monopoly on this silly definition.
Property and monopoly are similar, but not the same. Monopoly applies to a set of items, not a single item or group of items.
For example, you can "own" a copy of Pulp Fiction. You can watch it, you can break it, and you can sell it. What you are not allowed to do is sell a copy of the one you own. You are not allowed to do so, because Miramax LLC was granted a monopoly over the set of all Pulp Fiction copies.
You can own your house, but that is not the same as monopolizing the entire market of houses.
Sure, they can compete in the larger overall market of all books in general, but they must avoid the segment of that market that you own a copyright to.
We can. You just have to make it first.
This is not a question to ask of others, it a just question you ask yourself. Once you answer it for yourself, then just realize that same answer applies to everyone from their perspective.
They've been made. Repeatedly. They just don't persist.
Our economic system won't let them.
But how? I don't have the resources to build something like this on my own. I'm skeptical I could convince many investors to give me money to build something pitched as "just like Prime Video but without the ad revenue" when Amazon has certainly already done market research and determined this is the best path to maximize profit.
Only in the absence of competition. Prices go down all the time while growth remains positive.
> why can't we just have something that's truly paid and ad-free
You can, it just costs more. Ads are a way to make sure that there's a product for more price sensitive customers while keeping revenue high.
The real problem for streamers isn't pricing, it's churn.
Yes, clearly, as revealed by the way most consumers act.
How many people do you know that actually pay for YouTube to get rid of ads? I personally do, and I encourage everyone else to do so, but I assume it's a tiny market.
Perhaps they should have raised the rate of base Prime, and then offered a lower priced paid w/ads option. But there was probably an issue with the annual holders in that case.
So, instead they lowered the features and now folks can up to the new subscription.
Google, Facebook and now Amazon realized the big money is in brokering ads. As brokers, they know everything and control everything, exploiting both the viewers and advertisers.
The bundling makes cancellation particularly unlikely: you can't (or at least I don't know how to) cancel the Prime Video part of the Prime package alone, so there's no way to show your dissatisfaction with this short of cancelling the entire Prime membership. Which this latest push, however small on its own, has been enough to get me finally to consider doing, but it's still tough.
1. In most cases my Amazon orders took about the same amount of time to get to my house as they did with Prime: 3-4 days
2. Amazon has some terrible dark patterns. For example, on the product page you always see the lowest priced shipping option (usually free), but at checkout it defaults to paid shipping. It's really easy to accidentally pay an extra $5.99 for shipping, often with the same estimated arrival it would've had with free shipping.
I could be reading that wrong, but it was sure how it looked with my first few non-Prime orders.
Their drivers are also the worst. The driver that covers my area tends to throw packages a good 10 feet at my door. Needless to say, Amazon is pretty much my last choice option these days.
You don’t want to know what happens in warehouses…
Now it’s generally 4 working days, sometimes more.
Almost all the services I’ve used Amazon for in the past keep getting worse. Prime shipping, video, Amazon music, etc
Why won't I leave Prime (yet)? Because I have an "Amazon" visa credit card, with an admittedly serious 5% permanent discount on all purchases from Amazon (as well as companies they own, such as Whole Foods.) I won't stop purchasing products through Prime just yet; am simply careful to avoid anything that looks problematic, price-gouged, or needing aftersale support, and the discount lock-in is too attractive to me to ignore for now. But video? I can always find it elsewhere. Same goes for "FreeVee" because "Free with ads" isn't free.
So if Prime is failing you in other ways, don't feel like you need to keep it to keep your discount.
However, I'm seriously reconsidering my choices. Almost my entire family is in the Apple ecosystem and we recently purchased an Apple TV device to replace a FireTV, and I must say that it is a much better experience. And iCloud is a better photo/video sharing platform for us than Prime Photos ever was. Really, the only thing keeping me subscribed to Prime is the cash-back program.
As for Prime Video, it has always been the most crappy of the video streaming options. It's always frustrating when the things that I want to watch are not included with Prime and require a purchase or rental. And now that there are ads and lower quality, the chance that I'll watch anything on that platform is steadily declining.
The thing is I live less than 3 hours from a big warehouse (people who live in the same ZIP code as one of those warehouses often get 5-day shipping) but it seems that the residents of Upstate New York and New England are frequently treated as unpeople when it comes to facilities and infrastructure.
If they had simply raised the price of Prime, I would have been mildly annoyed for 30 minutes and moved on with my life, as I had done many times before. Instead, on top of my yearly Prime membership, I was going to get charge a monthly fee… this just hit all the wrong notes for me. It felt so cheap. Here I am paying for a premium service and they are going to nickel and dime me with a monthly charge on top of the yearly one. Not a chance in hell. I cancelled my Prime membership after 15 years over this move and have no regrets.
I hope I’m not alone in that. Prime Video is my least watched steaming service and waiting a few extra days for free shipping hasn’t been a big deal.
When cancelling there was no point where they asked why, which I found interesting.
I am a person who will pay to avoid ads. I have YouTube Premium and pay for the ad free Hulu tier. I also always pay extra to get the Kindle without ads, and pay to remove ads in any app I download within minutes. I even pay for my search engine (Kagi) instead of using Google or DDG. I’m the person they were after, but not like this.
I’m curious how many people they expected to pay for this. A modest price hike for everyone would likely have been more profitable and been mostly ignored by everyone. If they wanted to start breaking down the services to offer cheaper options to people looking for it, they should revamp the whole system. Present the 50 Prime offers and let people pick what they want, or have a few different bundles. Shipping and Videos were basically the only 2 things I used, so everything else was of no value to me.
It sucks that the price point keeps getting farther away, but it does exist.
If we all pay $3.5B per month (350M people times $10/month), that's enough to give us all the college textbooks, movies, software, and music we might want to use, as well as paying for a lot of transportation infrastructure for rapid shipping.
It seemed like a good model while Amazon was doing that.
Now it looks more like what you said.
Prime looks a lot more antitrusty in the model it's evolving to. I cancelled Prime about six months back, and Amazon is just obnoxious. There are ads on content I paid for. I can't check out without five annoying alerts. All those Prime deals look a lot less like deals and more like ways to bump up pricing for people who don't opt in. All in all, once I cancelled Amazon, it basically imploded on me, and now I only use it if there are seriously no other options.
That also pushes me away from any vendors who standardized on Amazon for logistics. All of a sudden, I realized non-Prime members just won't buy from you if you use Amazon for logistics.
It didn't used to be like that. Pre-Prime Amazon worked fine.
[1] https://businessinsider.mx/cofece-exige-amazon-mercado-libre...
Yo, Ho, Ho :)
Considering the shows I've liked on FV, one can hope :|
I used to pay for Netflix and Prime. It keeps getting more fragmented, more expensive and more shittified.
Like Gabe Newell said, piracy is a service problem. I'm willing to pay a reasonable monthly fee for a good service. Unfortunately the only ones providing that are pirates.
Plenty of the other providers have done basically the same thing: the previous price now includes ads and you have to pay more to stay ad-free... but they've all done it by raising prices and introducing a lower with-ads tier.
To me it feels worse to have your service downgraded with the option to pay more to get it back than it does to have your price increased with the option to drop to a worse tier. That's sort of irrational, as the price increase is basically "opting you in" to pay more, but also just reflects how much ads suck.
In terms of Amazon's choice, my best guess is that it's a reaction to an effect I've seen other providers describe: the ads are so lucrative they actually earn more on the lower-tier customers.
Good riddance.
You can subscribe to Prime monthly or yearly. Anecdotally, everywhere I've checked on forums, everyone who's contacted customer service to cancel their annual Prime membership has gotten a prorated refund (or even full refund in some cases). And I'm assuming that's probably their actual internal policy, specifically to avoid a lawsuit.
So if this is the case, is there any basis for this suit to succeed? It seems like it's wrong if Amazon changes the terms mid-subscription -- but it doesn't seem necessarily wrong for ongoing subscriptions if you can get out of it at any time.
it might be to avoid a lawsuit, but it's probably not to avoid this specific lawsuit. when i cancelled my prime, i didn't have to give any reason why, i never told anybody it was because i was mad about getting ads on prime video. but i still got the pro-rated refund for the 6mo remaining in the subscription.
more discussion: https://news.ycombinator.com/item?id=39350257
Watching Ads on Amazon Prime Video Is a Deal Breaker for Some
So far I haven't missed it. I watch more YouTube than any of these services anymore.
Here in Australia, where the ads haven't been introduced yet, I got a notification from Amazon prompting to change to a yearly subscription because of the money I'd save. They've never prompted me thusly before.
I don't care about the extra dollars for ad free. It's just like raising the price of a service - which happens all the time. And what's more, it certainly WOULD benefit me to switch to yearly, which I never got around to doing.
But it's hard to avoid the conclusion that Amazon is trying to lock people into year long contracts right before they change the terms. The deliberateness of THAT intent, the willingness to just so blatantly pinch from the pocket of the unwary - even if it's only a few bucks. That PISSES ME OFF.
Now I love capitalism - the right to own the sweat off your brow that stokes the competitive fires! It's the air we breathe. But these hyper-capitalist a-holes that would steal a cent if you just blink for a second... Goddamn. What makes these people?
That drop of sweat, that they didn't earn, joins the billions of others in a torrent of wealth being syphoned of the regular folk on a daily basis. And the world is growing parched.
So I salute the persnickety and fastidious Sir Wilbert Napoleon and everything he represent. I hope he wins.