The ACCC has challenged unfair contract terms in court before. What changed in November 2023 was the introduction of civil penalties. A business can now face penalties for proposing, applying or relying on an unfair term. In mid-2026, the ACCC began testing those provisions in contested cases. This article explains what the ACCC alleges against Amazon and Miyagi. It also covers what the cases mean for businesses that use standard terms, and what small businesses can do when a supplier leans on a harsh clause.
What Changed in November 2023
The unfair contract terms regime sits in the Australian Consumer Law. Before 9 November 2023, an unfair term in a standard form contract was void. There was no penalty for including one. Two key changes followed. The regime now covers more small business contracts. A business can also face civil penalties for proposing an unfair term, or for applying or relying on one. The changes apply to contracts made or renewed, and to terms varied or added, from 9 November 2023.
The ACCC’s Case Against Amazon
In June 2026, the ACCC commenced Federal Court proceedings against Amazon Commercial Services Pty Ltd and Amazon.com Services LLC. The ACCC alleges that five terms in Amazon’s annual Prime contracts let Amazon make negative changes during the contract period. It says annual subscribers had no contractual right to a refund or other meaningful redress when that happened. The ACCC also alleges that Amazon relied on those terms when it introduced advertising to Prime Video in July 2024. Subscribers who wanted to avoid ads had to pay extra. The ACCC further alleges that Amazon.com Services LLC, the US entity, was knowingly concerned in the Australian company’s conduct.
The ACCC says this is one of the first contested matters under the new penalty regime. Amazon has said it cooperated with the investigation and is reviewing the case. The matter has not been determined, and these are allegations only.
One allegation matters for every business with prepaid contracts. The ACCC says notice and a right to cancel did not fix the imbalance. Annual subscribers had paid upfront. Under the contract, they had no entitlement to a pro rata refund or other meaningful redress. On the ACCC’s case, a right to walk away is worth little if you cannot get your money back.
The Miyagi Proceedings
Days earlier, on 23 June 2026, the ACCC announced proceedings against Miyagi Pty Ltd and its founder and CEO. The ACCC alleges, among other things, that Miyagi used unfair contract terms. It says those terms prevented many consumers from cancelling health and wellbeing programs. That case has not been determined either.
Both cases involve consumer contracts. Even so, they matter to small business owners. The same law applies to standard form contracts with small businesses.
Why Small Business Contracts Are Caught
The protections can apply to a standard form contract where at least one party has fewer than 100 employees or annual turnover below $10 million. There is no contract-value limit. An unfair term is void. Only a court can ultimately decide whether a term is unfair. A business can also face civil penalties for proposing an unfair term, or for applying or relying on one.
The ACCC has made this a priority. It lists unfair terms in consumer and small business contracts as a 2026-27 priority. Its focus is on harmful cancellation terms, including automatic renewals, early termination fee clauses and non-cancellation clauses.
When Is a Term Unfair?
A term can favour your business and still be fair. It is unfair only if it meets three tests. Must create a significant imbalance in the parties’ rights and obligations.
It must go further than reasonably necessary to protect your legitimate interests, must also cause detriment to the other party if you rely on it. The court also looks at how transparent the term is, and at the contract as a whole.
If a party alleges a contract is standard form, it is presumed to be unless the other side proves otherwise. Most businesses that use take-it-or-leave-it terms should assume the regime applies to them.
Clauses to Review in Your Standard Terms
For businesses that use standard terms, the problem often appears when they try to enforce a clause. That might be an automatic renewal, a termination fee, a price increase or a right to suspend services. If the clause is unfair, it may not be enforceable when it matters most.
When we review standard terms for software and SaaS, subscription and service businesses, we look closely at clauses that let the business change the deal on its own terms. This includes changes to price, scope, service levels and the terms themselves. Check a few things for each clause. Does the other party get notice, and a real exit right? Does that exit right include a refund for anything already paid? Is the clause really needed to protect a legitimate interest, or does it simply favour you? From 1 July 2027, qualifying subscription contracts will also need to provide a way to end the contract that is easy to find and straightforward.
If You Are the Small Business Held to a Term
A harsh clause can still be open to challenge. If a supplier relies on a standard term to lock you into a renewal or charge you to leave, do not assume the written term ends the issue. Start with three questions. Is the contract standard form? Does the small business test apply to you? Does the term go further than the supplier reasonably needs?
Check the clause before you pay or reply. If your own website terms need a check too, see our guide on website terms and conditions. Keep copies of the contract, the notice you received, and any emails. If the term is unfair, that may give you real leverage in the dispute.
What Is Coming Next
The rules are tightening on several fronts. The government doubled the headline maximum penalty under the competition and consumer law in March 2026. It applies to conduct after the change commenced. Treasury’s review of the amended unfair contract terms protections was tabled in June 2026. It recommended infringement notice powers for the ACCC and ASIC. The government accepted that recommendation.
Subscription practices are also in the frame. Parliament passed new unfair trading practices legislation in July 2026, and it commences on 1 July 2027. The general unfair trading practices prohibition applies to consumers. The subscription provisions also extend to qualifying standard form small business contracts and include requirements about upfront information on payment liabilities and renewal, and a cancellation method that is easy to find and straightforward. This does not replace the unfair contract terms rules. It sits alongside them.
How Allied Legal Can Help
Standard terms work hard for a business, so they need to hold up when someone challenges them. Our team at Allied Legal reviews and drafts standard terms for software, subscription and service businesses. We check renewal, cancellation, pricing and variation clauses against the unfair contract terms regime. If a disputed term is about to be enforced, we can review the clause and advise whether it can safely be relied on or challenged. Contact us at 03 8691 3111 or email hello@alliedlegal.com.au to get your standard terms reviewed before a notice is sent or money is paid.
Frequently Asked Questions
1. What are unfair contract terms under Australian law?
They are terms in a standard form consumer or small business contract that cause a significant imbalance, go further than reasonably necessary to protect a legitimate interest, and cause detriment if relied on. An unfair term is void.
2. Do unfair contract term rules apply to small business contracts?
Yes. The rules can apply where at least one party to a standard form contract has fewer than 100 employees or annual turnover below $10 million. There is no contract-value limit.
3. Can a business be penalised for relying on an unfair term?
Yes. Since 9 November 2023, a business can face civil penalties for proposing an unfair term, or for applying or relying on one. Only a court can decide whether a term is unfair.
4. What is the ACCC alleging against Amazon?
The ACCC alleges that five terms in Amazon’s annual Prime contracts let it make negative changes without giving annual subscribers a contractual right to a refund or other meaningful redress. It says Amazon relied on them to introduce advertising to Prime Video. These are allegations only, and the case has not been determined.
5. Is an automatic renewal clause unfair?
Not automatically. It depends on the three-part test. A court must also consider how transparent the term is and the contract as a whole. Automatic renewals are a named focus of the ACCC’s 2026-27 priorities.
6. What should I do if a supplier tries to enforce a clause I think is unfair?
Check the clause before you pay or reply. Work out whether the contract is standard form, whether the small business test applies, and whether the term goes further than the supplier reasonably needs. Then get the clause reviewed.
7. Are new subscription rules coming?
Yes. Parliament passed unfair trading practices legislation in July 2026, and it commences on 1 July 2027. It is reported to include rules on subscription disclosure and cancellation.
This article is provided for general information only and does not constitute legal advice. You should obtain legal advice specific to your circumstances before acting on any information contained in this article.
