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A Rome court found that Netflix illegally issued price increases from 2017 to 2024 by changing its subscription terms without sufficient notice and reasons.
Netflix has approximately 5.4 million users in Italy. They can get a refund of up to €500 depending on their subscription tier, according to the Consumer Action Group, which filed the lawsuit.
The April 1 ruling comes amid a series of similar lawsuits across the European Union against Netflix — including those filed in Germany, the Netherlands and Poland — challenging price increases under consumer protection laws. It threatens how the company implements these increases, specifically the way it gets users’ consent.
Netflix will appeal the decision. “We take consumer rights very seriously, and believe that our terms have always been compatible with Italian law and practice,” she said in a statement.
In the ruling, the court vacated the price increases in 2017, 2019, 2021 and 2024 because Netflix did not provide good reasons for the changes. It found that the company’s justifications that the increases were the result of higher production costs, investments in new companies and continuous improvements were insufficient because they did not link the increases to clear criteria, such as inflation or measurable incentives.
Netflix relied on terms in its terms of use that allowed for changes as long as advance notice was given, although the court found those terms to be unfair.
In the European Union, companies cannot unilaterally change the terms of a contract without providing appropriate pre-specified justifications for those provisions to enter into force. Consumer protection laws aim to ensure the fairness of agreements and limit excessive discretion.
But in the United States, the process of implementing contractual changes matters more than the substance. Unilateral modifications are usually enforceable as long as users are notified and continue to use the Company’s services.
The court said that Netflix’s most recent price increase last year was legally implemented since it was linked to specific changes to the service and regulatory obligations, among other things. Under this ruling, existing subscription prices could be reduced by an amount equal to the price hike that was cancelled, according to Consumer Action President Alessandro Mostaccio.
“If Netflix intends to put the rights of subscribers and consumers before all other interests, it must respect the Rome court ruling and provide refunds, thus saving itself from massive class actions and individual litigation that will drag on for years, damaging its reputation and the resulting trust,” Mustaccio said. “But by abiding by the preliminary ruling, that confidence will be strengthened, and all litigation will be brought to an immediate end.”
With not enough room to grow existing subscriber bases, the question arose of how Netflix could continue to grow revenues. The most obvious answer is higher prices.
