A Rome court has found that Netflix illegally issued price increases from 2017 to 2024 by changing the terms of its subscription without sufficient notice and reasoning.
Netflix has roughly 5.4 million users in Italy. They could receive a refund of up to €500 depending on their subscription tier, according to advocacy group Consumer Movement, 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, Netherlands and Poland — challenging price increases under consumer protection laws. They threaten how the company implements the hikes, specifically the way in which it secures consent from users.
Netflix will appeal the decision. “We take consumer rights very seriously, and we believe our terms have always been in line with Italian law and practices,” it said in a statement.
In the ruling, the court voided price increases in 2017, 2019, 2021 and 2024 because Netflix didn’t provide valid reasons for the changes. The company’s rationale that the hikes were a result of rising production costs, investments in new firms and ongoing improvements aren’t sufficient since they don’t tie the increases to clear parameters, like inflation or measurable triggers, it found.
Netflix relied on clauses in its terms of use that allow for changes as long as advance notice is provided, though the court concluded those provisions are unfair.
In the European Union, companies cannot unilaterally change the terms of a contract without providing proper justification specified in advance of those provisions taking effect. Consumer protection laws are meant to ensure that the agreements are fair, limiting excessive discretionary power.
But in the United States, the process of implementing contractual changes matters more than their substance. Unilateral adjustments are typically found enforceable as long as users are notified and continue using a company’s services.
The court said that Netflix’s most recent price increase last year was legally implemented since they were anchored to specific service changes and regulatory obligations, among other things. Under the ruling, current subscriptions prices could be reduced by an amount equal to the price hikes that were voided, according to Consumer Movement president Alessandro Mostaccio.
“If Netflix intends to put the rights of its subscribers and consumers before all other interests, it should respect the Rome Court ruling and provide refunds, thus saving itself from massive class-action and individual litigation that will last years, damaging its reputation and resulting trust,” Mostaccio said. “By complying with the first-instance ruling, however, this trust would be strengthened, immediately ending all litigation.”
With little room left to grow existing subscriber bases, a question has emerged of how Netflix will continue to grow revenue. The most obvious answer is price increases.
