Netflix and other streamers have become notorious for streaming price hikes — a phenomenon that’s been appropriately dubbed streamflation. But Italy is not letting it slide, with a court order that requires Netflix to not only pay as much as $2.3 billion in refunds and damages to impacted consumers, but to roll back multiple price hikes implemented over the last decade.
But this just might be the start.
Experts tell TheWrap the ruling is part of a rising tide of planned or ongoing litigation from EU countries, and may prompt the European Commission to investigate whether broader action into content providers may be needed.
For Netflix, this could impact a significant chunk of the more than 101 million subscribers it counts in its Europe, Middle East and Africa, or EMEA, region. Netflix stopped breaking out subscriber figures publicly at the end of 2024, but has surpassed the milestone of 325 million globally.
“The practical takeaway is that Europe is now the real legal risk for Netflix’s pricing model, while U.S. subscribers are unlikely to see anything comparable absent a significant shift in federal consumer protection law,” Braden Perry, a regulatory and government investigations attorney, told TheWrap.
Germany and Spain’s respective consumer protection groups have already taken similar legal actions, he noted, while Poland’s consumer protection authority has opened an investigation with potential fines of 10% of annual turnover.
“The Italy ruling isn’t a Roman peculiarity,” Perry added. “It will embolden consumer organizations across every EU jurisdiction where Netflix raised prices without specifying the contractual grounds for doing so.”
Stefano Bonini, an associate professor of finance at Stevens Institute of Technology, said he’s “absolutely certain” that the European Commission would also look into the matter, but noted it could take awhile as they investigate Netflix’s pricing strategy across the EU.
“If they haven’t already, they will look into that and see if this is common practice that has been used systematically across countries to circumvent existing regulation,” he said.
The timing of the ruling comes as Netflix hiked prices across its U.S. plans for the second time in over a year after its $83 billion deal for Warner Bros. Discovery’s studio and streaming assets fell apart. But given Italy’s consumer protection laws are more comprehensive and much stricter than the U.S., experts said it’s unlikely that customers here would get any relief.
A Netflix spokesperson told TheWrap it would appeal the court’s decision, adding that it takes consumer rights “very seriously” and believes its terms have “always complied with Italian laws and practice.” Representatives for the EC did not immediately return TheWrap’s request for comment on this story.
A court ruling against Netflix
On Friday, a court in Rome upheld a lawsuit filed by the consumer group Movimento Consumatori and invalidated clauses that allowed Netflix subscription prices and other contractual terms to be changed between 2017 and January 2024. It also declared that Netflix price increases implemented in 2017, 2019, 2021 and November 2024 (with the exception of increases related to contracts signed after January 2024) were unlawful.
As a result, impacted subscribers will be entitled to a reduction in the current subscription price, as well as a refund and up to $2.3 billion — or 2 billion Euros — in damages.
The court has also ordered Netflix to publish the content of the ruling on its website and in major national newspapers and to inform all consumers, including those who had canceled their subscriptions, of the invalidity of the clauses and of their right to a refund. Failure to do so within 90 days could result in a penalty of €700 for each day of delay.
Movimento Consumatori’s lawyers Paolo Fiorio and Riccardo Pinna estimate that the premium plan increase amounts to €8 per month, while the standard plan increase amounts to €4 per month. A premium customer who activated the subscription in 2017 and now pays €19.99 is entitled to the same service for €11.99 under the order, while a standard customer who pays €13.99 will have to pay only €9.99.
They added that a premium plan subscriber who has paid for Netflix continuously since 2017 is entitled to a refund of about €500, while a standard plan subscriber is entitled to a refund of about €250. It’s estimated that Netflix has 5.4 million subscribers in Italy as of October, up from 1.9 million in 2019.
Based on that total subscriber figure and an average refund of €375, Netflix could owe Italian subscribers more than €2 billion, or about $2.3 billion.
Movimento Consumatori argued that if Netflix intends to put the rights of its subscribers and consumers first, 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.”
The firm, which has launched an online form to join a class-action lawsuit, noted that over 25,000 consumers have contacted the association in an effort to get refunds and that more are likely calling Netflix and other consumer associations directly.
“If Netflix does not immediately reduce prices and refund customers, we will launch a class action lawsuit to ensure all users receive the refund of the amounts unduly paid,” Movimento Consumatori President Alessandro Mostaccio added.
What does this mean for the EU and U.S.?
Netflix will fight the decision, but even if it loses, don’t expect the company to radically change how it operates globally, Bonini said. He said the streaming giant could make minor changes or clarifications to their policies in an effort to mitigate future legal challenges.
Ultimately, Bonini said he expects Netflix will try to negotiate a settlement to lower the overall reimbursement payout to consumers and fight to keep the current pricing in place.
“Netflix can always say, ‘There’s been tremendous inflation from 2017 to 2024 when this was done. I should have given a heads up or allowed for more ability to cancel, but at the end of the day as a market participant, I am free to set the price wherever I want’,” Bonini said. “They will never roll it back to the original price, that is for sure, they’re going to fight that. But they can say, ‘Whoever wants to cancel can cancel tomorrow and I’ll give them the money back and we’ll see how many people are really willing to give up Netflix.’ I don’t think there would be a lot of people.”
Expect even less movement in the U.S.
Tre Lovell, an entertainment and business lawyer, said the Italy ruling is unlikely to translate to the U.S. given that companies can make unilateral changes to contracts and are typically offered more leeway so long as they are being transparent.
“The U.S. consumer protection laws, although they’re good, are not quite as strict. They pretty much allow companies like Netflix to do price increases as long as there’s plenty of notice and you give the subscriber a chance to cancel,” Lovell told TheWrap. “Italy requires Netflix to put inside its initial subscriber agreement a justification for raising rates. The language that, ‘Hey, we have the right to do it,’ is not enough to replace a justification for it. And if they don’t have that, then it’s unconscionable.”
Though the Federal Trade Commission and state attorneys general have the authority to enforce Unfair, Deceptive or Abusive Acts or Practice (UDAP/UDAAP) laws, Perry said that “neither has shown appetite for treating streaming price increases as actionable unfairness.”
It comes down to a difference in how the EU and U.S. view those terms.
“The EU treats unfair contract terms as a substantive consumer right that courts can enforce collectively,” Perry said. “The U.S. treats subscription pricing as a matter of contract, and the contract itself routes disputes into individual arbitration where class-wide remedies aren’t available.”
TheWrap’s Tess Patton contributed to this report
