The U.S. Federal Trade Commission (FTC), joined by 22 state attorneys general, has filed a lawsuit against Amazon, accusing the e-commerce giant of embedding undisclosed costs into its digital advertising auction system. According to the FTC, the alleged scheme has likely generated tens of billions of dollars in hidden surcharges from advertisers using the platform.
The complaint, lodged in the U.S. District Court for the Western District of Washington, claims Amazon engaged in deceptive and unfair business practices that artificially drove up prices in its online search advertising auctions. For more than seven years, the company is alleged to have significantly raised the costs that over one million brands and sellers paid to advertise on its platform.
Among those affected are more than 500,000 small and medium-sized businesses that took part in auctions for ad placements on Amazon.com and the Amazon mobile app.
In these auctions, advertisers bid to display Sponsored Product ads, Sponsored Brands ads, and Display Ads alongside search results triggered by specific keywords on Amazon’s marketplace. The top-ranked bidder for each keyword secures the placement.
The lawsuit further alleges that Amazon and its senior leadership deliberately worked to conceal the surcharge-based pricing structure from advertisers. When advertisers inquired directly about changes to the auction format, the company is said to have provided false and misleading responses.
“When one of the world’s largest online retailers engages in unfair and deceptive conduct, the impact can be staggering. Amazon has millions of advertising customers who were misled into paying significantly higher prices. These higher costs were largely passed on to American consumers. The FTC under President Trump won’t allow this deception to continue,” said FTC Chairman Andrew Ferguson.
The attorneys general of Alaska, Arizona, California, Colorado, Florida, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Nebraska, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Vermont, and Washington are participating in the legal action.
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