Business & Markets
FTC and 22 states sue Amazon over alleged secret advertising surcharges
The complaint seeks an injunction and monetary relief; Amazon calls the allegations false and says its advertising auctions deliver lower prices.
Executive summary
- The case: The Federal Trade Commission and 22 states sued Amazon in federal court, alleging deceptive and unfair practices in its advertising auctions.[1][2]
- The allegation: The complaint says Amazon used undisclosed surcharges and calculated bids to raise prices paid by more than 1.2 million advertising customers.[3][2]
- Amazon's response: Amazon denies a companywide effort to deceive advertisers and says the government's characterization of its auction system is false.[2]
- What comes next: The plaintiffs are asking the court to stop the alleged practices and order monetary relief; the complaint does not set a final damages amount.[3][4]
The Federal Trade Commission and 22 states sued Amazon on Monday, accusing the company of secretly inflating prices in online advertising auctions and misleading more than 1.2 million advertising customers about how winning prices were calculated. The complaint was filed in the U.S. District Court for the Western District of Washington.[1][3][2]
The government alleges that Amazon told advertisers it operated second-price auctions, in which a winner generally pays just above the next-highest bid, while using an undisclosed surcharge known internally as a soft reserve price. The FTC says Amazon began changing the auction rules without notice in 2019 and used calculated or invented bids to push prices beyond those produced by advertiser competition.[1][3]
The complaint says the practices affected brands and sellers advertising on Amazon's website and app, including more than 500,000 small and midsize businesses. The FTC alleges the surcharges generated tens of billions of dollars for Amazon, including larger increases around high-volume shopping periods such as Prime Day and Black Friday. Those figures are allegations that have not been adjudicated.[1][3]
Amazon disputes the case. In a response reported by the Associated Press, the company said the complaint relies on simplified internal communications to allege a companywide effort to deceive and called that characterization false. Amazon also described the lawsuit as misguided and said it strongly disagrees with the claims, Axios reported.[2][4]
The FTC and the states are seeking a permanent injunction, monetary relief and other remedies. The filing opens a civil case rather than establishing liability, and any payment or operational change would depend on the court process or a settlement.[3][4]