FTC and 22 states sue Amazon over hidden advertiser surcharges
The US Federal Trade Commission and 22 states have sued Amazon, alleging the company secretly inflated advertising auction prices for more than six years. The lawsuit claims the scheme may have extracted over $20 billion from advertisers.
The Federal Trade Commission (FTC), joined by 22 states, has filed a lawsuit against Amazon over how it runs its advertising auctions. According to the FTC, the company has earned billions of dollars over more than six years by secretly inflating its rates.
Regulators allege that Amazon deceived advertisers for years by adding hidden surcharges to its ad auctions, causing ad buyers to unknowingly overpay for sponsored product placements and other ads on the platform.
The lawsuit states that the practice was widely known inside the company, and that multiple employees had raised concerns about it internally. Court filings claim Amazon has been able to impose these hidden surcharges almost every time a shopper clicks on an ad on its website.
According to the FTC, the practice continues to this day and has been highly profitable, with the lawsuit alleging the scheme may have illegally extracted more than $20 billion from advertisers who were unaware of the added costs.
Internal documents raise questions
While some details in the lawsuit have been redacted, it cites several internal Amazon documents in which employees appeared to question the company's approach to auction pricing. One cited memo reportedly acknowledged that using undisclosed reserve prices "increases our short-term revenue" but predicted it would "hurt us in the long run."
The FTC argues that overcharging advertisers ultimately led to higher prices on the platform, harming American consumers as a result.
Amazon has pushed back on that claim. In a lengthy statement, the company said the lawsuit "cites no evidence of consumer price increases" and called the FTC's action "misguided," arguing it "fundamentally misunderstands" how advertising auctions work. Amazon said that after the FTC reviewed roughly 1.5 million pages of documents spanning six years, it is relying on a handful of simplified communications to allege a companywide effort to deceive — a characterization Amazon called false.
