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FTC and 22 states sue Amazon over alleged secret ad surcharge scheme
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The Federal Trade Commission and 22 states on Monday sued Amazon over allegations that the e-commerce giant secretly inflated prices in its online search advertising auctions, potentially costing customers tens of billions of dollars.
Key facts
- Amazon added, "Even accepting the FTC's flawed premise that advertisers do not adjust bids, they estimate they saved over $8 billion from 2021 to 2025 because of Amazon prioritizing ad relevancy
- Amazon called the lawsuit "misguided," and said that the average winning bids for sponsored product ads dropped 50% from 2019 to 2025
- The FTC's lawsuit was joined by the attorneys general of Alaska, Arizona, California, Colorado, Florida, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Nebraska, New Jersey, New York
- The Federal Trade Commission and 22 states on Monday sued Amazon over allegations that the e-commerce giant secretly inflated prices in its online search advertising auctions, potentially costing
Summary
The lawsuit alleges that the undisclosed surcharges were applied for seven years, increasing the prices that more than 1 million Amazon brands and sellers were required to pay to advertise on its platform. The FTC's lawsuit was joined by 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. The lawsuit centers on so-called second-price auctions, the industry standard for digital ad deals. That raised costs for businesses, alleged the FTC and states joining the suit.