FTC and 22 states sue Amazon over secret ad auction surcharges since 2019

September 1, 2026 at 02:42 AM2 min

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The Federal Trade Commission and 22 state attorneys general sued Amazon on Monday, alleging the company secretly inflated advertising auction prices since 2019. The lawsuit claims the practice extracted over $20 billion from more than 1 million advertisers. Amazon disputed the allegations, saying the FTC fundamentally misunderstands how advertising auctions work.

Key Facts

The lawsuit was filed Monday by the FTC and 22 state attorneys general, including Alaska, California, Florida, New York, and Texas.
The FTC alleges Amazon's hidden surcharges extracted over $20 billion from advertisers since 2019.
The alleged practice affected more than 1 million brands and sellers, according to the complaint.
Amazon told over 500,000 small and medium-sized businesses that its ad auctions were second-price, where winners pay one cent more than the next-highest bid.
Amazon agreed to pay $2.5 billion in 2025 to settle an earlier FTC lawsuit over Prime subscription practices.

The Allegations

The FTC and 22 states allege Amazon secretly added hidden surcharges to its advertising auctions, causing advertisers to overpay for sponsored product placements and other ads. The lawsuit claims the practice began in 2019 and continues to this day, violating the FTC Act and over a dozen state laws. Internal documents quoted in the complaint show Amazon employees acknowledged that undisclosed reserve prices increased short-term revenue but predicted long-term harm. The FTC alleges Amazon manipulated its second-price auction system, in which winning bidders were supposed to pay only one cent more than the second-highest bid.

Amazon's Response

Amazon called the FTC's action misguided and said it fundamentally misunderstands how advertising auctions work. The company stated the lawsuit cites no evidence of consumer price increases and relies on a handful of simplified communications after reviewing 1.5 million pages. Amazon entered the online advertising market in 2008 with Product Ads and is now the world's third-largest online advertising provider behind Google and Meta.

Market Impact

The lawsuit focuses on Amazon's Sponsored Products, Sponsored Brands, and Sponsored Display advertising offerings. FTC chairman Andrew Ferguson claimed in a blog post that higher advertising prices were largely passed on to American consumers. The alleged scheme cost about 1.2 million U.S. advertisers tens of billions of dollars over the past seven years, according to officials.