SEATTLE: An Amazon ad-pricing lawsuit filed Monday by the Federal Trade Commission and 22 US states alleges that the retailer secretly inflated online advertising auction prices charged to more than 1 million customers.
The complaint, filed in the US District Court for the Western District of Washington, alleges Amazon misled about 1.2 million customers.
Customers are represented as bidding in competitive second-price auctions while undisclosed pricing mechanisms are imposed.
The FTC said Amazon began adding an undisclosed “soft reserve price” in 2019. Regulators allege the mechanism increased what winning advertisers paid. In Sponsored Products auctions, it resulted in advertisers paying their own bid about 80% of the time by 2024.
The agency said the alleged practices affected more than 500,000 small and medium-sized businesses. Moreover, it generated tens of billions of dollars in additional revenue over several years. Those figures remain allegations in a pending federal case.
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FTC Chairman Andrew N. Ferguson said advertisers were allegedly misled into paying higher prices. The commission voted 2-0 to authorise the complaint.
Amazon rejected the allegations. In an August 31 response, the company said the FTC relied on simplified internal communications to portray a companywide deception effort. It called that characterisation “patently false.”
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Amazon also said average inflation-adjusted cost per click for Sponsored Products remained flat from 2019 through 2024. Meanwhile, conversion rates rose 24% between 2021 and 2025.
Those performance figures are company claims that the court has not adjudicated. The FTC is seeking a permanent injunction, monetary judgment and other relief. The case remained pending as of August 31.
