FTC and 22 US states sue Amazon over alleged 20 billion ad price inflation
The U.S. Federal Trade Commission and 22 state attorneys general filed a lawsuit against Amazon on Monday, alleging the company secretly inflated advertising prices for nearly seven years, costing advertisers tens of billions of dollars.
The complaint, filed in federal court in Seattle, accuses Amazon of manipulating its ad auction system by charging advertisers their full bid amounts instead of the standard second-price rule, where the winner pays just one cent more than the second-highest bid. Internal company documents cited by the FTC refer to this practice as a “hidden surcharge,” according to reports . The FTC also claims Amazon used fictitious bidders to drive up prices.
FTC Chairman Andrew Ferguson stated that these higher costs were largely passed on to American consumers. “When one of the world’s largest online retailers engages in unfair practices, the consequences can be devastating,” Ferguson said .
The lawsuit alleges Amazon overcharged approximately 1.2 million businesses, including over 500,000 small and medium-sized enterprises, by an estimated $20 billion since 2019 . The FTC and state attorneys general are seeking civil penalties and restitution for affected advertisers.
Amazon’s stock fell about 2.5% on Monday following the announcement . The company has denied the allegations, stating in a release that the FTC’s claims “fundamentally misunderstand” how its ad auctions work and that its practices did not increase costs for consumers or advertisers .
This is not the first legal dispute between Amazon and the FTC. Last year, Amazon agreed to pay $2.5 billion in penalties and refunds to Prime subscribers after the FTC accused the company of deceptive practices in enrolling customers in subscriptions . Amazon did not immediately respond to requests for comment on the latest lawsuit.
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