The Federal Trade Commission (FTC) and attorneys general from 22 states have accused Amazon of operating a secret, seven-year scheme that allegedly overcharged approximately 1.2 million advertisers through manipulated advertising auctions.
According to the lawsuit, Amazon.com, Inc. began manipulating its advertising auctions in 2019. The FTC claims the company replaced genuine auction results with higher prices to increase its profits, despite advertisers believing that competition determined the cost of ads displayed on Amazon.
The FTC said its investigation uncovered internal documents and messages showing that Amazon allegedly increased auction prices for Sponsored Products, Sponsored Brands, and Sponsored Display ads. These advertisements appear when shoppers search for products on Amazon’s website. The agency began investigating Amazon’s advertising practices in 2024.
Based on internal references to “hidden” fees and “surcharges,” the lawsuit estimates that Amazon’s alleged advertising scheme may have extracted more than $20 billion from customers who were unaware of the additional charges.
The complaint alleges that Amazon conducted “billions of fraudulent auctions” and imposed undisclosed fees on advertisers nearly every time a shopper clicked an ad. The FTC claims Amazon’s practices deprived advertisers of the benefits of competition and prevented fair, transparent transactions in the online advertising market.
The FTC’s case includes a bipartisan coalition of attorneys general from 22 states: 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.
Source: arstechnica.com