For seven years, according to federal and state regulators, Amazon quietly collected more than it promised from the businesses that paid to be seen on its platform — a gap between what was pledged and what was taken that may have cost advertisers tens of billions of dollars. The FTC and 22 state attorneys general filed suit on Monday, alleging that Amazon's search advertising auctions were designed to charge winners their own full bids rather than the modest premium above second-place offers the company had described. At stake is not only the fate of over a million sellers and brands, but a br
FTC and 22 states sue Amazon over alleged $10B+ secret ad pricing scheme
Amazon takes great pains to actively conceal the inflation of its auction prices
Mark
So Amazon was running auctions for ad space but telling sellers one thing and charging them another?
Mimi
Exactly. They promised sellers would pay just one cent more than the second-highest bid. But the lawsuit says 80 percent of the time, Amazon charged them their full bid amount instead.
Luke
That's the allegation. Amazon disputes it, saying bids dropped 50 percent over the period in question. But the internal documents are the real problem for them.
Mark
What do the internal documents show?
Mimi
Employees discussing raising hidden charges while hoping advertisers wouldn't notice. Testing how much they could increase fees without triggering a reaction.
Luke
That's damning if true. But we should note those are allegations from the FTC's complaint, not independently verified facts yet.
Mark
How much money are we talking about?
Mimi
The FTC says tens of billions of dollars in overcharges. Amazon counters that advertisers actually saved $8 billion from 2021 to 2025 through other benefits.
Luke
Both numbers are estimates. The real damage figure will depend on what a court decides actually happened and how it calculates harm.
Mark
Why does this matter beyond Amazon and advertisers?
Mimi
Because those higher advertising costs get passed to consumers. If sellers pay more to advertise, they raise prices on the goods they sell.
Luke
That's the theory. Whether it actually happened at scale is part of what the lawsuit will determine.
El Pulso
- Amazon allegedly charged advertisers their own full bid price 80% of the time — not the 'one cent more than second place' it had promised — quietly pocketing the difference for seven years.
- Internal documents reveal employees discussed raising hidden surcharges while hoping advertisers would remain unaware, and even tested how far fees could climb before triggering a response.
- The FTC and attorneys general from 22 states have now united behind a lawsuit that frames the practice as a deliberate deception with staggering downstream costs passed on to everyday consumers.
- Amazon is fighting back, pointing to a 50% drop in average winning bids since 2019 and claiming advertisers saved over $8 billion through relevancy-based ad prioritization.
- Regulators are seeking court orders to stop the alleged scheme, along with penalties, restitution, and damages — putting Amazon's fast-growing advertising business directly in the crosshairs.
For seven years, according to federal and state regulators, Amazon quietly collected more than it promised from the businesses that paid to be seen on its platform — a gap between what was pledged and what was taken that may have cost advertisers tens of billions of dollars. The FTC and 22 state attorneys general filed suit on Monday, alleging that Amazon's search advertising auctions were designed to charge winners their own full bids rather than the modest premium above second-place offers the company had described. At stake is not only the fate of over a million sellers and brands, but a broader question about whether the rules of digital commerce are written by those who also referee the game.
On Monday, the Federal Trade Commission joined the attorneys general of 22 states in suing Amazon, alleging the company spent seven years secretly overcharging more than a million sellers and brands for advertising on its platform. The alleged harm runs into the tens of billions of dollars in hidden surcharges.
The core of the complaint concerns how Amazon's search ad auctions actually functioned. Amazon told advertisers they were participating in a second-price auction — meaning the winner pays just one cent more than the runner-up's bid, a standard and transparent practice across digital advertising. Regulators say the reality was different: roughly 80% of the time, Amazon charged winners their own full bid price and kept the difference without disclosure.
Internal documents obtained by regulators paint a picture of deliberate concealment. Employees allegedly discussed increasing these hidden charges while hoping advertisers wouldn't notice and pull back their spending. The company reportedly tested how aggressively it could raise surcharges before triggering a reaction — growing bolder, according to North Carolina Attorney General Jeff Jackson, as it became clear that most advertisers remained unaware.
FTC Chairman Andrew Ferguson warned that deceptive conduct by one of the world's largest retailers carries consequences far beyond the advertisers directly affected, with inflated ad costs ultimately flowing through to consumers purchasing goods on the platform.
Amazon rejected the lawsuit as misguided, arguing that average winning bids for sponsored product ads fell 50% between 2019 and 2025, and that advertisers saved more than $8 billion over four years through relevancy-based ad prioritization. The company maintains that sophisticated advertisers adjust their behavior based on real performance data, not auction descriptions.
New York Attorney General Letitia James said regulators are seeking a court order to halt the alleged scheme, along with penalties and restitution. The case now moves to the courts, where Amazon's defense will be weighed against the internal documents regulators say show the company knew precisely what it was doing.
On Monday, the Federal Trade Commission and the attorneys general of 22 states filed suit against Amazon, accusing the company of systematically overcharging more than a million sellers and brands for advertising on its platform over the course of seven years. The alleged scheme involved secretly inflating prices in the company's search advertising auctions—a practice regulators say cost customers tens of billions of dollars in hidden surcharges.
At the heart of the complaint is how Amazon's ad auctions actually worked versus how the company described them to advertisers. Amazon told businesses that in its second-price auction system, they would pay only one cent more than whatever the second-place bidder offered. This is standard practice in digital advertising: the winner pays just enough to beat the competition, not their full bid. But according to the lawsuit, Amazon charged the winning bidder their own full price roughly 80 percent of the time, pocketing the difference without disclosure. The states joining the FTC in the action include 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.
Internal Amazon documents obtained by regulators suggest the company understood exactly what it was doing. Employees allegedly discussed raising these hidden charges while "hoping that advertisers don't notice and decrease bids or ad spend," according to an executive cited in the FTC's complaint. The company even tested how much it could increase the surcharges without triggering a reaction from advertisers—essentially probing the limits of what it could get away with. As North Carolina Attorney General Jeff Jackson noted, Amazon appeared to grow bolder over time, substantially increasing its hidden fees as confidence grew that advertising customers remained unaware of the practice.
FTC Chairman Andrew N. Ferguson framed the stakes in his statement: "When one of the world's largest online retailers engages in unfair and deceptive conduct, the impact can be staggering." He pointed out that millions of advertising customers were misled into paying significantly higher prices, and that these inflated costs were largely passed through to consumers buying goods on the platform.
Amazon pushed back hard against the allegations. The company called the lawsuit "misguided" and argued that the average winning bids for sponsored product ads actually dropped 50 percent between 2019 and 2025. Amazon contended that the FTC's understanding of how advertisers behave was fundamentally flawed—that businesses adjust their bids based on real-world performance data, not merely on how auction mechanics are described. The company also estimated that advertisers saved over $8 billion from 2021 to 2025 as a result of Amazon prioritizing ad relevancy over bid price alone, suggesting that any overcharges were offset by other benefits.
New York Attorney General Letitia James said regulators are seeking a court order to halt what they characterize as an illegal scheme, along with penalties, restitution, and damages for affected advertisers. The lawsuit represents one of the most significant regulatory challenges Amazon has faced in recent years, targeting a business segment—advertising—that has become increasingly central to the company's profitability. The case will now move through the courts, where Amazon's defense that advertisers were sophisticated enough to adjust their behavior will face scrutiny against the internal documents suggesting the company deliberately obscured its pricing practices.
Citas Notables
When one of the world's largest online retailers engages in unfair and deceptive conduct, the impact can be staggering. Amazon has millions of advertising customers who were misled into paying significantly higher prices.— FTC Chairman Andrew N. Ferguson
Amazon takes great pains to actively conceal from customers the fact that it inflates its purported auction prices.— The FTC and state attorneys general in their complaint
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