Amazon Sued by FTC Over Claims It Misled Advertisers on Pricing

The US Federal Trade Commission and 22 US states sued Amazon.com Inc. over claims the e-commerce giant systematically overcharged advertisers for years.

The FTC, which enforces antitrust and consumer laws, and the state attorneys general allege in the suit filed Monday that Amazon gave advertisers inadequate disclosures around the pricing and terms of the “sponsored” listings that users see as the top products when they search the company’s marketplace.

“For years, Amazon has secretly inflated the auction prices for three of its advertising products: Sponsored Products, Sponsored Brands and Sponsored Display,” the regulator and the states said in a complaint filed in federal court in Seattle.

The suit alleges that since 2019 Amazon has “secretly and systematically overcharged” 1.2 million advertising customers.

The FTC and states had been probing claims that Amazon had been misleading advertising clients, Bloomberg reported in June. The probe, which ramped up last year and is overseen by the agency’s consumer protection unit, focuses in part on whether Amazon properly disclosed the terms and pricing related to its ads. The suit could lead to billions of dollars in civil penalties, Bloomberg reported in June.

In an emailed statement, Amazon said the lawsuit is based on a misunderstanding about how its advertising auctions work and presented no evidence of harm to shoppers. Amazon advertising auctions prioritise products relevant to shopper search terms before considering bid amounts, which helps shoppers find what they want and keeps prices down for advertisers, the company said. The average cost-per-click for Amazon search ads remained flat when adjusted for inflation from 2019 to 2024 while advertising performance increased, the company said.

Amazon’s auctions have saved advertisers $8 billion during in the five-year period ending in 2025, not cost them extra, the company said.

“The FTC claims advertisers were harmed because they didn’t understand how our auction worked and therefore overpaid,” Amazon said in an emailed statement. “Not only do we properly describe our pricing and auctions to advertisers, but this claim fundamentally misunderstands how advertisers behave.”

An FTC representative didn’t immediately respond to a request for comment.

A suit marks the latest legal clash between Amazon and the FTC, which has been looking into many aspects of the company’s business since at least 2019. Last year, Amazon agreed to pay $2.5 billion to resolve a different probe over its Prime subscription practices. And a trial is slated for early next year over claims that Amazon is illegally monopolising online retail markets and degrading quality for shoppers and overcharging sellers.

The case is FTC v. Amazon, 26-cv-3097, US District Court, Western District of Washington (Seattle).

By Spencer Soper, Erik Larson and Josh Sisco

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