FTC and states accuse Amazon of secretly inflating ad prices by $20 billion

A coalition led by the Federal Trade Commission and 22 state attorneys general, including New York, Pennsylvania, Arizona, New Jersey and North Carolina, filed a federal lawsuit against Amazon accusing covert inflation of online advertising prices since 2019 by undisclosed surcharges and secretly inserting higher bids, effectively turning second-price auctions into first-price auctions. The suit says more than 1.2 million advertisers, including over 500,000 small and medium-sized businesses, were overcharged by tens of billions of dollars, with costs likely passed to consumers. Internal documents reportedly show efforts to raise prices while advertisers could not audit data, with references to hidden charges and a 'soft reserve price' and estimates that Amazon charged winners their own price about 80% of the time. The lawsuit seeks injunctions, civil penalties, and refunds for affected advertisers, alleging harm to businesses and consumers across groceries, medicines, electronics and other goods. Arizona, New Jersey, North Carolina and other states joined the action, expanding a multi-state challenge within intensified scrutiny of Amazon's advertising business. The filing underscores ongoing regulatory pressure on Amazon beyond earlier actions.