Amazon Accused of Secretly Inflating Ad Prices by Over $20 Billion

Amazon (AMZN) faces a federal lawsuit after the Federal Trade Commission and 22 states accused the company of secretly inflating ad prices by more than $20 billion.

The FTC alleges Amazon misrepresented how it priced Sponsored Products and other ads, introducing undisclosed 'soft reserve prices' beginning in 2019 to push prices higher.

Internal documents referred to an 'invented auction participant,' which regulators claim was used to artificially inflate prices. The agency said Sponsored Products advertisers paid their full bid roughly 30% to 40% of the time in 2021, 70% in 2022 and about 80% by 2024.

FTC Chair Andrew Ferguson stated, 'Amazon has millions of advertising customers who were misled into paying significantly higher prices.'