Amazon Hit with FTC Lawsuit Over Alleged $20 Billion Ad Scam
The Federal Trade Commission (FTC) and 22 state attorneys general have filed a lawsuit against Amazon.com Inc. over allegations that the e-commerce giant systematically overcharged advertisers by more than $20 billion since 2019.
The complaint, filed in Seattle federal court on August 31, alleges that Amazon misled 1.2 million advertising customers, including over 500,000 small and medium businesses, about the pricing and terms of its sponsored listings.
The FTC claims that Amazon manipulated the auction process it uses to set ad prices, inflating prices for three of its advertising products: Sponsored Products, Sponsored Brands, and Sponsored Display. According to the complaint, Amazon began 'secretly manipulating' the auction procedure in 2018 to increase profits, replacing the price determined by the auction with a higher price designed to maximize Amazon's profits.
Amazon denied wrongdoing, stating that its ad auctions lower costs for advertisers and save them billions of dollars. The company also claimed that it properly describes its pricing and auctions to advertisers, and that the FTC's claim fundamentally misunderstands how advertisers behave.