Amazon Sued Over Alleged Secret Ad Surcharge Scheme

The Federal Trade Commission (FTC) and 22 states have filed a lawsuit against Amazon, alleging that the company has engaged in deceptive and unfair practices. According to the complaint, Amazon secretly increased prices in its online search advertising auctions for over seven years, affecting more than one million brands and sellers.

The FTC claims that Amazon covertly added an undisclosed surcharge to its advertising customers' bids, making them pay substantially higher prices. This alleged scheme has generated tens of billions of dollars in revenue for the company.

Amazon represented to advertisers that it ran second-price auctions, but the complaint alleges that the company actually charged winners their own bid close to 80% of the time. The FTC quotes internal Amazon documents stating that the company used an 'invented auction participant' to increase prices and a 'proxy 2nd price' to calculate bids.