FTC Sues Amazon Over Alleged Secret Ad Surcharge Scheme

The Federal Trade Commission (FTC) and 22 US states have filed a lawsuit against Amazon, alleging that the e-commerce giant secretly inflated prices in its online search advertising auctions. This alleged scheme could have cost customers tens of billions of dollars over seven years.

According to the FTC's complaint, Amazon used so-called second-price auctions, where businesses bid on advertising keywords. The company informed businesses that they would pay only 'one cent more' than the second-place bidder, but it actually charged the winners their own price about 80% of the time.

This meant that businesses paid higher costs, which were largely passed on to American consumers, the FTC and states argue. Amazon responded by calling the lawsuit 'misguided,' stating that the average winning bids for sponsored product ads dropped 50% from 2019 to 2025.