FTC, 22 States Sue Amazon Over Alleged $20-Billion Ad Overcharging Scheme

The Federal Trade Commission (FTC), joined by 22 state attorneys general, sued Amazon, alleging that the e-commerce giant secretly manipulated its advertising auction system to overcharge advertisers by more than $20 billion.

Amazon is facing a lawsuit from the FTC and 22 state attorneys general over alleged manipulation of its digital advertising auctions.

The FTC alleges that Amazon changed its advertising auction rules beginning in 2019, adding an undisclosed surcharge that the company internally called a “soft reserve price.”

According to the complaint, the practice caused more than 1 million advertisers—including hundreds of thousands of small and midsize businesses—to pay substantially more for ads than they otherwise would have under Amazon’s stated auction rules. 

FTC Chairman Andrew Ferguson said Amazon’s practices misled advertisers into paying significantly higher prices and alleged that some of those costs were ultimately passed on to consumers.

Amazon rejected the allegations, arguing that the FTC “fundamentally misunderstands how advertisers operate.”

The company said advertisers paid the same while receiving better performance as Amazon improved ad relevance. 

Amazon has become the world’s third-largest digital advertising platform, behind Google and Meta. Its advertising business generated about $68.6 billion in 2025, with sponsored-product listings accounting for a large portion of the business. 

The FTC alleges that Amazon’s auction changes undermined its representation that advertisers participated in a second-price auction, in which the winning advertiser pays the minimum amount necessary to win.

The agency says Amazon instead used the undisclosed “soft reserve” to raise the effective price paid by advertisers. Amazon disputes that characterization.