FTC, 22 States Sue Amazon Over Hidden Ad Fees

The Federal Trade Commission and attorneys general from 22 states filed a joint lawsuit against Amazon on Thursday, accusing the e-commerce giant of secretly manipulating its digital advertising auction system to charge marketers inflated prices without their knowledge.

According to the complaint, Amazon allegedly built hidden surcharges into the bidding process advertisers use to place ads on its platform, misrepresenting how winning bids were calculated. Regulators say the company told advertisers they were paying a market-driven price determined by competitive bidding, when in fact Amazon was quietly adding its own markup on top of the auction results. The FTC and state officials argue this practice constitutes both a deceptive act and an unfair business practice under federal and state consumer protection statutes.

The lawsuit, filed in federal court, seeks financial penalties, restitution for affected advertisers, and an injunction barring Amazon from continuing the alleged conduct. Officials say the scheme allowed Amazon to extract additional revenue from businesses that rely on its advertising marketplace to reach the millions of shoppers who use the platform daily, while those businesses believed they were paying only the amount set by open competitive bidding among advertisers. The states involved span a broad ideological and geographic range, signaling a rare instance of bipartisan coordination on an antitrust and consumer-protection matter of this scale.

Amazon’s advertising division has grown into one of the company’s most profitable segments in recent years, trailing only Google and Meta in overall digital ad revenue in the United States. That growth has been driven largely by sponsored product listings and auction-based placements that let brands bid for visibility on Amazon’s search results and product pages. Because so much of that advertising revenue depends on advertisers trusting that auction outcomes are transparent and fairly priced, allegations of concealed markups strike at a central premise of the marketplace’s business model.

The case arrives amid a broader wave of scrutiny facing large technology platforms over how they price advertising and mediate transactions between buyers and sellers. Regulators in the United States and Europe have in recent years pursued similar claims against other major ad-tech operators, arguing that opaque auction mechanics and undisclosed fees can distort competition and harm both advertisers and the smaller merchants who ultimately absorb higher costs. Digital advertising markets are especially vulnerable to such disputes because the technical complexity of real-time bidding systems can make it difficult for outside parties to verify whether pricing is being handled as advertised.

Antitrust and consumer-protection specialists say the Amazon suit reflects a continuation of aggressive enforcement postures adopted by the FTC in recent years toward dominant online marketplaces, following earlier actions targeting Amazon’s e-commerce practices more broadly. Analysts note that penalties in cases involving large-scale advertising markets can be substantial, given the volume of transactions processed through automated bidding systems, and that any required changes to Amazon’s auction disclosures could have ripple effects across the broader digital-advertising industry, which relies heavily on similar auction-based pricing models.

Amazon has not yet issued a detailed public response to the specific allegations laid out in the complaint. The company has previously defended its advertising business as a competitive marketplace that benefits both sellers and shoppers by surfacing relevant products.

The litigation is expected to move through pretrial proceedings in the coming months, with discovery likely to focus on the technical architecture of Amazon’s advertising auction system and internal communications about how pricing decisions were disclosed to advertisers.

News of the lawsuit was detailed in a release from the Federal Trade Commission.