FTC, states sue Amazon over deceptive ad prices

The Federal Trade Commission (FTC) and 22 US states filed a lawsuit against Amazon on Monday, accusing the e-commerce giant of defrauding 1.2 million advertisers.

According to the complaint, Amazon artificially inflated auction prices for Sponsored Products, Sponsored Brands, and Sponsored Display ads, which are the first products consumers see when they search for an item.

Under Amazon’s auction model, the winning advertiser should pay only slightly more than the second-highest bidder. However, the FTC alleges that the company charged advertisers higher prices after the auction had ended.

The agency claims that these ad prices spiked during peak shopping events like the Christmas holiday season. It noted that advertising clients have lost over $20 billion since 2018.

Amazon has rejected the allegations, calling them false claims. The company is currently the world’s third-largest digital advertising platform, behind Google and Meta.