FTC Lawsuit Claims Amazon Hid Ad Surcharge to Inflate Prices for Over a Million Sellers

The Federal Trade Commission, joined by attorneys general from 22 states, alleges that Amazon operated a covert ad surcharge scheme for more than seven years. By introducing a hidden “soft reserve price” and fabricating bids from an “invented auction participant,” Amazon allegedly turned its second‑price auctions into de‑facto first‑price auctions, causing winners to pay their full bid amount up to 80 % of the time. This practice affected over one million brands and sellers, many of whom were assured the system remained transparent, and is said to have generated tens of billions in extra revenue that was never disclosed.

Amazon responded by calling the lawsuit “misguided” and maintains that its auction mechanics are properly explained and that advertisers focus on performance outcomes rather than theoretical pricing models. The complaint seeks to halt the undisclosed surcharge, impose penalties, and compel Amazon to provide clearer disclosures about reserve prices and house bids. If proven, the case could force significant transparency changes in Amazon’s retail media business and may impact small businesses that rely heavily on advertising to reach customers.

The lawsuit highlights broader concerns about opaque pricing in digital advertising and adds to a series of regulatory actions against Amazon, signaling increased scrutiny of how the company leverages its marketplace power. Discovery of internal documents and executive communications will be pivotal in determining whether the practice constitutes deceptive conduct or legitimate auction design.

(Source：Webpronews)