FTC, 22 states sue Amazon over alleged hidden ad surcharge

The Federal Trade Commission and 22 state attorneys general filed a complaint against Amazon on Aug. 31, 2026, alleging the company secretly added surcharges to its digital advertising auctions and raised prices for advertisers.

The FTC said the alleged conduct affected more than one million brands and sellers over more than seven years, including more than 500,000 small and medium-sized businesses that took part in auctions for ad placements on Amazon.com and its mobile app.

According to the complaint, Amazon told advertisers its auctions were second-price or generalized second-price auctions, meaning the winner would pay one cent more than the next highest bidder. The FTC alleges Amazon instead charged Sponsored Products advertisers their own winning bid close to 80% of the time by adding an undisclosed surcharge the company internally called a soft reserve price.

The complaint says the hidden pricing change began in 2019. It also alleges the practice increased prices on high-volume shopping days such as Prime Day and Black Friday, and generated tens of billions of dollars in revenue for Amazon.

The agency said the attorneys general of Alaska, Arizona, California, Colorado, Florida, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Nebraska, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Vermont and Washington joined the case.

FTC Chair Andrew N. Ferguson said Amazon had millions of advertising customers who were misled into paying significantly higher prices. He said those higher costs were largely passed on to American consumers.

The commission voted 2-0 to authorize the filing, according to the FTC. The case was filed in the U.S. District Court for the Western District of Washington.

Sources

• FTC press release

Editorial note: This article was prepared with AI assistance and includes source attribution for reader review.