The Federal Trade Commission (FTC) filed a lawsuit against Amazon on Monday, accusing the retail giant of secretly overcharging advertisers through manipulations in its auction and pricing systems. Joined by 22 state attorneys general, the complaint alleges Amazon has collected upwards of $20 billion from advertising customers by imposing undisclosed surcharges starting from a 2019 change to its auction rule. FTC Chairman Andrew Ferguson emphasized that millions of advertisers were misled to pay inflated costs, which were ultimately passed on to consumers.

Amazon responded by labeling the FTC's lawsuit as misguided and argued that the complaint misrepresents how advertisers operate on its platform. The company denied evidence of higher consumer prices resulting from its ad services and highlighted that it has saved advertisers $8 billion between 2021 and 2025. Amazon insisted it has been transparent in providing guidance about its auction system and looks forward to contesting the claims in court.

The legal dispute focuses on Amazon’s sponsored products, brand, and display ads running on its widely used marketplace. Amazon has grown to become the world’s third-largest digital advertising business behind Google and Meta, generating over $68 billion in ad revenue last year. Despite the company's thriving ad business, some third-party sellers have criticized recent surges in advertising costs and new policies, leading to a boycott in which top sellers withheld their ad spending.

The FTC lawsuit claims that in 2019, Amazon made an unannounced adjustment by introducing a "soft reserve price" which functioned as a hidden surcharge, increasing ad prices beyond what advertisers were led to expect. Internal communications cited by the complaint reveal Amazon executives were aware of and intentionally implemented these practices to boost revenue. The agency is seeking civil penalties, restitution, and other damages under federal and state consumer protection laws. This suit adds to recent regulatory scrutiny of Amazon, including a $2.5 billion settlement last year related to its Prime program and an ongoing antitrust case involving the company’s market power.