• The FTC and 22 states have filed a lawsuit against Amazon for alleged deceptive advertising practices.
• Amazon is accused of secretly inflating prices charged to advertisers for seven years.
• The lawsuit claims advertisers could have lost over $20 billion due to these inflated costs.
• Amazon denies the allegations, stating its ad pricing policy remains fair and competitive.
• This marks the third major legal challenge Amazon faces from federal regulators.

The Federal Trade Commission (FTC), along with a bipartisan coalition of 22 state attorneys general, has filed a lawsuit against Amazon, alleging it has systematically inflated advertising prices for advertisers on its platform. The complaint contends that Amazon “secretly and systemically overcharged” advertisers, impacting over 1.2 million brands and costing them billions, with potential losses recognized at $20 billion or more, according to CBS News and Reuters.

The lawsuit, filed in the Western District of Washington, alleges that Amazon manipulated its advertising auction process, leading to inflated costs for advertisers without their awareness. “In executing its scheme to misrepresent and rig its auctions against its customers, Amazon has deceived its customers,” states the FTC's lawsuit, which highlights the significant financial harm done to advertisers, according to NPR. FTC Chairman Andrew N. Ferguson expressed that misleading practices by such a large retailer could drastically affect consumers.

Amazon has refuted the allegations, arguing that its advertising policies are designed to provide the most relevant ads to shoppers while ensuring fair pricing. The company claims that the average cost per click has remained stable between 2019 and 2024 despite its advertising revenue skyrocketing. In a statement, Amazon emphasized, “We provide customers the lowest prices every day across the widest selection of products,” according to Reuters and CBS News.

This lawsuit is the third major legal challenge against Amazon by the FTC, coming shortly after Amazon settled a separate case regarding its Prime subscription practices for $2.5 billion last year. The scrutiny of Amazon's advertising practices follows a trend of increasing regulatory pressure on large tech companies over perceived monopolistic behaviors and misleading consumer practices, according to NPR.