FTC and States Accuse Amazon of Deceptive Advertising Practices
By Editor • August 31, 2026 • 1 min read
The Federal Trade Commission (FTC), along with 22 states, has launched a lawsuit against Amazon, alleging that the company has been secretly inflating advertising costs for businesses on its platform.
Filed on Monday, the complaint claims Amazon manipulated its ad auction system for over seven years, resulting in significant revenue boosts that may have reached tens of billions. The lawsuit highlights the impact on over a million sellers and brands relying on Amazon’s advertising services.
Among the states involved are California, New York, and Florida. The focus is on Amazon’s Sponsored Products, Sponsored Brands, and Display ads, where the FTC claims the company misled over 500,000 small and medium-sized businesses about the auction process.
Initially, advertisers were informed they would participate in a “second-price” auction, meaning the winning bid would be just one cent higher than the next highest bid. However, the FTC alleges that starting in 2019, Amazon covertly introduced a surcharge known as a “soft reserve price,” manipulating the auction dynamics by artificially inflating what advertisers paid.
The FTC contends this led to advertisers paying their full winning bid nearly 80% of the time, effectively transforming a second-price auction into a first-price model. Amazon, which reported over $68 billion in advertising revenue last year, dismissed the allegations as misguided, asserting that its auction practices are transparent and fair.
Source: techcrunch.com
