Amazon sued by FTC, 22 US states over advertising practices

Amazon.com AMZN.O illegally raised prices for advertisers by surreptitiously raising the minimum price required to place ads that promote their products, the U.S. Federal Trade Commission alleged in a lawsuit filed in federal court Monday.

The agency, joined by a bipartisan group of 22 U.S. states, said Amazon systematically inflated auction prices for advertisers without their knowledge, costing them $20 billion or more. “Amazon has been able to generate billions of dollars in profits — at the expense of its auction advertising customers,” the FTC stated in its suit filed in federal court in the Western District of Washington state.

Advertisers suffered billions of dollars in harm from higher ad prices, while the states could seek civil penalties and attempt to recover some of that money, the FTC alleged.

Amazon, in a blog post Monday, denied the report, saying its advertising policies aim to show shoppers the most relevant ads, adding that the average cost per click for advertisers remained flat from 2019 to 2024, while the sales generated from those clicks rose.

“Amazon's approach to pricing contradicts any suggestion of consumer harm,” the company said. “We provide customers the lowest prices every day across the widest selection of products, and work to ensure our retail and grocery prices meet or beat those offered by other retailers.”

The e-commerce giant in September last year agreed to pay $2.5 billion in fines and reimbursements to Prime subscribers to settle the FTC's allegations that it deceived its customers to generate subscriptions.

Amazon shares fell about 3% in afternoon trading.