Amazon allegedly overcharged a million advertising customers

Amazon is being sued for secretly overcharging more than a million advertising customers.

A lawsuit filed by the US Federal Trade Commission (FTC) and a bipartisan group of 22 claims the company manipulated online auctions it uses to set ad prices, the BBC reports.

According to the lawsuit, filed on Monday, the alleged scheme has likely made $27b AUD from advertising customers since 2019.

"Amazon overrides and replaces the actual auction results with higher prices set by Amazon to increase its profits," says a complaint filed in the company's home state of Washington.

In a statement to the BBC, Amazon said it "strongly disagrees" with the premise that it misled advertisers and called the suit "misguided."

In addition to advertisers, the FTC, a US consumer watchdog, and the states say 

In the claim, Amazon is also accused of harming customers as extra costs are passed onto shoppers.

"Consumers are suffering, have suffered, and will continue to suffer substantial injury as a result," the complaint states.

Amazon hit back to that claim, saying in a statement:

“The FTC wants the public to believe this case is about higher prices for consumers. It is not."

Amazon share prices fall in face of lawsuit

The company's shares fell following the announcement of the lawsuit, closing 2.5% lower on Monday, according to the BBC.

The lawsuit states that Amazon's methods were spurred because "it was unhappy about how much revenue its advertising auctions were generating".

Amazon responded by saying the FTC "fundamentally misunderstands how advertisers operate".

"Advertisers adjust bids based on real-world performance, not descriptions of auction mechanics," Amazon said.

“Average winning bids fell 50% from 2019 to 2025 on Sponsored Products search ads, and roughly 92% of placed ads are not given to the highest bid.”