E-commerce giant Amazon (AMZN) is being sued by the Federal Trade Commission (FTC) and 22 U.S. states for allegedly misleading advertisers about its pricing and surcharges.
The lawsuit claims that Amazon “secretly and systematically overcharged” advertisers on its platform by manipulating its pricing and auction systems.
The lawsuit also states that Amazon may have earned more than $20 billion U.S. from advertisers by using “hidden surcharges” dating back to 2019.
“Amazon has millions of advertising customers who were misled into paying significantly higher prices,” said the FTC. “These higher costs were largely passed on to American consumers.”
In response, Amazon called the FTC’s lawsuit “misguided” and said the complaint “fundamentally misunderstands how advertisers operate.”
In a blog post, Amazon added that the lawsuit by the FTC and U.S. states does not include evidence of consumer price increases.
The lawsuit focuses on Amazon’s sponsored product advertisements, brand ads, and display ads that run alongside search results on its e-commerce platform.
Amazon has amassed the third-largest digital advertising business globally, behind only Google parent company Alphabet (GOOGL) and Meta Platforms (META).
In 2025, Amazon earned more than $68 billion U.S. in advertising revenue, with most of it coming from sales of sponsored products ads.
The lawsuit comes as third-party sellers on Amazon’s marketplace criticize surging advertising costs that have resulted from recent policy changes by the technology giant.
The FTC and U.S. states allege that Amazon’s practices violate federal and state consumer protection laws, and they’re seeking civil penalties, restitution, and unspecified damages.
This is the latest lawsuit against Amazon by the FTC. Last year, Amazon reached a $2.5 billion U.S. settlement with the agency to resolve a probe into its Prime membership program.
The company is also facing a trial in 2027 brought by the FTC and 17 U.S. states that accuses Amazon of wielding “monopoly power” to inflate prices.
AMZN stock has risen 15% over the last 12 months to trade at $259.77 U.S. per share.
