The Federal Trade Commission and 22 states filed a lawsuit against Amazon on Monday, accusing the retail giant of defrauding 1.2 million advertising customers by inflating prices in online ad auctions. District Court for the Western District of Washington, Amazon misled businesses about the true cost and competitiveness of several online advertising products.
Lawsuit Details and Allegations Over Ad Auctions
The joint legal action targets Amazon’s ad sales practices, alleging the company systematically overcharged businesses that purchased ad space on its platform. According to the FTC and the participating state attorneys general, Amazon claimed it offered competitive, transparent pricing for its online auctions, but instead manipulated auction mechanics to drive up costs for advertisers.
“When one of the world’s largest online retailers engages in unfair and deceptive conduct, the impact can be staggering,” said FTC Chairman Andrew Ferguson, according to the Associated Press. “Amazon has 1.2 million advertising customers who were misled into paying significantly higher prices.”
The lawsuit involves 22 states joining the federal agency in the legal filing. The complaint asserts that the inflated auction prices directly harmed approximately 1.2 million advertising customers who relied on Amazon’s platform to market products to consumers.
Amazon’s Response and Defense
Amazon pushed back against the allegations in an official company blog post following the announcement of the lawsuit. The retailer criticized the federal agency’s reliance on limited evidence to build its case.
“The FTC leans on a handful of simplified communications to allege a companywide effort to deceive,” Amazon stated in its blog post, as reported by the Associated Press. “That is patently false.”
Scope of the Multi-State Enforcement Action
District Court for the Western District of Washington, where the court will evaluate evidence regarding auction pricing transparency and the scale of financial impact on the 1.2 million affected advertisers.