FTC and 22 states unseal allegations of Amazon ad surcharges up to 250% above auction results

The Federal Trade Commission and 22 states have made public previously redacted portions of their complaint against Amazon over its search advertising auctions. The FTC announced the updated filing on November 5. The agencies allege Amazon used hidden surcharges to raise advertiser prices and then gave advertisers misleading explanations. These are allegations only. No court has made findings, and the FTC release announces no settlement.

What the unredacted complaint alleges

According to the FTC, the newly visible portions allege that Amazon secretly raises advertising prices by as much as 50% above auction results on ordinary days. They allege increases of as much as 250% on major shopping days such as Prime Day or Black Friday.

The complaint gives several specific examples:

• 2021 holiday season: Amazon allegedly raised advertisers' average cost-per-click by 20%, with some advertisers seeing increases of more than 200%.
• 2022 holiday season: Amazon allegedly raised its surcharges and increased its worldwide revenue by $87 million.
• Prime Day 2023: one large food and beverage advertiser allegedly faced price increases of more than 100%. The FTC says Amazon acknowledged internally that the resulting drop in the advertiser's return on ad spend was "destroying campaign performance."

The FTC also says the surcharges were used to meet revenue goals. In 2023, according to the complaint, Amazon executives discussed finding an additional $40 million in revenue to meet corporate financial targets. The complaint quotes an email from the head of Amazon Ads to a senior vice president of ad products and technology. In it, the executive asks to "pull out all of the stops (without doing unnatural acts) to close our gaps to plan." The email continues that whatever can be done with reserves, ideally at least $40 million, would help.

The alleged misstatements to advertisers

The unredacted pages also address what advertisers were told. The complaint alleges that when advertisers asked whether something had changed in the second-price auction process, Amazon falsely reassured them that higher prices reflected increased competition. In one example cited by the FTC, an account manager allegedly told an advertiser that product specialists reported no bug and no change in auction style. The account manager allegedly attributed a spike in cost-per-click to a more crowded marketplace.

For general counsel, this part of the complaint matters as much as the pricing figures. The theory is not only that prices were higher than a described auction would produce. It is also that front-line staff gave customers inaccurate explanations when asked directly.

Background and Amazon's position

The FTC and its state partners sued in the Western District of Washington, with the original complaint filed on August 31, according to FoodNavigator. That complaint alleges that for more than seven years Amazon increased Sponsored Ads rates for more than one million brands and sellers. The state attorneys general put the number of overcharged advertisers at more than 1.2 million and the overcharges at more than $20 billion. The FTC alleges that Sponsored Products advertisers paid their full bid about 80% of the time in 2024, which would effectively turn a purported second-price auction into a first-price one.

Amazon denies the accusations. In its August public statement, it said no advertiser pays more than its bid. It described "soft reserve prices" as a real-time minimum value for a placement and a "hard reserve" as the minimum a bid must exceed to enter an auction. Amazon said advertisers whose winning bids exceed both pay the soft reserve, while those between the two pay their own bid. It also said average cost-per-click for Sponsored Products search ads stayed flat after inflation from 2019 through 2024. On internal emails, Amazon said a stray email does not show a team's intent. Search Engine Journal reported that the FTC's latest release carried no new Amazon response to the unsealed details.

What this means for in-house counsel

If your company buys advertising on Amazon or another auction-based platform, treat this case as a prompt to review what you can verify about pricing. The complaint alleges that campaign reports show what advertisers paid but not how the final price was set. Ask the marketing and procurement teams which platform statements about auction mechanics they rely on, and whether those statements are in writing. Preserve account manager correspondence on unexplained cost spikes, particularly for 2021 through 2023 peak events. That material could matter if your company later considers a claim or receives a third-party request.

Companies that sell their own advertising, ranking or pricing products should read the revenue-target allegations as a compliance lesson. The FTC pairs internal discussion of closing a gap to plan with alleged changes to how prices were set. Review whether product and finance communications about hitting revenue goals through pricing parameters are accurate and consistently handled. Check that public descriptions of the mechanism, such as "second-price auction," match how the system actually works. Sales and support staff should have approved language for explaining price changes, so they do not offer speculation about causes.

Finally, keep the posture of the case in view. The allegations are untested, Amazon contests them, and the unredacted filing does not say whether any of the alleged practices continued after 2023. Avoid reaching conclusions in board materials or vendor negotiations that the court has not reached. Do consider a documented look at your own exposure and contract rights. Check whether your agreements give you audit or transparency rights over platform pricing, and whether any limitation period is running on a claim you might have.