FLORIDA – Florida Attorney General James Uthmeier has joined the Federal Trade Commission and 21 other states in suing Amazon, alleging the company secretly inflated advertising costs for businesses and contributed to higher prices for consumers.
The lawsuit, filed in the U.S. District Court for the Western District of Washington, alleges Amazon extracted more than $20 billion from about 1.2 million advertising customers, including more than 500,000 small and midsize businesses.
According to the complaint, Amazon told advertisers it used “second-price” auctions, in which the winning bidder paid only slightly more than the next-highest bidder. However, regulators allege the company added undisclosed surcharges and used an “invented auction participant” to drive prices higher.
By 2024, Amazon charged Sponsored Products advertisers their full winning bid about 80% of the time, according to the complaint. The lawsuit alleges Amazon effectively changed its system into a first-price auction without notifying advertisers.
The complaint says Amazon began testing hidden surcharges in 2019 and 2020 before expanding the practice across its platform. Regulators allege the surcharges were increased during major shopping events, including Prime Day and Black Friday.
The added costs affected more than advertisers, officials said. The complaint alleges sellers passed much of the expense on to shoppers through higher prices for products, including groceries, medicine and other everyday necessities.
“Sellers and vendors based in Florida have been overcharged by hundreds of millions of dollars over more than four years,” Uthmeier’s office said in a news release.
“Amazon told Florida businesses they were bidding in a fair auction. That was false,” Uthmeier said. “Amazon hid a surcharge, padded its own profits, and those costs landed on Florida families buying groceries, medicine, and everyday essentials.”
Amazon has called the lawsuit “misguided.” The company said the FTC reviewed about 1.5 million pages of documents but relied on a small number of statements and older educational materials to support its allegations.
Amazon also said its advertising system has lowered average bids since 2019 and denied that its practices harmed advertisers or consumers.
The lawsuit alleges violations of the Florida Deceptive and Unfair Trade Practices Act. Florida is seeking an injunction, restitution for consumers, repayment of alleged profits, civil penalties and other damages.
The other states involved are Alaska, Arizona, California, Colorado, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Nebraska, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Vermont and Washington.
