The Federal Trade Commission (FTC) and 22 state attorneys general are suing Amazon in the U.S. District Court for the Western District of Washington. They allege Amazon secretly manipulated its sponsored-ad auctions and overcharged about 1.2 million advertisers by more than $20B since 2019. Amazon denies the allegations, and the case is at the pleadings stage.
Latest development Aug 31, 2026
On August 31, 2026, the Federal Trade Commission (FTC) and 22 states sued Amazon in the U.S. District Court for the Western District of Washington. They allege Amazon concealed surcharges that inflated ad-auction prices for advertisers. Texas filed a separate, parallel suit the same day.
Why it matters
The case will decide whether Amazon deceived advertisers about how its sponsored-ad auctions set prices, and whether that conduct was unfair. It affects roughly 1.2 million advertisers and opens a second federal front against Amazon, separate from the FTC’s marketplace monopolization suit.
Background
On August 31, 2026, the Federal Trade Commission (FTC) sued Amazon.com, Inc. in the U.S. District Court for the Western District of Washington. The attorneys general of 22 states, led by Washington, joined the suit. The complaint alleges that, starting in 2019, Amazon secretly overrode the results of the “second-price” auctions that it told advertisers set the cost of its sponsored ads. These included Sponsored Products, Sponsored Brands, and Sponsored Display placements on Amazon.com and its mobile app.
The government contends Amazon told advertisers they would pay only one cent more than the next-highest bidder. Instead, it says, Amazon imposed undisclosed surcharges that inflated prices for roughly 1.2 million advertising customers, including more than 500,000 small and medium-sized businesses. The complaint frames the conduct as both a deceptive and an unfair practice, citing internal Amazon documents and employee communications. Regulators say those materials show the company knew advertisers believed they were bidding in a genuine second-price auction. The FTC and the states allege the scheme let Amazon extract more than $20B over roughly seven years, much of it passed on to consumers.
The plaintiffs seek an injunction to stop the practice, monetary relief, and civil penalties under state consumer-protection statutes. Amazon has denied the allegations, calling the lawsuit “misguided” and “flawed” and arguing that the FTC “cherry-picked” outdated internal documents. The company says average winning bids for sponsored-product ads fell by half between 2019 and 2025. It also says advertisers adjust bids based on real-world ad performance rather than a description of auction mechanics.
Texas Attorney General Ken Paxton filed a separate, parallel lawsuit the same day. It makes similar allegations under Texas consumer-protection law, and Texas did not join the federal case. The case is also distinct from the FTC’s earlier monopolization suit against Amazon over its marketplace conduct, which remains pending before a different judge in the same district. As of September 2026, Amazon’s defense team includes lawyers from Dunn Isaacson Rhee LLP and Wachtell, Lipton, Rosen & Katz. The case is at the pleadings stage, with no ruling yet on the merits or on any motion to dismiss.
Timeline 5 events
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OrderAmazon retains Dunn Isaacson Rhee and Wachtell Lipton
Bloomberg Law reported that Amazon’s defense team includes Karen Dunn, Jeannie Rhee of Dunn Isaacson Rhee LLP and William Savitt of Wachtell, Lipton, Rosen & Katz.
Amazon Taps All-Star Legal Lineup to Fight FTC Advertising Suit
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OtherAmazon publicly denies ad-auction allegations
Amazon posted a blog response calling the lawsuit “misguided” and “flawed,” saying regulators relied on outdated internal documents and that average ad costs fell over the relevant period.
FTC and 22 states sue Amazon over alleged secret ad surcharge scheme
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FilingTexas AG files separate ad-auction suit against Amazon
Texas Attorney General Ken Paxton announced a parallel lawsuit against Amazon over the same alleged auction-rigging conduct, seeking civil penalties under Texas consumer-protection law rather than joining the federal case.
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FilingFTC and 22 states sue Amazon over ad-auction pricing
The FTC and 22 state attorneys general filed suit in the Western District of Washington alleging Amazon secretly manipulated ad-auction pricing to overcharge advertisers by more than $20B.
FTC, States Sue Amazon Over Secret Ad Surcharge SchemeAmazon Faces FTC Suit Claiming It Misled Advertisers on Pricing
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OtherBloomberg reports FTC weighing ad-auction suit against Amazon
Bloomberg reported that the FTC had drafted a potential complaint against Amazon over advertising practices, with multiple state attorneys general also involved.
Amazon Faces Billions in Penalties From Potential FTC Ad Suit