Estimated reading time: 8 minutes.
Key facts
- Case: Federal Trade Commission et al. v. Amazon.com, Inc., No. 2:26-cv-03097, U.S. District Court for the Western District of Washington, filed August 31, 2026.
- Plaintiffs: The FTC and the attorneys general of 22 states, from Alaska to Washington.
- What is new: On November 5, 2026, the FTC announced an updated complaint that makes public details Amazon had previously redacted.
- What is alleged: Amazon secretly raised the price of search ads above its own auction results, by as much as 50% on ordinary days and as much as 250% on days like Prime Day and Black Friday.
- Who is affected: About 1.2 million advertising customers, including more than 500,000 small and medium-sized businesses, according to the complaint.
- Amazon's position: Amazon calls the lawsuit misguided and says advertisers were not harmed.
- Status: A government enforcement case, not a class action. No court has ruled on the claims, and there is no claim process.
In this article
- What the new filing reveals
- How Amazon ad auctions are supposed to work
- The hidden surcharge the government describes
- What advertisers were told
- The legal claims and what the government wants
- How Amazon responds
- What it means for sellers and shoppers
- What happens next
- Frequently asked questions
Amazon charged some advertisers up to 250% more than its own ad auctions called for on its busiest shopping days, according to newly unredacted portions of a lawsuit brought by the Federal Trade Commission and 22 states. The FTC announced the updated complaint on November 5, 2026, more than two months after it first sued Amazon in federal court in Seattle.
The case concerns the sponsored listings that appear when a shopper searches on Amazon.com. More than one million brands and sellers buy those placements, according to the FTC. The government says Amazon told them they were paying competitive auction prices while it quietly added a surcharge on top. Every description of Amazon's conduct below is an allegation from the complaint or the FTC, not a finding by a court.
What the new filing reveals
When the FTC filed the case on August 31, key numbers were blacked out. The public version of the complaint said Amazon had inflated Sponsored Products prices by an average "surcharge rate," but the rate itself was redacted. According to the FTC's November 5 announcement, the updated complaint now alleges:
- Amazon raised advertising prices by as much as 50% above auction results on ordinary days, and by as much as 250% on major shopping days like Prime Day or Black Friday.
- During the 2021 holiday season, Amazon increased advertisers' average cost per click by 20%, and some advertisers saw increases of more than 200%.
- During the 2022 holiday season, Amazon raised its surcharges in a way that increased its revenue by $87 million worldwide.
- One large food and beverage advertiser faced price increases of more than 100% during Prime Day in 2023. Internally, Amazon acknowledged the resulting drop in the advertiser's return on ad spend was "destroying campaign performance."
The FTC also says the surcharges were used to hit revenue goals. In 2023, according to the complaint, Amazon executives discussed finding an extra $40 million to meet financial targets. The FTC quotes an email from the head of Amazon Ads to a senior vice president: "I'd like to pull out all of the stops (without doing unnatural acts) to close our gaps to plan. I suspect that the entire gap won't be closed, so whatever can be done with reserves (ideally at least $40MM would be helpful)."
Not a class action This is a lawsuit by the FTC and 22 states. There is no class to join, no settlement and no claim form for advertisers or shoppers at this stage.
How Amazon ad auctions are supposed to work
Amazon sells three types of search ads: Sponsored Products, Sponsored Brands and display ads. Advertisers bid on keywords, and Amazon typically charges the winner each time a shopper clicks the ad. That price is called the cost per click.
According to the complaint, Amazon told advertisers it runs a generalized second price auction. In that format, the winner is chosen based on its bid and how relevant its ad is to the search, and it pays only the minimum needed to win, or just above the next highest ranked bid. The complaint says that is a common format in search advertising and that Amazon repeated the description in training materials, marketing and conversations with account managers.
The complaint says Amazon earns more than $68 billion a year in advertising revenue, mostly from ads on its own store, and that Sponsored Products is by far its most lucrative ad product.
The hidden surcharge the government describes
The FTC says that beginning in 2019, Amazon changed its auction rules without telling advertisers. It added what Amazon internally called a "soft reserve price," which the FTC describes as an undisclosed surcharge. One internal Amazon document described the auction pricing as having "a surcharge hidden in it," according to the FTC.
In practical terms, the complaint says Amazon would run its auction, see the result, and then replace the second price with a higher number it calculated. The complaint describes this as "secretly inserting a fake 'bid' or price after determining the winning bids."
The government says the effect grew over time. According to the FTC's August announcement, the share of auctions in which advertisers paid their own full bid rose from 30% to 40% in 2021 to about 70% in 2022, and to about 80% by 2024. The complaint estimates Amazon "extracted over 20 billion dollars" from advertisers.
What advertisers were told
A central part of the new filing is what Amazon said when advertisers noticed rising prices. According to the FTC, when advertisers asked whether "something has changed with respect to the second price auction process," Amazon told them the increases came from more competition.
The FTC gives one example. After an advertiser asked whether something had changed "either by design or mistake," an Amazon account manager replied: "After reaching out to the product specialist team we were informed there is not a bug, or a change in auction style, so no worries there. This year the marketplace is even more crowded than any year previous, and we are seeing the spike in CPCs [costs-per-click] as a direct reflection."
The government says statements like this were false because Amazon's own reserve pricing was driving the higher prices.
Why the auction format matters In a second price auction, an advertiser can bid high without fear of overpaying, because it only pays what it takes to win. If the price is quietly raised toward the full bid, that strategy costs more than the advertiser expects.
The legal claims and what the government wants
The FTC brings its claims under Section 5(a) of the FTC Act, which bans unfair or deceptive practices. Its counts include misrepresentation of the auction format, deceptive auction manipulation, concealment and unfair omissions. Each of the 22 states adds claims under its own consumer protection law.
In the prayer for relief, the plaintiffs ask the court to:
- Enter a permanent injunction to prevent future violations.
- Award monetary relief within the court's power.
- Award the states civil penalties, restitution, disgorgement, attorneys' fees and costs under state law.
The participating states are Alaska, Arizona, California, Colorado, Florida, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Nebraska, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Vermont and Washington. The FTC voted 2-0 to file the case.
How Amazon responds
Amazon disputes the case. In a statement published the day the suit was filed, the company called it "a misguided lawsuit" and said it "strongly disagrees" with the claims.
Amazon says advertisers were not harmed. It says that from 2019 through 2024, the average cost per click for Sponsored Products search ads stayed flat after adjusting for inflation, while conversion rates rose 24% from 2021 to 2025. It also says that in no scenario does an advertiser pay more than its bid, and that advertisers adjust bids based on real results, not descriptions of auction mechanics. Amazon says the FTC relied on "a handful of simplified communications" after reviewing about 1.5 million pages of documents.
Search Engine Journal noted that the FTC's November 5 announcement did not include a new Amazon response to the unredacted details. WRNJ reported that Amazon continues to dispute the allegations and plans to defend itself in court.
Allegations, not findings The surcharge figures, emails and account manager quote come from the government's complaint. Amazon denies wrongdoing, and a court has not decided whether any of it is true.
What it means for sellers and shoppers
For Amazon sellers and brands that buy sponsored ads, the case could eventually lead to refunds or other money if the government wins or reaches a settlement. That is not guaranteed. Any money would depend on how the case ends and what the court orders.
The government also argues shoppers paid a price. When the case was filed, FTC Chairman Andrew N. Ferguson said the higher ad costs "were largely passed on to American consumers." Amazon rejects that, saying the complaint cites no evidence of consumer price increases and that the proposed redress goes to advertisers, not shoppers. Whether shoppers were affected at all is one of the contested questions.
Sellers who believe they were overcharged may want to keep their advertising invoices and campaign reports, which show bids and actual cost per click over time.
What happens next
Amazon is expected to respond to the complaint in court, which in cases like this often includes a motion to dismiss. If the case continues, the parties would move into pretrial proceedings. A trial, ruling or settlement could take years.
For other cases open to consumers now, see our list of class action cases you can join. This article is for information only and is not legal advice.
Frequently asked questions
What is the FTC lawsuit against Amazon ads about?
The FTC and 22 states claim Amazon told advertisers it ran competitive second price auctions while secretly adding surcharges that pushed ad prices above the auction results. The case is No. 2:26-cv-03097 in the Western District of Washington.
What did the unredacted complaint add?
It made public figures Amazon had redacted, including surcharges of up to 50% on ordinary days and up to 250% on major shopping days, a $87 million revenue boost in the 2022 holiday season and a 2023 email about finding $40 million.
Is this a class action I can join?
No. It is a government enforcement case brought by the FTC and state attorneys general. There is nothing for sellers or shoppers to join or file right now.
Could Amazon advertisers get money back?
Possibly, if the government wins or settles and the court orders refunds. Nothing has been awarded, and no refund program exists.
What does Amazon say?
Amazon calls the suit misguided. It says average cost per click for Sponsored Products stayed flat after inflation from 2019 through 2024 and that advertisers never pay more than their bid.
Did the alleged surcharges raise prices for shoppers?
FTC Chairman Andrew N. Ferguson has said the higher costs were largely passed on to consumers. Amazon says there is no evidence of consumer price increases. A court has not decided the question.
