Attorney General Jeff Jackson Sues Amazon Over $20 Billion Ad-Rigging Scheme

FOR IMMEDIATE RELEASE
Monday, August 31, 2026
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Leads to Higher Costs for Customers for Groceries and Other Essential Goods

RALEIGH - Attorney General Jeff Jackson sued Amazon today, alleging that the company has run an illegal advertising pricing scheme that's overcharged more than 1.2 million advertising customers over $20 billion since 2019, including over 500,000 small- and medium-sized businesses. Those added advertising costs are then passed on to consumers, raising prices for groceries and other essential goods sold on Amazon.

"Amazon secretly rigged its bidding system to charge businesses more, and customers paid the price," said Attorney General Jeff Jackson. "We believe Amazon manipulated its ad auctions to inflate what sellers had to pay, adding billions of dollars in costs that ultimately get passed on to customers with higher prices. We're taking Amazon to court to stop it."

Amazon generates more than $68 billion in revenue from advertising on its website. Since 2012, Amazon has told sellers that its advertising system operates through "second-price auctions." Under that system, the winning bidder does not pay the full amount of its bid. Instead, it pays slightly more than the second-highest bid.

But the lawsuit alleges that, beginning in 2019, Amazon secretly manipulated those auctions to charge sellers more.

After a seller won an auction, Amazon would look at the winning bid and the second-highest bid, then secretly replace the second-highest bid with a higher "shill" bid of its own. That allowed Amazon to charge the winner more than the auction rules would otherwise require.

According to internal Amazon documents cited in the lawsuit, Amazon knew advertisers were bidding based on the belief that they were participating in a true second-price auction. But internally, Amazon employees discussed increasing prices while "hoping that advertisers don't notice and decrease bids or ad spend."

The lawsuit alleges that Amazon tested how much it could increase these hidden charges without advertisers detecting them, then raised the charges as those tests showed advertisers were not changing their behavior.

The lawsuit alleges that Amazon also designed mechanisms to keep the hidden charges difficult to detect and gradually phased in some price increases after abrupt increases triggered complaints from advertisers.

Inflated costs do not stop with the sellers. Businesses can pass higher advertising expenses on to consumers through higher prices for groceries, pharmacy products, clothing, school supplies, and other essentials sold on Amazon.

Attorney General Jackson is asking the court to ban Amazon from using this illegal ad scheme, pay penalties, and refund the excess money that advertisers paid Amazon.

Attorney General Jackson is joined in filing this lawsuit by the Federal Trade Commission and the Attorneys General of Alaska, Arizona, California, Colorado, Florida, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Nebraska, New Jersey, New York, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Vermont, and Washington.

A copy of the complaint is available here.

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