A new lawsuit filed today by the Federal Trade Commission (FTC) and 22 states, including Washington, alleges that Amazon has for years artificially inflated the prices of ads on its e-commerce platform and misrepresented how the company sets ad prices.

"Many small business owners in Washington rely on Amazon for their livelihoods, and our office is committed to making sure Amazon treats them fairly, transparently, and in accordance with the law." Attorney General Nick Brown said.

The bipartisan coalition of plaintiffs alleges Amazon has imposed undisclosed surcharges on its advertising customers, which include more than 500,000 small- and medium-sized businesses that participated in auctions for advertising placements on Amazon.com and its mobile app. In Washington, there were about 10,000 independent sellers on Amazon's platform as of 2023, according to the company's Small Business Empowerment Report.

Businesses buy ads on Amazon to have their products prominently displayed to shoppers. For years, Amazon told businesses that ads on its platform were sold through "second-price" auctions, using a combination of the bid amount and relevance to shopper queries. Under that model, a business chooses a maximum price it'd be willing to pay for an ad, but if it is the winning (highest) bidder, the business only pays one cent more than the second-highest bid.

Amazon's auction system, however, doesn't allow advertisers to see other bids. The coalition asserts that starting in 2019, Amazon began adding surcharges onto ad prices while continuing to tell ad buyers that it operated a "second-price" auction system. Amazon employees raised concerns, including in an internal memo in 2023 stating that this practice was not "doing the right thing for the advertisers," according to the complaint.

In the complaint, Washington alleges that Amazon violated the state's Consumer Protection Act. The Attorney General's Office is asking the court to order Amazon to reform its practices, pay restitution and civil penalties for each violation, along with reasonable attorneys' fees.

Joining Washington in filing the lawsuit, which is being led by the FTC, are the attorneys general of 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, and Vermont.

Managing Assistant Attorney General Joe Kanada, Assistant Attorneys General Gardner Reed and Averill Aubrey, and Paralegal Allison Cleveland are handling the case for Washington.

Read the complaint.

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