The Federal Trade Commission and 22 states filed a lawsuit against Amazon on Monday in the U.S. District Court in the Western District of Washington. The lawsuit alleges that the e-commerce giant defrauded more than 1.2 million advertising customers by misleading them about the prices for online auctions for ads.
Regulators claim that Amazon secretly inflated the minimum prices required to place ads that promote products while claiming it was offering competitive prices. The complaint alleges the company manipulated ad prices on its retail platform to reap billions, overcharging sellers and brands by tens of billions of dollars. FTC Chairman Andrew Ferguson stated that the impact can be staggering when one of the world's largest online retailers engages in unfair and deceptive conduct.
Amazon, which entered the online advertising market in 2008 with a service called Product Ads, has pushed back against the complaint. The company argued in a blog post that the FTC fundamentally misunderstands how its ads work and relies on a handful of simplified communications to allege a companywide effort to deceive. Amazon stated that these allegations are patently false.