Maryland Attorney General Anthony G. Brown has joined the Federal Trade Commission and attorneys general from 21 other states in a lawsuit against Amazon, alleging the company secretly inflated prices paid by businesses advertising on its online marketplace.
The complaint, filed in U.S. District Court for the Western District of Washington, alleges Amazon imposed undisclosed surcharges on more than one million brands and sellers over a period of more than seven years. The coalition claims the practices generated tens of billions of dollars in additional revenue for Amazon.
According to the lawsuit, Amazon represented that its advertising system used “second price” auctions, in which a winning advertiser would pay slightly more than the next-highest bidder. The complaint alleges Amazon instead charged Sponsored Products advertisers more than the winning bid nearly 80% of the time, effectively turning many auctions into first-price auctions without disclosing the change.
The lawsuit also alleges Amazon increased the surcharges during high-volume shopping periods such as Prime Day and Black Friday and intentionally concealed how advertising prices were being calculated. More than 500,000 small- and medium-sized businesses are among the advertisers that participated in the auctions, according to the complaint.
Brown, the FTC and the other participating attorneys general are accusing Amazon of deceptive and unfair practices related to its advertising auction system.
