Amazon promised sellers they'd pay a penny over the runner-up. The FTC says they paid their own bid 80% of the time
22 states and the FTC sued Amazon on August 31, 2026, claiming a seven-year pricing trick inside its ad auctions quietly pulled tens of billions of dollars out of more than a million brands and sellers — and that the cost landed on shoppers.
When you search for a phone case on Amazon, the first few results are ads. Sellers bid for those slots in an auction, and for years Amazon told them how that auction worked: win it, and you pay one cent more than the person who bid just below you. That rule matters, because it lets a seller bid what a click is really worth without fear of overpaying.
The complaint filed on August 31, 2026 by the Federal Trade Commission and 22 state attorneys general says the rule was not what Amazon said it was. For Sponsored Products ads, the complaint alleges, Amazon charged advertisers their own full winning bid close to 80% of the time. The auction Amazon described was a second-price auction. The one it allegedly ran was, in effect, a first-price auction. Over seven years, according to the complaint, more than 1 million brands and sellers paid the difference, likely tens of billions of dollars.
Here is the part that reaches past Amazon's advertisers. FTC Chairman Andrew N. Ferguson said the higher costs "were largely passed on to American consumers." A seller who suddenly pays more for every click does not absorb it out of goodwill — it goes into the price tag. If the allegation holds, a hidden surcharge on advertising was quietly a hidden surcharge on shopping.
The mechanics are worth a second, because they explain why the alleged lie was profitable rather than just dishonest. In an auction where you pay your own bid, smart bidders lower their offers over time to find the cheapest amount that still wins — the complaint calls this bid shading. In an auction where you only pay a cent over the next guy, you bid close to what the click is honestly worth to you. Tell people it's the second kind while running the first, and you collect the gap between honest bids and careful ones.
Trust in the rules is what made the bids high. The rules are what's now in dispute.
Scale matters here too. The complaint says over 500,000 of the affected advertisers are small and medium-sized businesses — one-person brands, side hustles, people who never saw the auction, only the invoice. They had no way to check. The auction happens inside Amazon's own system, and the only description of how it works came from Amazon's website, its training videos and its hundreds of sales staff.
Anyone who buys anything on Amazon: the FTC's chairman says these costs were largely passed to American consumers, which means the surcharge, if real, was baked into ordinary prices for years. Anyone running a small shop or a side hustle that advertises there — over 500,000 small and medium-sized businesses are named in the complaint, and many of them were spending their first real marketing money without any way to audit where it went. And anyone building a business on top of a platform they don't control: the pricing rules you're told are the rules you plan around, and this case is about what happens when only one side can see the ledger.
The FTC and the 22 state attorneys general — 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 — have filed a complaint. That is an allegation, not a finding. Amazon has not responded in the press release, and the FTC named no hearing date, no deadline and no damages figure beyond "likely tens of billions." What happens next, and when, nobody has said yet.
The complaint doesn't accuse Amazon of charging too much. It accuses Amazon of describing the rules one way and running them another. That's a smaller-sounding claim with a bigger reach: it applies to every auction, ranking and fee schedule where the platform is also the only referee. Ask yourself how many prices you pay today were set by a process you were simply told about.
Sources: Federal Trade Commission press release, "FTC, States Sue Amazon Over Secret Ad Surcharge Scheme," August 31, 2026.
Регулятор и 22 штата утверждают, что Amazon семь лет тайно завышал цену рекламы для более чем миллиона продавцов — а эти надбавки в итоге оплачивал покупатель в цене товара.
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