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Amazon faces FTC suit claiming it misled advertisers on pricing

Last year, Amazon agreed to pay US$2.5 billion to resolve a different FTC probe over its Prime subscription practices.

The United States Federal Trade Commission is preparing to sue e-commerce giant Amazon.com Inc. over claims the company misled advertisers on prices, according to a person familiar with the matter.

A group of U.S. states is also set to join the potential lawsuit , said the person, who asked not to be identified discussing the regulatory matter.

The FTC, which enforces antitrust and consumer laws , and multiple state attorneys general had been probing claims that Amazon had been misleading advertising clients. A possible lawsuit could lead to billions of dollars in civil penalties, Bloomberg reported in June.

The probe, which ramped up last year and is run by the agency’s consumer protection unit, focuses in part on whether Amazon properly disclosed the terms and pricing related to its ads, Bloomberg previously reported. The ads, sometimes known as “sponsored listings” or “sponsored ads,” appear as the top products when they search Amazon’s marketplace, the report said. An enforcement action was expected as soon as this summer.

The lawsuit may be filed as soon as Monday, according to the person.

In an emailed statement, Amazon said FTC investigators misrepresented how its advertising auctions work and presented no evidence of harm to shoppers. Amazon advertising auctions prioritize products relevant to shopper search terms before considering bid amounts, which helps shoppers find what they want and keeps prices down for advertisers, the company said. The average cost-per-click for Amazon search ads remained flat when adjusted for inflation from 2019 to 2024 while advertising performance increased, the company said.

An FTC representative didn’t immediately respond to a request for comment.

A suit would mark the latest legal clash between Amazon and the FTC, which has been looking into many aspects of the company’s business since at least 2019. Last year, Amazon agreed to pay US$2.5 billion to resolve a different probe over its Prime subscription practices. And a trial is slated for early next year over claims that Amazon is illegally monopolizing online retail markets and degrading quality for shoppers and overcharging sellers.

The Wall Street Journal earlier reported the FTC planned to file the suit Monday.

Bloomberg.com