RALEIGH – North Carolina joined the Federal Trade Commission and attorneys general from 21 other states in a lawsuit filed Aug. 31 that accuses Amazon of secretly inflating prices in its advertising auctions.
The complaint, filed in U.S. District Court for the Western District of Washington, alleges Amazon told advertisers its Sponsored Ads used generalized second-price auctions, in which a winning advertiser pays only what is needed to beat the next-highest ranked bid. Regulators allege that beginning in 2019 Amazon added undisclosed soft reserve prices that raised charges after auctions were completed.
The North Carolina Department of Justice says more than 1.2 million advertising customers, including more than 500,000 small- and medium-sized businesses, were overcharged by more than $20 billion since 2019. The lawsuit alleges higher advertising costs can be passed to shoppers through higher product prices.
The plaintiffs are asking the court to stop the challenged practices and award monetary relief, including refunds, penalties and other damages.
Amazon disputes the allegations. In a company response, Amazon called the lawsuit misguided and said advertisers never paid more than their bids. The company said average cost per click for Sponsored Products search ads was flat after inflation from 2019 through 2024 and argued its increased emphasis on ad relevance improved performance for advertisers.
The allegations have not been adjudicated.