Amazon Ads FTC Lawsuit: New Details on Auction Price Surcharges
The Amazon Ads FTC lawsuit now includes unredacted claims of hidden auction surcharges up to 250% on Prime Day. What sellers and PPC teams should check.
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The Amazon Ads FTC lawsuit just got a lot more specific. On November 5, 2026, the Federal Trade Commission published an updated, unredacted complaint filed with 22 state attorneys general. It makes public numbers and internal emails that were blacked out when the case was first filed in August 2026 in the U.S. District Court for the Western District of Washington.
The core claim is that Amazon covertly raised what advertisers paid in its search ad auction, above what the auction itself would have produced. As Search Engine Journal noted in its report on the filing, the case centers on Amazon’s “soft reserve prices.” Amazon denies any wrongdoing. Nothing has been decided by a court, so everything below is an allegation unless stated otherwise.
For anyone running Sponsored Products or other Amazon search ads, this is worth reading closely. It does not change how you buy ads today, but it gives you good reasons to look harder at your own cost data, especially around big shopping events like the ones coming up this month.
What the unredacted Amazon Ads FTC lawsuit claims
The FTC release lists several specific allegations. Here they are as published:
| Allegation | Figure in the FTC release |
|---|---|
| Price increase above auction results on ordinary days | Up to 50% |
| Price increase on major shopping days such as Prime Day or Black Friday | Up to 250% |
| Average cost per click change, 2021 holiday season | Up 20%, with some advertisers above 200% |
| Extra worldwide revenue from surcharges, 2022 holiday season | $87 million |
| One large food and beverage advertiser, Prime Day 2023 | Increases of more than 100% |
| Internal revenue gap discussed in 2023 | An additional $40 million |
According to the FTC, Amazon internally acknowledged that the Prime Day 2023 increases were “destroying campaign performance” for that food and beverage advertiser. The release also quotes an email from the head of Amazon Ads: “I’d like to pull out all of the stops (without doing unnatural acts) to close our gaps to plan.”
The FTC also alleges that when advertisers asked whether something had changed in the second price auction, Amazon told them the higher costs came from more competition. In one case an account manager allegedly said it was “not a bug, or a change in auction style, so no worries there,” and described the marketplace as “even more crowded than any year previous.”
How Amazon has responded
Amazon answered the original suit in a post on About Amazon dated August 31, 2026, calling the case misguided. Its main points:
- “In no scenario does an advertiser pay more than their bid.”
- Cost per click for Sponsored Products search ads stayed flat from 2019 to 2024 after adjusting for inflation, while conversion rates rose.
- Roughly 92% of placed ads do not go to the highest bidder, because relevance is weighed alongside bid price, which Amazon estimates saved advertisers over $8 billion from 2021 to 2025.
- Some older training materials used simplified or outdated auction explanations, and these were updated or removed. Amazon says its Ad Console has stated since 2018 that a bid is the most an advertiser can be charged.
Amazon called the idea that a few internal emails show a company wide effort to deceive “patently false” and said it looks forward to making its case in court. The FTC release does not describe a trial date or any settlement.
Why this matters for PPC teams
Both sides agree on one thing: you never pay more than your maximum bid. The dispute is about what happens between the second highest bid and your maximum. In a classic second price auction you pay just above the next bidder. The FTC alleges Amazon pushed prices up inside that gap without telling advertisers.
If that is true, the effect would show up as cost per click creeping toward your max bid, especially on peak days, while your competition looked the same. That is a pattern you can test in your own data. It is also a reminder that “the auction got more crowded” is an explanation you should check, not accept. We covered the wider point about trusting platform automation in AI in PPC: should advertisers be worried.
What Amazon advertisers should do now
These steps are Brandella’s recommendations, not anything required by the FTC or Amazon.
- Export your cost history. Download campaign and keyword level cost per click data for 2021 onward, with daily granularity around Prime Day, Black Friday and Cyber Monday. Data you have saved is more useful than data you have to request later.
- Compare CPC to max bid. For your top keywords, calculate average CPC as a share of max bid by day. A ratio that jumps on event days without a matching change in impression share is worth flagging.
- Set bids you can live with. Because you can be charged up to your maximum, treat every max bid as a price you are willing to pay, not a ceiling you hope never to reach. This matters most for the holiday events ahead.
- Use event specific budgets and bid caps. Lower bid caps or tighter budgets on peak days protect margin if costs spike. Review results the morning after each event.
- Track efficiency, not just volume. Watch ACoS, return on ad spend and conversion rate alongside clicks. A paid media reporting dashboard with these side by side makes sudden cost shifts obvious.
- Ask in writing. If costs jump, ask your Amazon contact in email what changed and keep the answer. Clear written records help in any dispute.
- Cut waste first. Before raising bids to recover volume, remove search terms that never convert, the same discipline we describe for Google Ads negative keywords.
What to watch next
This is a live case, and every claim in the complaint is an allegation that Amazon disputes. Watch for any court rulings, a response from Amazon to the newly public details, and whether the case leads to clearer disclosure of reserve or floor pricing in ad auctions generally.
Whatever the outcome, the practical lesson holds across every ad platform: keep your own records, know how the auction you buy in is supposed to work, and check whether your costs actually match that story. If you want a refresher on spotting creative and bid problems early, our guide to PPC ad copy testing is a good next read.
