The Federal Trade Commission (FTC) and 22 states have sued Amazon for secretly inflating advertising rates since 2019. The lawsuit alleges Amazon added hidden surcharges to ad auctions, causing advertisers to overpay for sponsored placements. The FTC claims the scheme extracted over $20 billion from unwitting customers and ultimately raised prices for consumers.

Internal documents cited in the suit show employees questioned the practice, with one memo acknowledging it increased short-term revenue but would hurt the company long-term. Amazon denies the allegations, calling the lawsuit misguided and saying it misunderstands how advertising auctions work. The company states it reviewed 1.5 million pages of evidence and found no basis for the FTC’s claims, asserting the suit relies on oversimplified communications to allege a companywide deception effort.