> ## Content Index > Fetch the complete content index at: https://www.consumernews.ai/llms.txt > Use this file to discover other available public pages before exploring further. # FTC sues Amazon, accuses it of secretly inflating ad prices - URL: https://www.consumernews.ai/ftc-reportedly-preparing-lawsuit-accusing-amazon-of-secretly-inflating-ad-prices/ - Published: 2026-08-31T18:45:48.000Z - Updated: 2026-08-31T21:51:20.000Z - Description: Amazon isn’t just selling ads; those ads increasingly determine what shoppers see first. - Author: James R. Hood - Tags: Consumer Protection - **The FTC and 22 states today sued Amazon, alleging it secretly manipulated the auctions businesses use to buy ads on its shopping site.** - **Regulators are expected to argue that Amazon raised minimum ad prices without adequately telling advertisers, extracting tens of billions of dollars over seven years.** - **The dispute matters to consumers because paid ads increasingly dominate Amazon search results — and higher advertising costs can ultimately be reflected in product prices.** Amazon built one of the world’s largest advertising businesses by selling merchants prominent positions in the search results shoppers see when they look for products. Now federal and state regulators reportedly contend that Amazon secretly manipulated those advertising auctions to make sellers pay more. The Federal Trade Commission and a bipartisan group of 22 state attorneys general filed a lawsuit accusing Amazon of deceptively raising the minimum prices businesses had to pay for ads on its retail platform, according to the [FTC said](https://www.ftc.gov/news-events/news/press-releases/2026/08/ftc-states-sue-amazon-over-secret-ad-surcharge-scheme?ref=consumernews.ai). The lawsuit alleges that Amazon used a pricing mechanism known as a “soft reserve” to quietly push advertisers’ bids higher, generating tens of billions of dollars in additional revenue over roughly seven years. “When one of the world’s largest online retailers engages in unfair and deceptive conduct, the impact can be staggering,” said FTC Chairman Andrew N. Ferguson. “Amazon has millions of advertising customers who were misled into paying significantly higher prices. These higher costs were largely passed on to American consumers. The FTC under President Trump won’t allow this deception to continue.” [Earlier reporting](https://www.reuters.com/legal/litigation/amazon-faces-billions-penalties-potential-ftc-ad-suit-bloomberg-news-?ref=consumernews.ai) about the FTC investigation said regulators were examining whether Amazon adequately disclosed its use of “reserve pricing” — essentially the minimum amount an advertiser has to pay before an ad can be purchased. Reuters reported in June that the FTC’s consumer protection division was investigating Amazon’s advertising auctions and that several state attorneys general were participating. The allegations have not yet been proven in court. As of Monday afternoon, the FTC had not publicly posted the expected complaint. [Why the first Amazon search result may not be the best oneThose “recommendations” on Amazon are sometimes ads, not independent recommendations. Don’t take them as gospel.![](https://storage.ghost.io/c/2a/11/2a11693a-adfd-404e-b346-dc871787142e/content/images/icon/cnai-logo-icon-600-sq-6faa501d-4277-4f47-97aa-5b9edfcbfd6a.png)ConsumerNews.aiJames R. Hood![](https://storage.ghost.io/c/2a/11/2a11693a-adfd-404e-b346-dc871787142e/content/images/thumbnail/online-shopping-midj-2026-419ad32f-d2ad-4db0-b0b1-552a8d804542.jpg)](https://www.consumernews.ai/why-the-first-amazon-search-result-may-not-be-the-best-one/) ## Amazon ads have become a massive business The case concerns a business that has quietly become one of Amazon’s biggest sources of revenue. Amazon reported $68.6 billion in advertising services revenue in 2025, up 22% from $56.2 billion in 2024 and nearly 46% from $46.9 billion in 2023. The company [defines](https://www.sec.gov/Archives/edgar/data/1018724/000101872426000004/amzn-20251231.htm?ref=consumernews.ai) that business broadly to include sponsored ads, display advertising and video advertising sold to sellers, vendors, publishers, authors and others. ([SEC](https://www.sec.gov/Archives/edgar/data/1018724/000101872426000004/amzn-20251231.htm?utm%5Fsource=chatgpt.com)) Much of the advertising shoppers encounter on Amazon is more basic: a merchant pays for its product to appear prominently when someone searches for something like “coffee maker,” “running shoes” or “dog food.” That makes Amazon unusual among advertising platforms. Consumers who search Amazon frequently already intend to buy something, making a high position in the results particularly valuable. For merchants, advertising can consequently become difficult to avoid. ## The allegation: Amazon quietly raised the floor Digital advertising generally works through automated auctions. Businesses compete for prominent advertising positions by specifying how much they are willing to pay, often each time a shopper clicks an ad. But auctions can also have a reserve price — the minimum amount the platform will accept. According to the Journal, the FTC will allege that beginning around 2018 Amazon secretly increased those minimum prices using its “soft reserve” system. The practice reportedly was eventually used in as many as 80% of Amazon ad auctions and was particularly aggressive during major shopping periods. Regulators contend the system could increase advertisers’ cost per click by as much as 50%, according to the Journal. If accurate, the allegation would mean advertisers believed they were participating in a competitive auction while Amazon was simultaneously influencing the price floor behind the scenes. The states joining the FTC are expected to seek civil penalties and restitution. ## Sellers pay — but shoppers may ultimately pay too Although the immediate victims alleged in the case are advertisers, the dispute has broader implications for Amazon customers. Advertising has become increasingly important for merchants trying to make their products visible on Amazon. A seller whose product appears several screens down in the search results may have little chance of making a sale. Advertising expenses therefore become another cost of selling — much like Amazon commissions, fulfillment charges and shipping expenses. Those costs can ultimately be incorporated into the prices consumers pay. The FTC has already made essentially that argument in its separate antitrust lawsuit against Amazon. In that case, the [commission alleges](https://www.sec.gov/Archives/edgar/data/1018724/000101872426000004/amzn-20251231.htm?ref=consumernews.ai) that Amazon has increasingly replaced relevant organic search results with paid advertisements, worsening the shopping experience while making advertising fees increasingly necessary for merchants that want consumers to find their products. The FTC said in its antitrust complaint that Amazon deliberately expanded advertising on search pages as a way to extract more revenue from businesses selling through its marketplace. ## Search results aren't necessarily recommendations The case is also another reminder for shoppers that the first product shown after an Amazon search isn't necessarily the product Amazon's system considers the best match. It may simply be advertising. Sponsored listings are labeled, but paid results can resemble ordinary product listings and appear alongside them. That distinction has become more important as Amazon has expanded advertising throughout its marketplace. A shopper searching for a relatively generic product may now encounter several sponsored products before reaching unpaid search results. That doesn't mean advertised products are necessarily inferior. But consumers may want to compare several listings rather than assuming the first result is Amazon's recommendation. ## Another major FTC fight with Amazon The advertising case would add another front to a long-running battle between Amazon and federal regulators. The FTC and states [sued Amazon in 2023](https://www.ftc.gov/news-events/news/press-releases/2023/09/ftc-sues-amazon-illegally-maintaining-monopoly-power?os=windhgbitylrefdapp&ref=consumernews.ai), accusing it of illegally maintaining monopoly power in online retail and marketplace services. That case includes allegations that Amazon burdens sellers with increasingly costly fees and degrades search results with advertising. Amazon has denied the antitrust allegations. Separately, Amazon agreed in 2025 to pay $2.5 billion in penalties and refunds to settle an FTC case accusing it of enrolling consumers in [Prime subscriptions](https://www.reuters.com/world/amazon-pay-25-billion-settle-prime-deception-allegations-2025-09-25/?ref=consumernews.ai) without proper consent and making cancellation unnecessarily difficult. ([Reuters](https://www.reuters.com/world/amazon-pay-25-billion-settle-prime-deception-allegations-2025-09-25/?utm%5Fsource=chatgpt.com)) The expected advertising lawsuit differs in an important respect. This time the alleged deception wasn't principally aimed at shoppers. It was allegedly aimed at the businesses paying Amazon to reach them. But because those businesses compete for shoppers' attention — and build advertising expenses into the economics of selling their products — the effects can travel straight through the marketplace to consumers. ### What consumers should know Amazon search results increasingly combine advertising with ordinary product listings. When comparing products: - Look for **“Sponsored”** labels before assuming a top result earned its position organically. - Scroll beyond the first few results; highly ranked products may be there because the seller paid for placement. - Compare prices with other retailers, particularly on heavily advertised products. - Check reviews, specifications and total price rather than relying primarily on search position. - Remember that advertising expenses are part of sellers' costs and can indirectly contribute to higher retail prices. The FTC's expected lawsuit could eventually reveal much more about how Amazon decides what shoppers see — and how much merchants have been paying for the privilege of appearing there.