Vermont attorney general joins FTC suit accusing Amazon of hidden ad surcharges
A bipartisan coalition of 22 state attorneys general, including Rhode Island's, joined federal regulators in suing Amazon over what they say were undisclosed surcharges in its search advertising auctions. The claims are allegations that have not been tested in court.
Vermont Attorney General Charity Clark and 21 other state attorneys general joined the Federal Trade Commission on Monday in suing Amazon, alleging the company used deceptive and unfair practices that drove up prices in its online search advertising auctions.
Rhode Island's attorney general is among those who signed on to the complaint, along with officials from states including California, Florida, New York, New Jersey, Pennsylvania and Washington.
According to the complaint, Amazon quietly raised the cost of advertising on its platform over more than seven years, affecting more than a million brands and sellers, including more than 500,000 small and medium-sized businesses. The attorneys general allege the company took in tens of billions of dollars through the practice.
Advertisers bid in auctions for ad placements that appear alongside search results on Amazon's website and app. The complaint says Amazon told advertisers it ran "second price" auctions, in which a winning bidder would pay only "one cent more than the next highest bidder," but that in practice Sponsored Products advertisers were charged their own winning bid close to 80% of the time.
Beginning in 2019, the complaint alleges, Amazon added an undisclosed surcharge it called internally a "soft reserve price," and executives concealed the change, including by giving false answers to advertisers who asked directly whether the auction format had changed. Prices rose most sharply on high-volume shopping days such as Prime Day and Black Friday, the complaint says.
"Manipulating or misleading businesses into spending more than they should on advertising is deceitful and unlawful," Clark said.
The allegations have not been tested in court. The release did not include a response from Amazon.
This brief was drafted by AI from a public agency press release and published by The New England Signal. Why we use AI for stories like this one.