Amazon Disputes FTC Lawsuit Over Sponsored Ads as ‘Misguided’ and ‘Patently False’

Amazon has disputed a new lawsuit from the Federal Trade Commission and 22 states, calling the complaint over sponsored ads “misguided” and “patently false.” On Monday, the FTC alleged that “the company engaged in deceptive and unfair practices that secretly inflated prices in its online search advertising auctions” that ultimately “concealed unfair charges.” According to the FTC, the alleged scheme has “likely extracted tens of billions of dollars from its unwitting advertising customers,” a notion of which Amazon “strongly disagrees.” “When one of the world’s largest online retailers engages in unfair and deceptive conduct, the impact can be staggering,” FTC chairman Andrew N. Ferguson said in a statement. “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.” Alaska, Arizona, California, Colorado, Florida, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Nebraska, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Vermont and Washington cosigned the FTC’s complaint, filed in Washington federal court on Monday. Together, they accused Amazon of imposing “undisclosed surcharges on its advertising customers, which include over 500,000 small- and medium-sized businesses that participated in auctions for advertising placements on Amazon.com and its mobile app.” However, Amazon issued a blog post rebuttal of its own, insisting the commission “fundamentally misunderstands how advertisers operate” referencing just “a handful of simplified communications to allege a companywide effort to deceive” based on approximately 1.5 million pages of data across seven years. The company further insisted that “customers saved over $230 a year on average last year on essentials and other products through deals, coupons and our Subscribe & Save reorder program,” in addition to there being “no advertiser harm” either. The blog post continued: “From 2019 through 2024, the average cost-per-click for Amazon’s Sponsored Products search ads remained flat adjusted for inflation, while conversion rates grew 24% from 2021 to 2025. Advertisers paid the same and got more as we meaningfully improved ad relevancy and therefore performance.” “We have shared all of this with the FTC on multiple occasions. The data, the industry context, the evidence of how advertisers actually behave and the information showing our auction works as intended. They have shown little interest in engaging with the facts and appear more focused on trying to secure a substantial monetary victory for themselves and states they can lure with this possibility,” Amazon concluded. “The evolution of Sponsored Ads has been a journey toward better outcomes for everyone: providing sellers and vendors the ability to promote their products in the Store, highly relevant advertising for shoppers, and stronger sales and performance for advertisers. We’ve provided advertisers with guidance about our auctions and pricing in the main tools they use to manage their campaigns, and we continue to update that guidance. We look forward to making our case in court.”