Amazon sued in US over allegations of unfair advertising prices

Amazon faces a broad US lawsuit over claims that it quietly made online advertising more expensive, with the Federal Trade Commission alleging the practice generated potentially tens of billions of dollars over seven years.

The FTC says companies pay Amazon to place advertisements alongside particular search results. Under the auction rules described by the agency, the winning bidder should pay only one cent more than the second-highest offer. A $200 bid, for example, would cost $190.01 if the next-highest bid were $190.

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These higher costs were largely passed on to American consumers.

The complaint alleges Amazon instead collected the full winning bid in almost four out of five product-advertising auctions. The agency says internal company documents refer to the practice as a “hidden surcharge.” It also accuses Amazon of using fictional bidders to push prices higher.

The attorneys general of 22 states joined the case. FTC Chairman Andrew Ferguson said the additional costs were largely passed on to American consumers, warning that the consequences could be severe if one of the world’s largest online retailers used unfair practices. Amazon shares traded about 2.5% lower on Monday.

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If one of the world’s largest online retailers engages in unfair practices, the consequences could be devastating.