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PHOENIX (AZFamily) — Arizona Attorney General Kris Mayes has joined attorneys general from 20 other states and the Federal Trade Commission in suing Amazon, accusing the company of secretly tacking hidden surcharges onto advertising costs.
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The coalition alleges that Amazon set undisclosed surcharges on its advertising customers, including over 500,000 small and medium-sized businesses.
For years, Amazon reportedly told these businesses that ads on its platform were sold through “second-price” auctions, using the bid amount and how relevant its product was to a shopper’s search. Under this system, a business set the highest price they’re willing to pay. If the business won the auction, it only paid one cent more than the next-highest bid.
Advertisers can’t see other bids in Amazon’s auction system. The lawsuit alleges that starting in 2019, Amazon began quietly adding surcharges to ad prices while still telling advertisers it used the “second-price” auction model. According to the complaint, Amazon employees raised concerns about the practice, including in a 2023 internal memo that said this method wasn’t “doing the right thing for the advertisers.”
Mayes is alleging that Amazon violated Arizona’s Consumer Fraud Act. The attorney general’s office wants the court to make Amazon change its practices, pay damages, cover civil penalties for each violation and pay attorneys’ fees.
“Amazon has built one of the largest advertising businesses in the world on the backs of small business owners who trusted the company to play by its own rules,” Mayes said in a written statement. “For years, Amazon told advertisers they were bidding in a fair, second-price auction, while secretly adding hidden surcharges that drove prices higher. Many of these increased costs were passed on to Arizonans. Companies that engage in such deceptive practices must be held accountable.”
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Joining Arizona in filing the lawsuit are the attorneys general of Alaska, 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.
If you believe you are a victim of consumer fraud, file a complaint with the Arizona Attorney General’s Office at www.azag.gov/consumer.
If you need a complaint form sent to you, contact the Attorney General’s Office in Phoenix at (602) 542-5763, in Tucson at (520) 628-6648, or outside the Phoenix and Tucson metro areas at (800) 352-8431.
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