Earlier this fall, we covered the federal lawsuit filed by the Federal Trade Commission (FTC) and 22 state attorneys general accusing Amazon of covertly manipulating its search ad auctions to overcharge sellers.
At the time, some of the specific details remained blacked out under court protective orders.
On November 5, 2026, the court unsealed those redactions. The newly public filings include internal executive emails, hidden pricing markups, and documented statements where Amazon allegedly misled advertisers about rising costs.
Here is what the latest court disclosures revealed.
The Key Revelations from the Unsealed Complaint
Amazon long assured advertisers that its ad marketplace operated on a fair, competitive "second-price auction" system, where costs were dictated strictly by market competition.
The unredacted court records appear to challenge this notion:
- Hidden Surcharges Up to 250%: Regulators allege Amazon quietly imposed secret surcharges on ad auctions, raising prices by up to 50% above fair auction results on regular days, and surging by as much as 250% on peak shopping days like Prime Day and Black Friday.
- Massive Cost-Per-Click Spikes: During the 2021 holidays, Amazon's actions allegedly drove average CPCs up by 20%, with some advertisers seeing price spikes over 200%. In the 2022 holidays alone, these undisclosed surcharges allegedly netted Amazon $87 million in worldwide ad revenue.
- "Closing the Gap" Financial Targets: The complaint cites internal emails showing executives used these covert surcharges to hit internal revenue quotas. In 2023, facing a $40 million shortfall, the head of Amazon Ads told leadership: "I’d like to pull out all of the stops (without doing unnatural acts) to close our gaps to plan... whatever can be done with reserves (ideally at least $40MM would be helpful)."
- Blaming Marketplace Competition: When brands asked why their ad costs were spiking and return on ad spend (ROAS) was collapsing, the Complaint alleges Amazon representatives falsely claimed that auction mechanics hadn't changed and blamed "crowded marketplace competition" instead.
3 Strategic Takeaways for E-Commerce Brands
- Preserve Your Historical Ad Data: If this enforcement action results in a government restitution fund, settlement, or private class action, recovery formulas will depend on proof of your actual advertising spend. Even if you haven't filed a formal complaint with the FTC, make sure you download and back up your historical Amazon campaign reports, daily CPC averages, and search query data dating back to 2019 while that data remains accessible in your Seller Central or Ads console.
- Don't Build on Borrowed Land Alone: Relying exclusively on third-party marketplace algorithms leaves your profit margins vulnerable. Diversifying to your own independent, direct-to-consumer storefront (like a Shopify site) is the best protection against marketplace fee manipulation.
Frequently Asked Questions
What did the FTC recently reveal about Amazon Ads?
The FTC and 22 states unsealed factual evidence showing Amazon applied covert surcharges between 50% and 250% on search ad auctions to meet corporate financial targets, and falsely told advertisers that rising costs were purely the result of organic competition.
What is Amazon's response to these unredacted filings?
Amazon denies the allegations, asserting that the lawsuit mischaracterizes standard auction mechanics and that advertisers always retain control over the maximum bids they set.
Protect Your Brand Across Every Channel with Abrams Law
Navigating third-party platform regulations, marketing compliance, and agency contracts requires strategic legal counsel. Contact Abrams Law today to schedule a consultation.
About the Author: This article was written by Courtney Abrams, Esq. Courtney Abrams is a trademark and e-commerce attorney and founder of Abrams Law, a Phoenix-based boutique law firm focused on digital marketing, intellectual property strategy, and comprehensive brand protection for fashion/lifestyle brands, content creators, and online shops nationwide.
Disclaimer: The information provided in this post is for general educational purposes only and does not constitute formal legal advice or establish an attorney-client relationship. If you need legal assistance securing your assets, please schedule a formal consultation directly with our firm.
