The Federal Trade Commission and 22 states sued e-commerce giant Amazon on Monday, accusing it of secretly inflating its prices in its online search advertising auctions, which potentially cost customers tens of billions of dollars.

The lawsuit alleged undisclosed surcharges were applied for seven years, which increased the prices that more than one million Amazon brands and sellers were required to pay to advertise on its platform. 

The FTC was joined by a bipartisan group of 22 attorneys general, including officials from Alaska, Arizona, California, Florida, Idaho, Illinois, Indiana, Louisiana, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina and Washington. 

The FTC and attorneys general claimed Amazon told businesses that they would pay only "one cent more" than the second-place bidder for an advertising keyword, but allegedly charged the winners its own price about 80% of the time, according to CBS News.

"When one of the world's largest online retailers engages in unfair and deceptive conduct, the impact can be staggering," FTC Chairman Andrew 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."

Amazon has denied the allegations, claiming the FTC and states misunderstood how "advertisers operate," and that the average winning bids for sponsored product ads dropped 50% from 2019 to 2025.

"Advertisers adjust bids based on real-world performance, not descriptions of auction mechanics," Amazon said in a statement. "Even accepting the FTC's flawed premise that advertisers do not adjust bids, we estimate they saved over $8 billion from 2021 to 2025 as a result of Amazon prioritizing ad relevancy over selecting ads on bid price alone."

Attorneys general from Colorado, Iowa, Maryland, Nebraska, New Jersey and Vermont also joined the lawsuit.

Misty Severi is a news reporter for Just The News. You can follow her on X for more coverage.