For thousands of businesses that rely on Amazon to put products in front of shoppers, advertising costs can directly affect how much they spend to compete on the marketplace. Arizona is now backing a federal case that alleges those costs were inflated through a system advertisers were not told about.
Attorney General Kris Mayes joined the Federal Trade Commission and 21 other states in suing Amazon over its advertising auctions. The complaint alleges the company began adding undisclosed surcharges to ad prices in 2019 while continuing to describe its system as a second-price auction, in which the winning advertiser generally pays slightly more than the next-highest bid.
The lawsuit says the practice affected more than 500,000 small and midsize businesses. Because advertisers could not see competing bids, the coalition argues they had little ability to determine whether the prices they were charged matched the auction rules Amazon described.
Arizona is accusing Amazon of violating the state’s Consumer Fraud Act and is seeking refunds or other compensation, civil penalties and changes to the company’s advertising practices. Amazon will have the opportunity to contest the allegations in court.
The case also reflects a broader shift in scrutiny of digital marketplaces: regulators are increasingly examining not just the prices consumers see, but the opaque systems businesses must use to reach those consumers.
