FTC Sues Amazon Over Secret Advertising Surcharge Scheme

The Federal Trade Commission (FTC), along with 22 states and the District of Columbia, has filed a lawsuit against Amazon, accusing the e-commerce giant of operating a "secret ad surcharge scheme." This lawsuit, filed on June 18, 2024, alleges that Amazon has been deceptively increasing the costs for businesses to advertise on its platform, thereby inflating prices for consumers. The core of the FTC's complaint centers on Amazon's "Buy with Prime" program, which allows third-party sellers to offer their products on their own websites with Prime delivery benefits. According to the FTC, Amazon has leveraged its dominant market position to impose a "fee" on these sellers, effectively acting as a surcharge that is not transparently disclosed. This fee, the FTC contends, forces sellers to raise their prices on Amazon's own marketplace to compensate for the additional cost, or to pass the increased cost onto consumers who purchase directly from their own sites using "Buy with Prime." The lawsuit argues that this practice violates federal antitrust laws by harming competition and consumers. The FTC's complaint states that Amazon's conduct has "artificially inflated prices" for millions of consumers across the United States. The agency further alleges that Amazon has engaged in a pattern of anticompetitive behavior to maintain its monopoly power in online retail. The "Buy with Prime" program, launched in April 2022, was intended to expand Prime benefits to off-Amazon websites. However, the FTC claims that Amazon has used this program as a tool to extract additional revenue from sellers, making it more expensive for them to reach customers. The states joining the FTC in this action include Arizona, California, Colorado, Connecticut, Delaware, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont, and Wisconsin, as well as the District of Columbia. This lawsuit represents a significant escalation of regulatory scrutiny on Amazon's business practices, following years of investigations and concerns raised by lawmakers and consumer advocates regarding the company's market power and its impact on competition and pricing. The FTC is seeking to permanently enjoin Amazon from continuing these alleged anticompetitive practices and to obtain other relief deemed appropriate by the court, which could include monetary damages and structural remedies.