Amazon faces possible FTC lawsuit over advertising practices: Report

Amazon may soon have another legal headache to add to its ever-expanding to-do list.

The e-commerce titan is reportedly staring down a possible lawsuit from the US Federal Trade Commission (FTC) over claims that it may have failed to provide advertisers with clear information about how some of its advertising products were priced. According to Bloomberg, the watchdog is considering legal action that could expose the company to hefty civil penalties.

The potential case comes at a time when Amazon's advertising business has transformed from a side hustle into one of the company's most lucrative operations. With billions of dollars flowing in from sponsored listings, video promotions and display ads, the stakes are far higher than they were just a few years ago.

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Several state attorneys general are also said to be involved in the investigation, signalling that the matter could carry consequences beyond Washington.

Amazon's ad empire faces uncomfortable questions

Advertising has quietly become one of Amazon's most powerful money-making machines. Last year alone, the company generated $68.6 billion in advertising revenue, making it a serious challenger to established digital advertising giants.

But regulators have reportedly been looking closely at how the company sells those ads.

At the centre of the investigation is whether Amazon adequately explained the terms attached to certain advertisements, particularly sponsored listings that appear prominently when shoppers search for products on its marketplace.

The FTC's consumer protection division has also examined how Amazon conducts its advertising auctions. Investigators are said to be interested in whether the company properly informed advertisers about "reserve pricing" requirements.

Reserve pricing refers to the minimum amount advertisers must be willing to pay before they can secure certain ad placements. Regulators are reportedly trying to determine whether those thresholds were communicated clearly enough to customers buying advertising space.

Google's parent company, Alphabet, has also been under scrutiny over similar issues involving online advertising practices.

Neither Amazon nor the FTC has publicly commented on the latest developments.

Another legal storm brewing for the retail giant

The possible advertising case is just one of several legal challenges currently hovering over Amazon.

The company remains locked in an ongoing battle with the FTC over antitrust allegations tied to marketplace visibility and pricing practices. Regulators have accused Amazon of using its dominance to unfairly influence competition, claims the company has consistently disputed.

Meanwhile, a separate class-action lawsuit filed in Washington alleges that Amazon shifted tariff-related costs onto consumers despite presenting itself as a platform focused on low prices. The complaint claims prices on inexpensive goods rose by more than five per cent during 2025 and argues affected customers were not reimbursed.

Amazon has also moved to settle another lawsuit in Illinois concerning allegations involving employees' medical and genetic privacy. While the company agreed to resolve the case, it denied any wrongdoing.

According to Bloomberg, the advertising probe could conclude either with a settlement or a formal lawsuit, potentially as early as this summer.

For Amazon, whose empire spans e-commerce, cloud computing, streaming and advertising, regulatory scrutiny has become something of a recurring companion.

And with watchdogs increasingly paying attention to how Big Tech makes its money, the company's advertising business, once considered a quiet success story, may now find itself firmly in the spotlight.