Amazon Faces Risk of FTC Lawsuit Over Alleged Misleading Advertising Practices
Amazon is facing an in-depth FTC investigation into whether it concealed its advertising auction pricing mechanism and reserve-price information from advertisers. If the investigation leads to litigation, Amazon could face substantial civil penalties and be required to improve transparency in its advertising-bidding policies.
What are the key facts?
- 1FTC is investigating Amazon
- 2Focus on disclosure of ad auctions and reserve prices
- 3Civil penalties are possible
- 4Attorneys general from multiple states are involved
What happened?
According to Bloomberg, the US Federal Trade Commission (FTC) is considering suing Amazon, alleging that it misled advertisers in its advertising business. The investigation focuses on whether Amazon adequately disclosed the auction rules for search advertising and the “reserve price,” or the minimum threshold for advertisers to participate in bidding. The investigation is currently led by the FTC’s consumer-protection division, with attorneys general from multiple states also involved. If the allegations are substantiated, Amazon could face civil penalties.
What does this mean for cross-border sellers?
Amazon’s advertising-auction mechanism could face transparency reforms. Sellers should closely monitor policy changes in the advertising console and assess the compliance of their current advertising strategies.