Texas Attorney General Ken Paxton sued Amazon for deceiving businesses about how it prices advertising on its platform.
The lawsuit alleges that Amazon told advertisers it ran "second-price" auctions where they would "only pay the least bid amount needed in order to win." Instead, Amazon allegedly added hidden surcharges and undisclosed "soft reserve" prices that pushed costs up by roughly 17 percent on ordinary shopping days and more than 25 percent during peak events like Prime Day.
According to the lawsuit, Amazon's hidden surcharges generated roughly $4.5 billion in additional revenue nationwide in 2024 alone. Advertisers now pay their own bid nearly 80 percent of the time, the suit claims.
More than 18,000 Texas sellers and vendors advertise on the platform across billions of auctions, many of them small businesses and authors who depend on the placement to make sales.
"Amazon lied to Texas small businesses and charged them for an auction it never ran, which raises prices for job creators and Texas families," Paxton said. "I will not allow this multi-billion-dollar corporate scam to go unchecked."
Texas is seeking civil penalties of up to $10,000 for each violation and has asked the court to order Amazon to stop describing its auctions inaccurately and to provide each Texas advertiser with a record of auctions showing bids, surcharges applied, and final amounts charged.