Consumers Affected
18,000
Texas Attorney General Ken Paxton sued Amazon.com, Inc. on August 31, 2026, alleging Amazon deceived advertisers by claiming to run second-price auctions while secretly applying hidden surcharges and undisclosed 'soft reserve' prices that pushed winners' costs up by roughly 17% on ordinary days and more than 25% during peak events like Prime Day. The hidden surcharges generated roughly $4.5 billion in additional nationwide revenue in 2024, and more than 18,000 Texas sellers and vendors advertise on the platform. The State brings claims under the Texas Deceptive Trade Practices Act, seeking civil penalties of up to $10,000 per violation, an injunction against inaccurate auction descriptions, and per-auction pricing records for every Texas advertiser; the FTC and a coalition of other states filed a parallel federal action the same day.
Remedies sought in the newly filed lawsuit (not yet ordered): civil penalties of up to $10,000 for each violation; an injunction requiring Amazon to stop describing its auctions inaccurately; and an order requiring Amazon to give every Texas advertiser a record of each auction showing the bids, any surcharge applied, and the final amount charged.
In-house teams that buy advertising through Amazon (Sponsored Products/Brands/Display) or other retail media and ad-tech platforms should review their advertising services agreements, marketplace seller agreements, and any agency or media-buying contracts for pricing-methodology representations (e.g., 'second-price auction' or 'you only pay the least amount needed to win' language) that may now be inaccurate, and for fee clauses that could permit undisclosed surcharges, reserve prices, or bid adjustments. Because Amazon provides advertisers no auction-level records, contracts should be checked for transparency, audit, and records rights, and updated to require disclosure of competing bids, surcharges, reserve prices, and final amounts charged, mirroring the relief the Texas AG has requested. Companies that resell advertising services or pass ad costs through to customers should also review pass-through, reconciliation, and client-facing pricing disclosure clauses, and add remedies (refunds, termination rights, representations and warranties about pricing methodology) that can be triggered if a platform's pricing descriptions prove false.
Entity
Amazon.com, Inc.
Industry
RetailOfficial Press Release
https://www.texasattorneygeneral.gov/news/releases/attorney-general-ken-paxton-sues-amazon-rigging-advertising-auctions-overcharged-businesses-45
Amazon FINAL
https://texasattorneygeneral.gov/sites/default/files/images/press/Amazon%20FINAL.pdf
Texas Attorney General Enforcement Page
https://www.texasattorneygeneral.gov/consumer-protection/privacy
"Attorney General Ken Paxton today sued Amazon.com, Inc. (“Amazon”) for deceiving Texas businesses about how it prices the advertising they buy."
"August 31, 2026 | Press Release"
"seeks civil penalties of up to $10,000 for each violation"
"The State brings claims under the Texas Deceptive Trade Practices Act and seeks civil penalties of up to $10,000 for each violation."
"Amazon promised advertisers a competitive auction, then secretly manipulated the process to change the results to charge them more."
"Amazon applies hidden surcharges and undisclosed “soft reserve” prices that push the winner’s cost up toward its own maximum bid"
Colorado Attorney General Phil Weiser joined the FTC and 22 state attorneys general in filing a lawsuit against Amazon for manipulating the auctions used to set advertising prices, replacing actual auction results with higher prices since 2019 and overcharging nearly 1.2 million U.S. advertising customers. The FTC estimates total improper surcharges from 2018 to 2026 exceed $20 billion, with costs ultimately passed to shoppers through higher prices. The states seek a permanent injunction and monetary relief; no penalty has been imposed yet as this is a newly filed complaint.
New York Attorney General Letitia James, joined by 21 other states and the FTC, sued Amazon for secretly overcharging its advertising customers more than $20 billion by submitting fake second-place bids to inflate ad auction prices since 2018. More than 1.2 million advertisers, including hundreds of thousands of small businesses, were allegedly overcharged. The coalition seeks a court order stopping the scheme plus penalties, restitution, and damages.
$1.0B
The FTC secured a $2.5 billion settlement with Amazon, including a $1 billion civil penalty and $1.5 billion in consumer refunds, for enrolling millions of consumers in Prime subscriptions without proper consent and designing a deliberately difficult cancellation process. The order requires Amazon to implement clear enrollment disclosures, an easy cancellation method, and cease the unlawful practices.
$25.0M
The FTC and DOJ charged Amazon with violating COPPA by indefinitely retaining children's Alexa voice recordings and failing to honor parents' deletion requests. Under a proposed consent decree, Amazon must pay $25 million, delete children's data, and implement privacy safeguards.
Texas Attorney General Ken Paxton opened an investigation into TriWest Healthcare Alliance Corp., the U.S. government contractor that administers the VA Community Care Network and the Defense Health Agency's TRICARE West Region, over reports that it wrongfully denied health care claims by falsely treating insureds as having other health insurance (OHI). The OAG has issued Civil Investigative Demands (CIDs) and plans to interview consumers and employees to determine whether TriWest violated the Texas Deceptive Trade Practices Act. No findings or penalties have been imposed yet.
$1.0B
Texas Attorney General Ken Paxton secured a historic settlement with Meta Platforms, Inc. requiring Meta to pay over $1 billion and implement significant new safeguards to protect children online. The settlement includes stricter age-assurance measures, a daily two-hour limit for teen users, default disabling of notifications during school hours, hidden likes/reactions, and a nighttime access mode restricting features for children.