Amazon is facing a potential new legal fight in the US, with the Federal Trade Commission reportedly preparing a possible lawsuit over claims the online retail giant misled advertisers.

According to Bloomberg, the FTC has drafted a potential complaint as part of an ongoing investigation into Amazon’s advertising practices.

Multiple state attorneys general are also understood to be involved, raising the prospect of substantial civil penalties.

The investigation is focused in part on whether Amazon properly disclosed the terms and pricing of its ads, including the sponsored listings that appear prominently in search results on Amazon’s marketplace.

Advertising has become a major growth engine for Amazon, which generated US$68.6 billion in advertising revenue last year. The business includes search advertising, video ads and display advertising across the web.

The FTC has reportedly examined Amazon’s ad auctions, including whether the company properly disclosed reserve pricing – minimum price thresholds advertisers must meet before buying certain ads.

The matter could be resolved through either a lawsuit or settlement as soon as the US summer, Bloomberg reported. The FTC and Amazon declined to comment.

The potential ad case comes as Amazon faces mounting legal pressure on several fronts.

A separate class action filed in Washington federal court alleges Amazon passed tariff-related costs on to consumers despite claims it offered low prices and would absorb certain tariff impacts.

The lawsuit alleges Amazon increased prices on low-cost goods by more than 5% during 2025 and failed to refund affected customers.

Amazon has also agreed to settle a separate Illinois class action involving claims tied to worker medical and genetic privacy, though the company denied wrongdoing.

The latest regulatory scrutiny adds to Amazon’s long-running battles with the FTC, including antitrust claims over marketplace visibility and pricing practices.