ChatGPT Pricing Euphemism Backfires on Amazon

Companies may try to obfuscate bad news, sometimes through the use of euphemisms and creative wording. We've seen online marketplaces announce rate hikes as a move to "simplify" pricing, but using soft language doesn't make changes any less impactful to sellers' businesses.

The FTC called out Amazon for doing that in a new lawsuit filed on Monday, according to Bloomberg reporter Spencer Soper. In a post on LinkedIn, he wrote the following about the FTC's allegations:

"In 2024, a team of Amazon advertising employees struggled to think of synonyms for the word "surcharge," which they'd been told not to use in internal communications regarding advertising prices. So they asked ChatGPT for alternatives and settled on "performance premium.""

The FTC and 22 state attorneys general filed the lawsuit on August 31, 2026, over what it called a "secret ad surcharge scheme," alleging Amazon concealed unfair charges in its digital advertising auction pricing." The complaint goes far beyond the use of euphemisms.

In response, Amazon called the lawsuit misguided in a blog post published the same day and said "the FTC's own complaint cites no evidence of consumer price increases, and consumers are only mentioned a handful of times in over 150 pages." But the FTC recognized that small- and medium-sized businesses are customers.

The lawsuit alleged that, "for over seven years, Amazon has covertly and substantially increased the prices that more than one million brands and sellers were required to pay to advertise on its platform. As a result, the complaint alleges that Amazon's scheme has likely extracted tens of billions of dollars from its unwitting advertising customers."

But in its response, Amazon provided statistics that it says proves advertisers were not harmed. For example, it said, "From 2019 through 2024, the average cost-per-click for Amazon's Sponsored Products search ads remained flat adjusted for inflation, while conversion rates grew 24% from 2021 to 2025. Advertisers paid the same and got more as we meaningfully improved ad relevancy and therefore performance."

Amazon wrote, "The FTC claims advertisers were harmed because they didn't understand how our auction worked and therefore overpaid. Not only do we properly describe our pricing and auctions to advertisers, but this claim fundamentally misunderstands how advertisers behave."

In addition to refuting the lawsuit's claims in its blog post, Amazon addressed some of the evidence the FTC used to bolster its case - including stating that sometimes its employees express "ill-formed" thoughts in emails as part of brainstorming:

"With a writing culture like we have, people at times use email as a brainstorming and suggestive medium, expressing ideas, testing hypotheses, but sometimes expressing thoughts that are either ill-formed or that they change later with the benefit of conversation and other views. Most every decision of any import is decided in a meeting and through multiple meetings. A stray email is not indicative of a team's intent or even collective viewpoint. Also, as a customer-centric advertising company, our advertising team, including senior leaders, communicates with advertisers on a regular basis and it's not unusual to simplify a description in these instances."

Here's the fulltext of the section Spencer Soper called out from the FTC/AGs complaint:

"In July 2024, members of the Sponsored Products auction team discussed using a different word than "surcharge" in their internal communications. A team member prompted ChatGPT: "Give me some different terms for the term 'surcharge' in Sponsored Product pricing. This term is currently used to describe the additional price that we charge on top of the second price CPC we charge to advertisers for every click. This additional price is determined based on the performance/value we deliver to advertisers through the ad." The team then considered replacing "surcharge" with alternate terms which included, among others: "value adjustment," "price refinement," "price adjustment," "inflated CPC," "price exaggeration factor," "performance premium," and "profit extraction lever." The auction team ultimately suggested "performance premium.""

Sellers who advertise on marketplaces may be particularly interested in reviewing the fulltext complaint on the FTC website as well as the full response from Amazon.

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