Amazon Continues To Spew False Claims And Deceive Consumers

A frightening monopoly is illuminated by antitrust lawsuits, seller complaints, and consumer deception.

May 27, 2021, Los Angeles, CA - Amazon's unchecked monopoly power and bullying of brand owners and retail partners is drawing intense criticism, scrutiny, and lawsuits. The e-commerce giant has grown into a global juggernaut of fraud, scams, counterfeits, replicas, and piracy. Allegations of stealing from its employees, fake product reviews and blocked feedback, along with improperly using third-party data for its own strategy for developing and selling its own private-label products contribute to its growing nefarious business profile. Amazon claims 300 million active customer accounts and over 1.9 million selling partners worldwide.

The illusory and deceptive responses spewing from Amazon's bilge are shocking;

Amazon recently published its chest-pounding and self-congratulatory "Comprehensive Brand Protection Report" and spokesperson comments claiming they prevented over 6 million new selling accounts, stopping bad actors before they published a single product for sale, and blocked more than 10 billion suspected bad listings before they were published. This is not a sign of efficacy but a call for Amazon (and lawmakers) to review what business Amazon is actually supporting.

• The claim lacks any context. How many counterfeit listings were evaluated or missed? Amazon's claim is no more convincing than increased drug seizures at the border put a dent in illegal drug cartel trafficking to the U.S.
• If Amazon is so good at fighting counterfeits, why have 500,000 brands registered to fight Amazon fakes?
• The Counterfeit Report, a global award-winning consumer advocate and industry watchdog, identified and removed over 263,000 counterfeit items on Amazon websites for just a handful of the 500,000 brands fighting Amazon fakes. In response, Amazon Corporate Counsel Annasara Purcell claimed the trademark-owners submissions were an "unacceptable abuse of Amazon's infringement reporting system" and directed the rejection of over 18,000 counterfeit complaints. Obvious and inarguably counterfeit items remain, including many fake products being sold worldwide directly by Amazon.
• Amazon was also notified of an additional 226,972 fraudulent, dangerous, and potentially deadly listed items, with over 135,000 items sold to consumers. The fraudulent items remain, including products directly sold by Amazon, despite legal notice, a federal lawsuit, and a U.S. Consumer Product Safety Commission warning.

Amazon claimed it seized more than 2 million products sent to its fulfillment centers and that it detected as counterfeit before being sent to a customer. Amazon destroyed those products to prevent them from being resold elsewhere in the supply chain.

• Amazon is repeatedly identified as the direct-seller of counterfeit merchandise, e.g. "ships from and sold by Amazon.com" in addition to Amazon Prime, Amazon Warehouse, and Fulfilled by Amazon ("FBA") offerings that are plagued with counterfeit, fraudulent, and replica items. Counterfeit and fraudulent products are endorsed with Amazon's coveted "Amazon's Choice" designation. Amazon ignores brand-owner counterfeit complaints and repeatedly resells counterfeit and fraudulent merchandise through its "Amazon Warehouse" clearance center in addition to offering it to third-party clearance centers and resellers who offer the items on eBay.
• Amazon, as a direct seller, resold a returned counterfeit product (clearly marked "counterfeit") to the brand owner in the federal lawsuit (Maglula, Ltd v. Amazon) -- a striking and compelling example of Amazon's dysfunctional system. Judge Liam O'Grady didn't mince words in his harsh rebuke of Amazon's behavior, "The Court does not believe even the most persuasive presentation of Amazon's evidence would make one iota of difference to a jury."

Amazon has exhausted its illusory and patently false policy claim, "Products offered for sale on Amazon must be authentic. The sale of counterfeit products is strictly prohibited." Consumers might place their confidence in Amazon's guarantee; "We stand behind the products sold on our site with our A-to-z Guarantee," that could be true, but only if consumers are informed by Amazon (or knew) they received a counterfeit product. However, Amazon rarely notifies consumers they received a fake, even after being told by the brand owner.

• Amazon customer support employees further the deception repeatedly responding to consumer's social media complaints with, "all the products listed on Amazon are genuine" -- also a blatant lie.
  
  

  

A misconfigured database exposed over 200,000 fake Amazon reviewers.

• Reviewers were paid via PayPal to compensate them for the product purchase and allowed to keep the product itself as payment.
• There are about 250 million reviews on Amazon, with 60% of electronics, beauty products, sneakers, and supplement reviews deemed “fake.” Barely 17% of users fully trust reviews -- Review42.
• Amazon claims that only 1% of their reviews are unreliable, responding, "we have long-standing policies to protect the integrity of our store, including product authenticity, genuine reviews, and products meeting the expectations of our customers," and Amazon uses “powerful machine learning tools and skilled investigators” in order to weed out reviews that sound fake -- Modern Retail.

As retailers go out of business, small businesses feel they must use Amazon to sell their wares while Amazon charges them fees for selling and advertising. Amazon can treat sellers in this manner because it knows that sellers have no other realistic alternatives to its platform. "Amazon Marketplace is like Hotel California, a lovely place to start or expand an online retail business, but check out from Amazon Marketplace, and you can quickly find your business in bankruptcy" -- an Amazon seller's testimony before U.S. Congress.

• The District of Columbia filed an antitrust lawsuit against Amazon.com Inc. on Tuesday, alleging the company blocks sellers on its marketplace from offering lower prices elsewhere to stymie competition. The Washington, D.C. Superior Court lawsuit targets “most favored nation” clauses Amazon has imposed on sellers preventing Amazon sellers from offering lower prices on other websites, including their own. Prices on Amazon incorporate Amazon-imposed fees as high as 40% of the product price, and Amazon sellers can’t offer lower prices on other websites, says D.C. Attorney General Karl Racine. For example, a seller might want to offer a product on Walmart’s website at a lower price than on Amazon if Walmart took a lower cut of each sale. The Federal Trade Commission and other U.S. states have also been probing some of Amazon’s business practices. Harming consumers by prompting merchants to raise prices on other sites more neatly fits the traditional definition of antitrust behavior in the U.S. (view the complaint)
• Amazon constantly scans rivals’ prices to see if they’re lower. When it discovers a product is cheaper on, say, Walmart.com, Amazon alerts the company selling the item and then makes the product harder to find and buy on its own marketplace -- effectively penalizing the merchant. In many cases, the merchant opts to raise the price on the rival site rather than risk losing sales on Amazon - Bloomberg.
• Amazon's self-preferencing predatory pricing and exclusionary conduct exploits their power to become even more dominant and unaccountable to anyone but themselves, while ravaging dozens of businesses.
• Amazon is facing up to $36 billion in fines after Europe’s antitrust regulators charged Amazon with violating competition law. The U.S. has lagged far behind, allowing e-commerce sites to operate virtually immune to product liability claims and destructive anti-competitive behavior. There is no incentive for Amazon to stop -- they make too much money.
• An Indian retailer group calls for a ban on Amazon in country after a Reuters report
• Amazon says its seller fees are competitive.

Class action plaintiffs and state enforcers have tried to use state price-gouging laws to hold online retailers accountable for prices set by third parties.

• A class action filed in the Northern District of California against Amazon on April 21, 2020 alleges that price increases on the site occurred for pandemic period products sold by third parties and products supplied directly by Amazon. Amazon moved the Court to compel arbitration, arguing, among other things, that plaintiffs agreed to its conditions of use (“COUs”) when they registered their accounts. This live issue remains one to watch, given the lack of clarity for platforms and the possibility that they could be held responsible for third-party pricing as well as their own product pricing, regardless of their internal policies or compliance actions - JDSupra.

Amazon isn't just listing products on its website; it's on a quest to sell all things to all people and dominate retail merchandise and pharmaceutical sales, personal data mining, entertainment, and company takeovers. The allegations against Amazon range from the individual (the mistreatment of workers and differential pricing to customers), the market (anti-competitive behavior including the suppression of competitor products), and social (tax avoidance) -- suggest an organization that not only lacks a moral compass, but could be well on its way to a state of ‘profound immorality,’ says Professor Sarah Kaine

• Amazon remains on the U.S. Trade Representative's "Notorious Market List" for a second year. The list is reserved for the worst online markets and offenders that enable and facilitate the world's largest criminal enterprise (estimated at $1.7 to $4 trillion); counterfeit product sales, copyright piracy, and trademark infringement. Amazon has the distinction of being the first and only U.S. company to be added to the list.
• About 50% of Amazon products come from China, assisted by fake review companies (almost always in China) that open hundreds or thousands of fake Amazon accounts known as “zombie accounts.

Amazon is aggressive about dodging taxes and getting everyone else to subsidize its inevitable growth through tax breaks and tax avoidance.

• Amazon’s original business model involved legally dodging the obligation to collect sales taxes and then using the resulting price advantage to gain market share. It did this by locating its first warehouses in very few states, most of which do not have a sales tax, and then shipping its goods to customers in all the other states that do tax retail sales. This enabled Amazon to not have “nexus” in sales-tax states, so those states could not compel it to collect the tax; Texas alone came after Amazon for $269 million in uncollected sales taxes - Gizmodo.
• Amazon paid no federal income tax on $11.2 billion in profit in 2018 and a 1.2% tax rate on a $13.3 billion profit in 2019. First-quarter 2021 net income hit a first-ever high of $8 billion.

The powers that be at Amazon have often attempted to sweep these stories under the rug, but with social media and the Internet, squashing the stories has become difficult. After all, there really are shady things going on inside Amazon, and the public ought to know! Whistleblowers, step forward.

And just what do the leaders know? Jeff Bezos is stepping down as CEO amid the biggest regulatory challenges in Amazon's history, with multiple federal investigations into its competitive practices and lawmakers drafting legislation that could force Amazon to restructure its business. Second-in-command VP Jeff Wilke unexpectedly retired, VP Tim Bray quit the company in protest of the treatment of co-workers and whistleblowers, and Operations Director Doug Gurr left after trying to shift away criticism of tax avoidance and working conditions. Marketplace VP Peter Faricy left Amazon after being sidelined in 2018 amid a shake-up over counterfeits, infringements, and bad actors. In the past 12 months, Amazon insiders sold 8,397,205 shares of Amazon stock (about $27 billion USD). Why?

The House Judiciary Committee recently published its bipartisan investigation into the state of big-tech competitive practices, including Amazon. The results of the investigation are shocking, concluding, "Our economy and democracy are at stake." By controlling access to markets, the tech giants can pick winners and losers throughout our economy. They not only wield tremendous power, but they also abuse it by charging exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and businesses that rely on them. They have surveilled other companies to identify potential rivals and have ultimately bought out, copied, or cut off their competitive threats.

Regulators and politicians say its tactics are unfair for a company its size and potentially illegal. Amazon executives often initiated efforts like these on their own, though in some cases examined by The Wall Street Journal, Jeff Bezos himself was involved, according to former Amazon executives and internal emails.

While Congress is engaged in partisan bickering, America is being destroyed by unregulated e-commerce, big tech, and China.

Additional research material:

The Heavy Hand of Amazon: A Seller Not A Neutral Platform
Edward J. Janger & Aaron D. Twerski,
14 Brook. J. Corp. Fin. & Com. L. 259 (2020).

How Amazon Wins: By Steamrolling Rivals and Partners
Dana Mattioli, The Wall Street Journal