Amazon Business Practice Issues That You Can Take Advantage Of

Trust Transparency Center has tracked and reported on Amazon’s Dietary Supplement programs and platforms for the past three years with the intention of arming independent retailers with strategies to effectively compete against this gargantuan operation.

Over time there have been many changes in the structure of the service, not many of them for the good. It is no secret that we exist in a litigious society with the idea that the bigger you are, the more likely you are to face legal action. There is no bigger entity than Amazon and as such, one would expect them to be targeted with lawsuits. Some such lawsuits find merit, others can be deemed frivolous. Some of the platform lawsuits in this lengthy list involve supplements, others do not. Some of the current or previous Amazon lawsuits center around its working conditions:

Other lawsuits allege market issues such as price fixing and monopolistic practices:

  • A trio of proposed class-action lawsuits in the U.S. and Canada accuse Amazon of abusing its market dominance to fix prices.
  • California consumers hit Amazon.com with a class-action lawsuit accusing the retail giant of violating state consumer-protection laws by price-gouging during the COVID-19 public health crisis, according to attorneys at Hagens Berman.
  • In Harris v. Amazon.com LLC16-CV-967, the plaintiff alleges that he was charged for Prime membership without his knowledge or consent.

Product counterfeiting has also been an emerging lawsuit issue. Amazon has noted the problem’s existence for several years and has tried to take action both legally and through a program called “Transparency.” However, the counterfeit issue is largely driven by the exploitation opportunities the Amazon platform provides. (Global sales of counterfeits are growing at a feverish 15% annual rate, and are projected to reach $1.82 trillion in 2020, with e-commerce making up more than a quarter of that, according to the Global Brand Counterfeiting Report.)

The most serious and concerning Amazon legal issue was recently served by the United States Department of Justice relating to bribery. On September 16, 2020, the DOJ filed suit in the United States District Court for the Western District of Washington at Seattle against six plaintiffs located from New York to India. The filing accused the six defendants of soliciting money from retailers and paying bribes to internal Amazon employees to gain information, reinstate products and “settle scores.” The DOJ advised the unfair advantage provided by the defendants to the Amazon marketplace exceeds $100 million. The 38-page filing reads more like a mystery/crime story than a lawsuit.

The Grand Jury charges include stealing Amazon confidential business information, reinstating suspended accounts and products, circumventing Amazon restrictions on accounts, facilitating attacks against sellers and their product listings

Some examples of malicious attacks on supplement products to “settle a score.”:

Image ID: Small/blurry image of an Amazon listing. Product title appears to be "Probiotic Powder for Dogs and Cats with 5 Billion CFU Per Serving and 12 Strains of Bacteria for Digestive Health." The rest of the text is too small/blurry to read. Instead of an image of the product, the image listing is the mask from the V for Vendetta movie. End ID.
Image courtesy of Trust Transparency Center.
Image ID: Small image of an Amazon listing for "Keto Diet Pills That Work--Weight Loss Supplement to Burn Fat Fast--Boost Energy and Metabolism--Best Ketosis Supplement for Women and Men--Nature Driven--60 Capsules." The picture of the product has been replaced with a picture of the Joker from one of the Batman movies. End ID.
Image courtesy of Trust Transparency Center.

The conspiracy argument provided details of the defendants recruiting Amazon employees to accept bribes.

The range of bribes paid ranged from $350 to $200,000. One interaction was described as employees would coordinate the timing of messages to allow bribed employees to intercept and control the “ask.” It is unclear how this alleged bribery was initiated. In speaking with Amazon sellers familiar with this type of issue, the six defendants noted above are ‘the tip of this iceberg’ and the problem is more widespread. This type of behavior is made more possible with the accumulation of clout that Amazon has. The larger the organization, the higher the possibility of employees flouting rules and succumbing to ‘influences’ to take advantage.

So, why talk about this and what is the problem with this bribery? Amazon, despite its obligation to ensure some measure of product safety, repeatedly allows dietary supplements with known safety issues to remain on market. Amazon is allowing products  with proven zero active ingredients to be marketed falsely through these practices and allowing inferior products to purchase fake reviews – while you in store are confirming vendor quality, product quality and efficacy. While you in store are maintaining ethical and fair practices, Amazon is allowing employees to use their marketplace to receive ill-got gains.

Dietary supplements are a valuable asset to our total healthcare system. However, the vetting and oversight provided by Amazon to the dietary supplement consumer is insufficient. You, the independent retailer of dietary supplements, depend on the integrity of the market and the products provided. This viewpoint is not shared by Amazon. It is up to the natural products industry as a whole to reinforce the ideal that ingestible products are not equivalent in the marketplace as clothing, electronics or appliances. Litigation continues to fail us, and it is time we demand integrity and honesty be maintained, if not in the Amazon marketplace, at least the dietary supplement marketplace.

What can you do as a retailer to impact change? Continue to educate your consumers on the importance of reliability and honesty in the marketplace. The products and services you provide are not under consistent criticism and legal action. It is time to educate and resonate the message that we will not support bribery, adulteration and mismanagement of the category. Litigation remains a starting point for this message, but your interest and action are the most effective defense that can change this misaligned environment.

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Scott Steinford, Founder, Trust Transparency Center
Scott Steinford has built a career of leading, learning and mentoring. Through immersion in many aspects of the supplement and pharmaceutical industry Scott has worked to redefine and improve business practices within the healthcare industry with an emphasis on transparency. His experience ranges from entry level to CEO and positions include organizations representing ingredient supplier, ingredient manufacturer, retail brand, private equity, M&A due diligence expert and trade organizations. Scott has a Pre-Law Bachelor’s Degree from the University of Texas at Arlington and a Master’s of Science Degree in Law from Champlain College. Scott currently is Executive Director for the CoQ10 Association and President of the Natural Algae Astaxanthin Association (NAXA) and Founder of Trust Transparency Center, a boutique consulting organization dedicated to assisting companies seeking to improve both their internal and external trust transparency. Scott’s prior experience includes CEO of Doctor’s Best and maintained a pivotal role with a variety of ingredient manufacturers including Eisai, Kaneka and was a founder of ZMC-USA.

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