US prosecutors have charged six people in connection with an alleged scheme to bribe Amazon employees and contractors in order to increase sales of third-party sellers on its marketplace, generating more than $100m in revenue over three years.
The US Department of Justice on Friday said the six defendants indicted in Washington state had conspired to pay more than $100,000 in bribes to “at least” 10 Amazon workers, who would then reinstate merchant accounts that had sold banned substances, dangerous electronics or general counterfeit goods.
Two of the defendants, Rohit Kadimisetty and Nishad Kunju, are former Amazon workers in Hyderabad, India, and are accused of recruiting colleagues to carry out the fraud. Mr Kadimisetty relocated to California in 2017, according to the indictment.
Amazon has come in for widespread criticism over its increasingly unruly third-party marketplace platform, which makes up more than 60 per cent of its total retail sales.
“Amazon has systems in place to detect suspicious behaviour by sellers or employees, and teams in place to investigate and stop prohibited activity,” the company said.
“We are especially disappointed by the actions of this limited group of now former employees, and appreciate the collaboration and support from law enforcement to bring them and the bad actors they were entwined with to justice. There is no place for fraud at Amazon and we will continue to pursue all measures to protect our store and hold bad actors accountable.”
The indictments raise fresh questions about the potential for manipulation and exploitation of consumers who buy products on Amazon. Earlier this month the company deleted 20,000 customer reviews after the Financial Times found evidence of widespread fraud. On Thursday The Markup — a US technology news site — reported details of banned substances being sold on the platform.
Prosecutors said workers were paid to share “competitive intelligence” about sellers — such as revenue or supplier information. Competitors would be flooded with negative “customer” reviews, driving them down Amazon’s rankings or off the platform altogether, prosecutors said.
The indictment said some of the six defendants acted as both sellers on the platform and consultants to other merchants seeking to gain an upper hand.
On one particular occasion, the indictment said, several Amazon employees in the same department participated in the scheme, making it possible to increase the speed at which suspended seller accounts could be reinstated in exchange for cash.
“This is like a lightning deal on crack,” one of the defendants, New York City-based consultant Joseph Nilsen, wrote in an email, according to the indictment. “To be clear, this is Kobe [Bryant] laying it up to Shaque [sic] [O’Neal] coming in to crush the backboard. If approved, all cases will be slammed [sic] dunk.”
Their alleged tactics also involved posing as a law firm to claim rival sellers had infringed intellectual property, prompting Amazon to suspend those accounts. Other efforts included altering product images to display offensive messages, prosecutors said.
“Realising they could not compete on a level playing field, the subjects turned to bribery and fraud in order to gain the upper hand,” said Raymond Duda, special agent in charge, FBI Seattle.
“What’s equally concerning, not only did they attempt to increase sales of their own products, but sought to damage and discredit their competitors.”
The six defendants will appear in federal court in Seattle on October 15. They face charges including conspiracy to commit wire fraud, as well as bribery and computer misuse.
A lawyer for defendant Ephraim Rosenberg, a Brooklyn-based consultant to third-party Amazon sellers, said his client was a “forthright and honourable man”. He will “vigorously respond to these charges in court”, said Peter Offenbecher, the lawyer.
Lawyers for Mr Nilsen, Sara Shulevitz and Mindy Meyer said: “We are in the midst of reviewing the indictment, and will have further comment once we have reviewed the charges in their entirety.”
Lawyers for the remaining defendants could not immediately be reached for comment.