Thursday, October 29, 2020

U.S charges Amazon ex-employee in $100 million bribery scheme

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A former Amazon.com Inc. employee in India was charged by the U.S. with taking more than $100,000 in bribes to give select merchants an advantage over competitors selling goods ranging from electronics to dietary supplements.

The illegal arrangement with consultants based in New York, California and Georgia who advise sellers on the online marketplace started as early as 2017, and allowed them to reap $100 million worth of competitive benefits, according to an indictment announced Friday.

“This is just the tip of the tip of the iceberg,” said Jason Boyce, an Amazon merchant turned consultant who runs the firm Avenue7Media. “You can find people in online selling forums willing to put you in touch with someone who can get into Amazon’s system to help you sell more products or sabotage your competitors.”

The Indian employee charged was identified as Nishad Kunju, 31, of Hyderabad. Others indicted are Ephraim Rosenberg, 45, of Brooklyn, New York; Joseph Nilsen, 31, and Kristen Leccese, 32, of New York City; Hadis Nuhanovic, 30, of Acworth, Georgia; and Rohit Kadimisetty, 27, of Northridge, California.

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They were charged with conspiracy to use a communication facility to commit commercial bribery, conspiracy to access a protected computer without authorization, conspiracy to commit wire fraud and wire fraud.

“Realizing 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, an FBI supervisor in 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.”

Amazon said it has systems in place to detect suspicious activity by employees and sellers and teams that investigate prohibited activity.

“Bad actors like those in this case detract from the flourishing community of honest entrepreneurs that make up the vast majority of our sellers,” the company said in a statement.

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More than half the goods sold on Amazon’s website come from independent merchants who give Amazon a cut of each sale. Selling on Amazon is so competitive it has created a cottage industry of consultants who help merchants. Amazon’s introduction of paid advertising on the site, which allows merchants to pay for better visibility in search results, has increased the competitive pressure on sellers.

Amazon has struggled to tamp down various problems that run rampant on its site, like counterfeit products and fake customer reviews meant to deceive shoppers. Many of these schemes can be conducted in ways that elude detection by the company, such as finding online shoppers in Facebook groups and using PayPal to pay them to buy a product and leave a favorable review. The federal indictment highlights how the stakes are so high that Amazon’s employees and contractors can be enticed with bribes to manipulate a marketplace that is supposed to help shoppers find the best products at the best prices.

“This inside thing is bad and it’s growing,” said Boyce, who sold on Amazon for more than a decade before starting his consulting firm.

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