Amazon Sues Administrators of 10,000 Facebook Groups Over Fake Reviews

Amazon has filed a lawsuit against administrators of more than 10,000 Facebook groups it accuses of coordinating fake reviews in exchange for money or free products. Amazon said in a statement posted on its website on July 19 that the Facebook groups were set up to recruit people “willing to post incentivized and misleading reviews” across its stores in the U.S. the UK, Germany, France, Italy, Spain and Japan.

The problem over phoney reviews is not new for Amazon, or e-commerce as a whole. Amazon itself has previously sued people it said were offering fake testimonials, though lawmakers and regulators have questioned whether the company was doing enough to combat the issue. In 2021, U.K. competition regulators launched a probe into whether the online retailer and Google were taking adequate actions to protect shoppers.

In the statement, Amazon said one of the Facebook groups it’s targeting, called “Amazon Product Review,” had more than 43,000 members. The company said Facebook removed the group this year, but it was able to dodge the platform’s detection by “changing letters in phrases that might set off Facebook’s alarms.”

Amazon noted since 2020, it has reported more than 10,000 fake review groups to Meta, the parent company of Facebook. Meta has removed half of these groups and is investigating the others, Amazon said.

The retailer’s announcement comes as another side of the company’s operations is facing more scrutiny. On July 19, federal labor officials confirmed to the AP the Occupational Safety and Health Administration has opened inspections at Amazon facilities in New York, Illinois, and Florida after receiving referrals alleging safety and health violations from the U.S. Attorney’s Office for the Southern District of New York.

Nicholas Biase, a spokesperson for the U.S. Attorney’s Office in New York, said federal labor officials entered the Amazon warehouses on the morning of July 18 after their office made referrals about “potential workplace hazards,” including “Amazon’s required pace of work for its warehouse employees.”

Biase said the civil division of the U.S. attorney’s office is investigating safety hazards at the company’s warehouses across the country, as well as “fraudulent conduct designed to hide injuries from OSHA and others.” The office is encouraging current and former Amazon warehouse workers to report workplace safety issues directly to them.

Source: Globe and Mail
Source: Retail Dive


Business Groups, Tories Seek Changes to Canadian Tax System After Amazon Findings

The federal Conservatives and industry groups representing Canada’s small businesses and technology sector are calling for changes to the tax system that for years allowed Amazon.com Inc. decrease to book its Canadian retail profits in the U.S., minimizing its exposure to corporate taxation here.

The Globe and Mail revealed this tax strategy as part of an investigation into Amazon’s activities and influence in Canada, drawing on documents that governed employee behaviour during the company’s climb to the top of the country’s digital retail sector. While warehouse operations were run by a Canadian-registered company, the documents describe a system in which staff at Amazon’s Seattle headquarters oversaw this country’s retail operations, with strict rules to limit travel and discussion of Amazon business.

Amazon described the information in the documents as an “outdated portrayal” of its corporate structure in an e-mail to The Globe in July, but did not deny having previously used the strategy. The company said it pays all taxes required by Canadian governments. Nothing in the documents counselled Amazon, its subsidiaries or employees to engage in anything illegal, such as tax evasion, nor do the documents contain any evidence of illegal behaviour.

Tax-minimization strategies are common in the corporate world, but the findings revealed the extent to which large multinationals can minimize the taxation of their profit in countries where they operate but are not headquartered. Dan Kelly, the president and chief executive officer of the Canadian Federation of Independent Business (CFIB), said his group has many concerns. “For years, small, independent businesses have worried that large multinationals can use complex corporate structures to minimize their taxes in Canada,” he said. “Without vigilance from Ottawa, these giant companies can have an unfair advantage over smaller firms.”

Justin Trudeau’s Liberal government warmly welcomed the giants of American technology to Canada, particularly during his first term, much to the frustration of many high-growth Canadian tech firms. Though the government has since distanced itself from the giants of Big Tech, domestic industry groups such as the Council of Canadian Innovators have long expressed frustration at what they see as preferable treatment of foreign multinationals at the expense of domestic economic development.

“This case represents an extreme example, and one that should be studied by policy-makers,” said Benjamin Bergen, the council’s president, in an e-mail. “It’s troubling that Canada’s tax system provides more favourable treatment of the foreign company profits than for domestic companies.”

The Amazon documents recommended restrictions on corporate travel for retail employees, who were instructed not to spend more than two consecutive weeks or more than 182 days a year in Canada, or else profit from Amazon’s retail operations in this country might be taxed here. The company also instructed staff not to have dedicated workspace in Canada, or to ask anyone here to order an Amazon product or sign up for its services while those employees were on Canadian soil.

Asked if the federal government would take new action over multinational profit taxation, Adrienne Vaupshas, a spokesperson for Finance Minister Chrystia Freeland, listed a variety of initiatives that Ottawa had already announced. These included funding for Canada Revenue Agency to “to expand audits of larger entities and non-residents engaged in aggressive tax planning” and launching a public, searchable beneficial ownership registry by the end of 2023.

The Canada Revenue Agency (CRA) declined a request for an interview, instead e-mailing a statement that reiterated its past comments to The Globe on the taxation of Amazon and other multinational tech companies. The CRA said it is bound by law to keep information about individual taxpayers secret. It also maintains all resident corporations must file an annual return if they have carried on business in this country, had a taxable capital gain or sold taxable Canadian property, even if they don’t owe anything to the agency.

Governments around the world have long sought to find a way for profits of multinationals to be taxed in the markets where they operate. The Organization for Economic Co-operation and Development has spent nearly a decade trying to develop a uniform global corporate tax system. While the government said it supports these measures, the details are not finalized and have already faced criticisms. Even the OECD has said that Amazon’s retail margins are likely too low to qualify it for the system as currently proposed.

It is, however, possible for individual countries to try to force multinationals to pay back taxes after investigating their corporate structures. In 2009, tax authorities in Japan ordered Amazon to pay the equivalent of US$119-million in back taxes from 2003 through 2005 for sales in the country that flowed through a U.S. subsidiary. It is not clear if Amazon paid that amount – the company did not respond when asked by The Globe if it did – but the company was later reported by Japanese media to be paying nearly US$140-million in annual tax there late last decade.

Source: Globe and Mail