Why it matters: The holiday shopping season is in full gear, and the biggest online retailer Amazon has to deal with seller scams, data leaks, and unscrupulous employees. According to a report from The Wall Street Journal, the giant retailing outfit has been looking into suspected data leaks and bribing of employees since September. The investigation has led to several employees being let go in both the US and India.
Anonymous sources allege these employees were accessing internal data and selling it to “disreputable merchants.” The sellers were then using the information to sabotage competitors’ listings and surface their own products higher in search results than they otherwise would normally.
A spokeswoman for Amazon told WSJ the company is pulling out all the stops against those trying to harm shops on the site. It has already deleted thousands of bogus reviews, tightened access to customer data on the website, and crippled methods used to gain fraudulently higher search results. The company has even employed machine learning and other tools to block malicious behavior before it happens.
“If bad actors abuse our systems, we take swift action, including terminating their selling accounts, deleting reviews, withholding funds, taking legal action and working with law enforcement,” the spokeswoman said.
"This year, U.S. shoppers are on track to spend $124.1 billion online, 15% more than last year. Roughly half that spending takes place on Amazon."
Despite Amazon’s efforts, some sellers are still sabotaging competitors by flagging their wares as counterfeit or trademark infringing. While this does not permanently disable the competitor, it does cause the product listing in question to be taken down while Amazon investigates, resulting in lost sales.
Sellers are also purchasing wholesaler accounts on the black market. Some Chinese companies are selling these accounts for up to $15,000 or rent them for $1,500 per month, WSJ reports.
These accounts allow a holder to make changes to wholesaled product en masse through the Amazon Vendor Central system. For example, the holder can change the image of a product and that image will adjust for every seller who used it across the entire website. Some are using this to sabotage multiple competitors at once.
It is hard to find all of the bad players though. Amazon has an estimated three million sellers all receiving a ton of traffic. According to analysts’ estimates, shoppers in the US are set to spend $124.1 billion online this year, which is up 15 percent over last year. Nearly half of that money will be spent on Amazon. So, Bezos and crew, have their work cut out for them.