Tuesday, September 18, 2018

Does Amazon discriminate against Puerto Rico residents?

By on February 18, 2018

The delays not only affect regular Amazon customers in Puerto Rico, but also members of the Amazon Prime service. (Amazon Press Room)

While countless users express rage on social media because it has been weeks since their orders were made, and their products still have not reached their Puerto Rico destination, an issue that began just after Hurricane Maria, Amazon has opted for silence and not addressed the claims that are suggesting discriminatory treatment by the company owned by billionaire Jeff Bezos.

On multiple occasions, and through various means, Caribbean Business has tried to contact Amazon’s Corporate Communications Department without receiving even a confirmation of receipt. In the information requests–sent in both English and Spanish–the unjustified delays in shipment of goods to the island are questioned, since they continue even though these companies that deliver packages have mostly resumed their regular operations.

The matter continues to affect those who have resorted to the online platform to place orders for essential products, such as batteries and generators to power electrical appliances in the absence of electricity. According to multiple social media posts, shipments are stopped while still stateside, as reflected by the tracking service provided by the company. Subsequently, this system does not reflect changes in that status.

The delays not only affect regular Amazon customers in Puerto Rico, but also members of the Amazon Prime service. This annual membership has a prepaid cost of $99 and the main promise with the membership is receiving free shipments within two days. However, this guarantee has been severely interrupted, which is why a subscriber decided to issue a petition through Change.org. At the moment, the petition has more than 2,000 signatures.

“We understood that after the Hurricane Maria, that shipment would be delayed and might have some issues, but it has been four months now since Hurricane Maria, and both USPS [U.S. Postal Service] and UPS have gone back to their normal routes, especially on the city and urban neighborhoods. Another issue we have with Amazon shipping services, is that the problem usually occurs during the handling process and that later the orders go through ParcelPool which is a real guarantee to be delayed,” reads part of the complaint.

The petition’s author further states the items are “stuck” in warehouses in Jacksonville, Fla., or some other distribution center around the United States, which is inconsistent with the service Amazon Prime continues to provide on the mainland U.S. and other parts of the world.

In January, Amazon announced its subscription price will increase from $10.99 per month to $12.99 a month for those who do not prepay the annual membership.

Many consumers believe Amazon’s failure to send goods to Puerto Rico constitutes discriminatory treatment. They have even raised a flag on the small amount of merchandise that can be purchased in Puerto Rico using the membership, as many items that previously could be sent to the island now appear unavailable.

Where is DACO?

The secretary of the Consumer Affairs Department (DACO by its Spanish acronym), Michael Pierluisi, told Caribbean Business the agency is considering several angles to address the issue of commercial discrimination, not only because of the informal complaints the agency has received via social networks on Amazon, but also other companies that do business online but do not have operations on the island.

DACO currently does not have before its consideration a formal complaint from an Amazon or Amazon Prime customer. However, Pierluisi said he was aware of the possible discriminatory practices of that digital platform, since as a user, he has experienced problems both in the availability of articles and their delivery.

“The secretary’s office is evaluating how best to address, in a more encompassing manner, the issue of commercial discrimination against those living in Puerto Rico. I exhort consumers to file a complaint and, if Amazon understands that we do not have jurisdiction, they should state so in their reply to DACO. It seems to me that with everything Amazon does, and the sales it makes, even if they are not physically here, it could reasonably be understood that they have a presence in Puerto Rico.”

Consumer Affairs Secretary Michael Pierluisi indicated his office was discussing different legal frameworks to establish jurisdiction over companies that do not operate in Puerto Rico but do business with island customers. (Jaime Rivera/CB)

In addition, he urged the company to comply with the Amazon Prime subscription contract or reduce the price to members residing on the island.

If they made a commitment, they have to comply, but if for a justified reason they cannot comply, they should give some kind of discount to members who are residents of Puerto Rico because they are paying the same to receive less. Amazon should provide the same treatment to Puerto Rico as to residents of other states.”

Continuity strategies to guarantee equal treatment

In 2011, the past head of DACO and current secretary of State, Luis Rivera Marín, began an investigation, along with a campaign against discriminatory practices by numerous North American companies, including Amazon, Apple and Best Buy. At that time, the Office of Commercial Anti-Discrimination (OADC) was established and several investigations resulted in a fine of up to $470,000 for failing to comply with the delivery of a request for information that would be used to precisely address the controversy over the refusal to send packages to Puerto Rico free of charge.

According to Administrative Order 2011-006, the OADC will oversee every company with a presence in Puerto Rico that offers goods, products and services to consumers and, in turn, offers these products through the internet, direct sale, catalog or any other form, will provide consumers “the same or similar conditions regarding access, sale, products, products, service, warranties and delivery that are offered to citizens within the [mainland] United States.”

It is not clear from a reading of the order that it contemplates the instances in which a consumer acquires an item online through a company that does not have its headquarters or affiliate on the island.

To address this controversy, the head of DACO indicated his office was discussing different legal frameworks to establish jurisdiction over companies that do not operate in Puerto Rico but do business with island customers. This could include investigations, information requirements and even lawsuits on behalf of consumers against these companies.

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We will begin to talk about the issue publicly, address consumer complaints and try to encourage them to file through the DACO website. We are currently evaluating the scope of the department’s jurisdiction over companies that do not have operations in Puerto Rico, and we are evaluating how we can make these companies treat Puerto Rico as they should. There can always be a scenario where there is different treatment, but there has to be a justification based on something concrete,” Pierluisi said.

Asked by CB about the results the OADC has achieved since its inception, Pierluisi mentioned, as an example, the recent controversy in which the Consumer Financial Protection Bureau (CFPB) issued fines of at least $1 million against American Express’ discriminatory treatment of credit card holders in Puerto Rico, the U.S. Virgin Islands and other U.S. territories.

Part of the investigation conducted by the OADC was based on a request for information sent by DACO to American Express in November 2011, as part of the inquiry by the OADC at that time. Specifically, the resolution issued by the CFPB is based on the Equal Credit Opportunity Act and establishes that for a period of 10 years, 200,000 people received financial products with inferior conditions compared with the rest of the 50 states. During the course of the investigation, American Express paid more $95 million to resolve grievances over the unequal treatment it provided consumers.

The good thing is there is a federal law that interpreted that granting Puerto Rico inferior terms is contrary to the law,” the DACO secretary said, suggesting that the CFPB determination could be used as an analogy in similar cases or even the Congressional spearhead for legislation against similar practices that occur in other businesses, to the detriment of consumers residing in a U.S. territory.

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