Amazon facing $500K fine for nixing free shipping to P.R.

Written by  //  February 8, 2012  //  Retail  //  8 Comments

Daco Secretary Luis Rivera-Marín.

The Consumer Affairs Department has issued a fine against online retailer Amazon for failing to reasonably support its decision to take the “Super Saver” free shipping benefit away from Puerto Rico consumers, News is my Business learned Tuesday.

The initial $340,000 fine lodged two weeks ago is currently hovering at about $500,000 and will increase by $10,000 a day as long as the case is open, agency Secretary Luis Rivera-Marín said.

“We believe the company is aware that we have a legitimate issue that they must address and have appeared before us with all of their concerns and defenses available to them,” Rivera-Marín noted.

Amazon eliminated the free shipping option to Puerto Rico in August 2011, drawing the ire of local consumers and attention from the government agency known as Daco, which in October 2011 threatened to file a lawsuit against the retailer for discriminatory business practices.

That lawsuit did not materialize but turned into an administrative process instead that resulted in the fine in late January. Even though Amazon is not physically located in Puerto Rico, Daco’s penalty is enforceable through the U.S. Constitution’s Full Faith and Credit Doctrine that essentially “is the recognition of another state’s legal decisions by a state.”

Amazon’s representatives filed a motion for reconsideration at Daco on Tuesday, which Rivera-Marín said will now be reviewed.

“The agency will now review the merits of their arguments and we will work diligently to guarantee Amazon its due process in this case. However, the agency will rigorously claim the rights of Puerto Rican consumers,” the government official said, without estimating how long the review process will take.

Ultimately, there is a slim chance Amazon may not have to pay the fine, as Daco’s “interest is that Puerto Rican consumers are treated fairly,” Rivera-Marín said.

Students score a victory
In the last few weeks, Daco has also been pressing Amazon to make another policy change, this time related to its Amazon Student program, which essentially gives member college students exclusive discounts on a variety of products and categories, as well as six months of free two-day shipping with Amazon Prime.

The Amazon Student program offers deals and promotions exclusively for college enrollees.

On that front, Daco scored a victory on behalf of Puerto Rico college students who effective Feb. 13 will have access to the program for the first time since its inception, Rivera-Marín said.

“They already acknowledged in good faith that it was not a good business decision to block local college students from having access to the service, so we hope they will decide similarly on the free shipping issue,” he said, noting that Daco issued a warning against Amazon after a Sacred Heart University student filed a complaint at the agency regarding the limitation of the service.

  • http://twitter.com/hectorramos Héctor Ramos

    The one excuse that always comes up when inquiring a retailer about their limits on shipments to Puerto Rico is the need to file an international Electronic Export Information declaration. Why waste time fining private corporations, when you could spend that time lobbying against this EEI requirement that has been imposed by the Federal government?

    As an aside, Amazon Prime is now available in Puerto Rico, with certain restrictions. It allows you to use Free Super Saver shipping again (under the $79 annual fee), but it has been my experience that all shipments are made through either UPS 2nd Day Air or USPS Parcel Post (also took two days to get to my front door). We still can’t stream their Amazon Prime VOD content, which is something that should be actually looked into – why are all these content deals being made where Puerto Rico is considered an international location?

    • http://twitter.com/hectorramos Héctor Ramos

      Here’s some more information on the matter: http://hectorramos.com/amazon-fined/

  • Holly

    I hope that this issue can be resolved. I was a loyal Amazon customer for more than 10 years but haven’t bought anything from them since they stopped offering SS Shipping to PR customers. I used to buy all my DVD’s and CD’s from them but the shipping fee are too high and I can find better deals elsewhere

  • M. Martinez

    Whatever it takes to allow Puerto Rico equality in Amazon’s business. God knows I use it a lot for my purchases, mostly books and e-books, but I would be willing to stop buying from them if this issue does not resolve itself on behalf of Puerto Rico.

  • Jorge Melendez

    I used to make lots of purchases from Amazon.  But since they stopped free shipping to Puerto Rico, I stopped buying from them.  Hopefully the office of DACO of Puerto Rico can accomplish in stopping Amazon from discrimating against customers from Puerto Rico.

  • Estyur

    I use to buy buy all my stuff in amazon
    but then I took a shipping fee to the wallet 

  • Ugotmebutonlyonce

    The shipping speed will
    default to FREE Two-Day Shipping for all eligible items to street
    addresses in the contiguous United States. The shipping speed will
    default to FREE Standard shipping for addresses in Alaska, Hawaii, and
    Puerto Rico.. You’ll have the opportunity to select a faster shipping
    speed for each item in your purchase if one is available. .. /QUOTE
    This is CRAP… ONLY FREE STANDARD SHIPPING AVAILABLE, I BET THEY’LL USE USPS FFS.