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