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E-commerce is the most-complained-about industry in

the state for the first time
Jan. 26, 2020 at 6:01 am ! " #
 Online purchases were the largest source of consumer complaints filed with the state Attorney General’s office in 2019. Amazon,
the largest online retailer, is... (Bess Adler / Bloomberg) More $

By Benjamin Romano #
Seattle Times business reporter

A month after he purchased a computer and

an extended product protection plan through
Amazon and 27 days after the device stopped
working, Omar Dada found himself trapped in
a Kafkaesque customer service bureaucracy
and still out more than $1,200.

“I’m being given the run-around every time I

call them,” the Newcastle man wrote in an
early December complaint to the Washington
state Attorney General’s Office. “I just want my
money back! Please help me.”

Dada’s complaint was one of 409 related to

Amazon lodged with the office’s consumer
protection division in 2019, a milestone year
that division chief Shannon Smith and her
colleagues had seen coming for a while.
 Last year, e-commerce surpassed telecom and broadband providers, car dealers and
traditional retailers for the dubious title of most-complained-about industry, as
measured by the attorney general’s complaints database.

“As e-commerce becomes more and more ubiquitous, we’re receiving more and more
complaints about it,” said Smith, who began working in the consumer protection
division in 2005 and has been its chief since 2012. “It doesn’t at all surprise me that [e-
commerce is] now on the top of the list.”

In 2013, electronic shopping was the subject of fewer than 4% of consumer

complaints filed with the Washington attorney general. In 2019, the industry received
1,134 complaints, or more than 7% of the total filed, according to a Seattle Times
analysis of the complaints. In that time, e-commerce grew from less than 6% of U.S.
 retail sales to 11.2% in the third quarter of 2019, according to the latest U.S.
Department of Commerce estimates.

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The Better Business Bureau also has seen more e-commerce

complaints: Online retailers became the No. 1 recipient of complaints nationally in
2017 and held the title in 2018, too. In the organization’s Northwest and Pacific
region, the top scams reported through its online tracking tool last year involved
online purchases, representing about 24% of all reports.

The complaints in the attorney general’s database are a reflection of problems that
consumers — and some businesses — are having with businesses. The office makes
no determination about the complaints’ validity. But it does forward them to the
subject businesses and facilitates communications as part of an informal resolution
service.

In Dada’s case, Amazon ultimately refunded his money a couple days after he filed
his complaint, but before the Attorney General’s Office contacted Amazon and UPS.
(The two companies disputed whether Dada’s computer was actually returned to
Amazon, a precursor to receiving a refund or replacement. During his sixth phone
call with the company about the issue, an Amazon representative said it was Dada’s
responsibility to follow-up with UPS and find the shipment. But UPS would not allow
him to file a claim because Amazon had issued the return shipping label.)
Still, Dada said he was happy with the response of the Attorney General’s Office,
particularly after his frustrating month of phone calls in pursuit of what he felt
should have been a straightforward refund for a defective product covered by a
replacement plan. “Who’s going to help you with this kind of stuff? I don’t have a
lawyer on call,” he said. Filing a consumer complaint “felt like the only thing I could
do.”

The Seattle-based behemoth of e-commerce, Amazon, was the subject of a plurality of

the complaints in the state attorney general’s database: 409 last year, eight times as
many as the next closest contender, apparel retailer LuLaRoe, which the attorney
general sued in early 2019, describing it as a “pyramid scheme.” EBay came in third
with 48 complaints.

Over the seven years of data analyzed, Amazon was the subject of 1,760 complaints,
about 26% of the total for e-commerce and by far the most of any company in the
industry. It trailed only Comcast (3,215) and CenturyLink (2,667) for total complaints
during the period.

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Asked for comment, an Amazon spokesperson provided a generic statement of the

company’s focus on customers, adding: “If a customer ever has a concern, they can
contact our customer service team directly so we can investigate and resolve the
situation.”
The attorney general’s complaints database includes a litany of stories like Dada’s, in
which Amazon customers describe multiple, unsuccessful attempts to obtain
refunds; lengthy wait times between correspondence with the company; conflicting
statements from various customer service teams; locked accounts that are opened
and then locked again; frustration; and, ultimately, a plea for outside help.

The complainants in the database are by definition a sample of dissatisfied

customers, while Amazon’s growing sales demonstrate that many more people are
happily buying and selling over its vast platform for commerce.

Some of the gripes may seem petty (a Los Angeles man wrote that he was
shortchanged 6 cents after returning an item that cost $11.99, among other
complaints). But then there are the third-party sellers whose accounts have been
locked, tying up thousands or millions of dollars, and sometimes putting livelihoods
built on selling via Amazon at risk.

Smith said the attorney general’s consumer division looks into complaints by
businesses, too. “They are consumers of Amazon,” she said.

Trends in consumer complaints are one means to help guide the attorney general’s
office toward formal investigations and legal actions, Smith said. But the breadth of
activities lumped in the e-commerce industry defy easy categorization. “There’s no
one real fact pattern,” she said.

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Some complaints hew closely to those lodged against traditional retailers: “I didn’t
get the product that I ordered. I got charged more for the product than was
advertised,” Smith said.

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 Others are unique to the online buying process.

The 110-person consumer protection division, including attorneys, investigators and

other staff, uses a technology lab to re-create the consumer online shopping
experience. Investigators and attorneys look for things like appropriate disclosures
and instances of “mid-transaction marketing,” in which consumers think they’re
buying one thing but are actually being subscribed to a third-party product or service,
Smith said.

“Unfortunately, we’ve seen deception in that process, not just in the ultimate
purchase, but in the process of making the purchase,” she said.
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Another category of complaints involves online subscriptions and digital media

services.

The attorney general’s office investigated Amazon’s FreeTime Unlimited kids media
subscription program, which was included free for a year with certain Amazon
devices. Between January 2014 and March 2018, consumers were charged $2.99 plus
tax for it automatically each month after the free subscription ended, unless they
opted out, in what is known as a “negative option.” It’s considered a deceptive
marketing practice under Washington law when the presence and terms of the
renewal are not clearly and conspicuously disclosed to consumers.

Amazon agreed not to engage in unfair or deceptive practices related to the

subscription in an “assurance of discontinuance” filed in King County Superior Court
last year. It voluntarily paid $120,000 for the attorney general’s investigation costs,
without admitting wrongdoing. The attorney general noted Amazon’s “liberal
cancellation and refund policy” for those customers who did request to cancel.

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The attorney general’s office was alerted to Amazon’s practice by a consumer, though
not through the written complaint process.
 In another investigation into Amazon, the Attorney General’s Office said last year it
found thousands of toys with unsafe levels of lead and cadmium for sale by third-
party sellers on the company’s site. That came to the office’s attention through
previous work by the Washington Department of Ecology.

Consumer complaints often “raise questions about how Amazon manages its
platform and what kinds of representations it makes to consumers about what’s for
sale on its platform,” Smith said.

Amid e-commerce’s rise, the total number of consumer complaints fielded with the
attorney general has declined. Smith said consumer watchdogs at the Federal Trade
Commission and other state attorneys general have noticed that trend for several
years. She said there’s no consensus explanation for the decline, but speculated that
the proliferation of online review sites and customer feedback channels from
companies themselves may be helping resolve complaints before consumers seek
outside help.

That was Dada’s approach.

“I love Amazon as a company — er, did,” he said. “I try to resolve things through the
business, because I know they have the incentive to do that and treat their customers
well.”

Benjamin Romano: 206-652-6593 or bromano@seattletimes.com; on Twitter:

@bromano.

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