Amazon.com Inc. (NASDAQ:AMZN) is clapping back at claims made by Attorney General Brian L. Schwalb as part of a lawsuit with the Superior Court of the District of Columbia.
What Happened: Schwalb filed a claim Wednesday against the Seattle-based e-commerce company alleging consumer protection law violations due to slower Prime deliveries in historically lower-income neighborhoods.
Amazon, Schwalb alleges, secretly stopped its fastest delivery service to nearly 50,000 Prime subscribers in two specific ZIP codes, while still charging full subscription fees to those customers.
"The claims made by the Attorney General, that our business practices are somehow discriminatory or deceptive, are categorically false,” Kelly Nantel, an Amazon spokesperson, told Benzinga via email.
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According to the lawsuit, Amazon used third parties like United Parcel Service, Inc. (NYSE:UPS) and the U.S. Postal Service to make deliveries in the specified areas for the past two years. This resulted in slower deliveries than those made by Amazon's delivery drivers.
Amazon told Benzinga that it had changed delivery methods in those neighborhoods due to safety concerns for drivers, after repeated instances of carjacking, vehicle theft, armed robbery, assault and other forms of gun violence.
But Schwalb claims Amazon violated consumer protection laws by failing to disclose the change to consumers.
Amazon "cannot covertly decide that a dollar in one ZIP code is worth less than a dollar in another," Schwalb said in a statement, per the New York Times.
"We're suing to stop this deceptive conduct and make sure District residents get what they're paying for," Schwalb added.
Why It Matters: Amazon told Benzinga that the company is constantly reviewing data and safety conditions and making changes accordingly as these variables change.
“We want to be able to deliver as fast as we possibly can to every zip code across the country, however, at the same time we must put the safety of delivery drivers first. In the zip codes in question, there have been specific and targeted acts against drivers delivering Amazon packages. We made the deliberate choice to adjust our operations, including delivery routes and times, for the sole reason of protecting the safety of drivers. And we're always transparent with customers during the shopping journey and checkout process about when, exactly, they can expect their orders to arrive,” Nantel added.
“What we'd like to do, and have offered, is to work together with the Attorney General and their office in an effort to reduce crime and improve safety in these areas. Nevertheless, we will proceed in the process and demonstrate that providing fast and accurate delivery times and prioritizing the safety of customers and delivery partners are not mutually exclusive," Nantel concluded.
Amazon stock surged 2.3% to notch new all-time highs on Wednesday, lifting its impressive year-to-date gains to 44%. The lawsuit could prove to be a dark cloud over an otherwise booming holiday season for the online retailer.
Price Action: According to Benzinga Pro, Amazon shares are up 0.18% at $218.52 at the time of publication Thursday.
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