Amazon secretly excluded two ZIP codes from its fastest delivery service while charging nearly 50,000 Prime members who live in the areas its full Prime subscription price, the District of Columbia’s attorney general alleges in a lawsuit filed Wednesday.
Amazon violated consumer protection laws by stopping its quickest delivery service to the two historically lower-income neighborhoods, then misled customers about why their packages were arriving later than advertised when they complained, according to the suit filed in D.C. Superior Court.
The world’s biggest online retailer’s paid subscription service, Amazon Prime, offers two-day delivery for millions of items, as well as next-day or same-day for many other products for $139 a year, or $14.99 a month.
Amazon in June 2022 decided to stop using its fleet of branded trucks to make Prime deliveries to D.C. ZIP codes 20019 and 20020, servicing them instead with third-party delivery services like UPS and the U.S. Postal Service. The company knew the decision would result in significantly slower deliveries for the areas, but did not tell existing or prospective customers, the suit alleges.
Amazon informed the attorney general’s office that the change came as the result of safety concerns for its drivers, the attorney general said. Yet the company was legally obligated to disclose the change to customers.
“Amazon is charging tens of thousands of hard-working Ward 7 and 8 residents for an expedited delivery service it promises but does not provide. While Amazon has every right to make operational changes, it cannot covertly decide that a dollar in one ZIP code is worth less than a dollar in another,” D.C. Attorney General Brian Schwalb stated in a news release.”We’re suing to stop this deceptive conduct and make sure District residents get what they’re paying for.”
Amazon Prime two-day delivery
Last year, the rest of the city’s Prime members received packages within two days of checkout 75% of the time, but those in the impacted ZIP codes received their orders within two days just 24% of the time, according to the suit.
Amazon dismissed as “categorically false” claims that its business practices are discriminatory or deceptive.
“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,” an Amazon spokesperson said in an emailed statement.
The spokesperson added, “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.”
The company said it’s clear with customers about expected delivery dates. “And we’re always transparent with customers during the shopping journey and checkout process about when, exactly, they can expect their orders to arrive,” the spokesperson said.
Amazon would like to work with the attorney general’s office to reduce crime and improve safety in those areas, the spokesperson stated. “Nevertheless, we will proceed in the process and demonstrate that providing fast and accurate delivery times and prioritizing the same of customers and delivery partners are not mutually exclusive.”
The lawsuit is not the first time Amazon has been accused of providing discriminatory service.
A Bloomberg analysis in 2016 found that Amazon excluded predominantly black ZIP codes to varying degrees from same-day delivery in six major cites. Amazon at the time said the issue had nothing to do with race.
And two years later, the since-discontinued Amazon Restaurants delivery service excluded the same D.C. neighborhoods that are the focus of the Prime delivery lawsuit. The company told local news at the time that it was working to bring more eateries online.
Kate Gibson is a reporter for CBS MoneyWatch in New York, where she covers business and consumer finance.
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