Amazon Comes Under Increased Fire as Partner Files Suit

Posted by · December 28, 2011 4:45 pm

When one considers the past year over at Amazon, the first thing that’s likely to come to mind is the incredible success of its Kindle Fire tablet. Attractively priced at $199, these 7-inch tablets have made the dream of owning a tablet into a reality for those without the funds to purchase a more expensive tablet like an Apple iPad or a Samsung Galaxy Tab. In fact, some market analysts have projected that Amazon will sell 14 million Kindle Fires before year’s end.

Unfortunately for Amazon, however, the vast popularity of its new tablet has done little to distract attention from the company’s several faux pas of 2011.

Back in September, the company came under fire for its mistreatment of sick and pregnant workers after complaints about its roasting warehouse conditions finally drew the attention of federal regulators. Responding to the federal investigation, which recommended that significant changes be made to the sweatshop conditions that workers were forced to endure, Amazon provided its workers with popsicles, bandanas and a healthy portion of baseless excuses.

December delivered yet another blow to the Amazon reputation. Sparking uproar among local businesses, the company used its Price Check app to undermine local retailers during the biggest shopping season of the year. Paying little mind to plight that plagues small businesses nationwide, Amazon offered 5 percent discounts (up to $5) to consumers who went into local stores, scanned product barcodes, walked back out and purchased the same items from Amazon instead.

“By all means use Amazon – they have amazing selection! – but there’s no need to be a tacky jerk to your neighborhood store in the process,” wrote Gawker’s Ryan Tate.

But apparently Amazon didn’t get Tate’s message and avoid further controversy before the year draws to a close.

Launching a federal lawsuit Wednesday, Amazon partner M-Edge Accessories—the maker of Kindle cases—is accusing Amazon of violating its commission agreement. After agreeing to a three-year deal that gave the retailer a 15 percent cut of case sales, Amazon is said to have breached that agreement a mere two months into the contract. After Amazon allegedly demanded a commission rate of 32 percent under threat of removing the Kindle cases from the site altogether, M-Edge simply refused at first.

However, being dependent on Amazon for 90 percent of its revenue, the company was eventually forced to go along with the new terms after Amazon came back over a year later. This time Amazon allegedly promised to bury the M-Edge cases in its search results so that “no one will be able to find you.”

Finally, adding insult to injury, Amazon eventually decided to bypass M-Edge altogether and manufacture its own Kindle case with the exact same features, including the built-in light. After violating M-Edge’s patent, the retailer allegedly proceeded to effectively drop the M-Edge cases from the site, stripping the company of its “Amazon Approved Accessory Maker” status and instead listing them as “currently unavailable.”

Considering its increasingly poor track record in the way that it treats its employees, competitors, and even its customers, it makes you wonder if that $199 would be better spent at a more responsible retailer.