a prominent Amazon The consultant has avoided jail time for his part in an elaborate scheme to bribe company employees in order to give his clients an edge in the e-retailer’s growing online market.
Ephraim “Ed” Rosenberg pleaded guilty in March to one criminal charge, stemming from a September 2020 indictment that charged six people with conspiring to pay bribes to Amazon employees in exchange for confidential information that would benefit third-party merchants selling products in the company’s market. .
Rosenberg was sentenced Friday in federal court to two years probation and 12 months of house arrest. He was also ordered to pay a $100,000 fine.
“Mr. Rosenberg’s illegal actions were detrimental to sellers who work hard every day to build a thriving business on Amazon, and today he was held accountable for his crimes,” Amazon spokeswoman Mira Dix said in a statement. “When we discovered suspicious behavior related to this case in 2018, we reported it to the FBI and actively supported the subsequent investigation.”
Rosenberg, 48, is a well-known figure in the world of Amazon’s third-party sellers. He runs a consulting business that advises entrepreneurs on how to sell products on the online marketplace and navigate unforeseen problems with their accounts. Rosenberg’s Facebook group for sellers, ASGTG, has more than 70,000 members, and he hosts a popular seller’s conference each year in his hometown of Brooklyn.
The case offers an unfiltered look into the cottage industry of consultants and brokers that has flourished alongside the growth of Amazon’s third-party marketplace. Since its launch in 2000, the marketplace has grown into a lucrative and competitive platform for millions of sellers to market their products. From May 2019 to May 2020, U.S. small and medium-sized businesses selling in the marketplace averaged more than $160,000 in sales, according to a report issued by Amazon.
While the marketplace has helped Amazon generate tens of billions of dollars in sales, it has also become a notorious host to counterfeit, unsafe and expired products. Behind the scenes, scammers have used illicit tactics for years to overwhelm competitors, artificially boost their listings, or circumvent Amazon’s marketplace rules.
The case is not the first time Amazon has dealt with issues of company employees leaking sensitive information or manipulating the site in exchange for payment. In 2018, the company investigated allegations from employees, primarily based in China, that they received payments ranging from $80 to more than $2,000 in exchange for access to internal data, The Wall Street Journal informed.
Amazon has said it spends hundreds of millions of dollars a year to ensure products are safe and compliant. He provision The sharing of internal data to sellers by employees violates Amazon’s Seller Policies and Code of Conduct.
Rosenberg’s punishment is far less severe than what other defendants have faced. A former Amazon employee was sentenced last year to 10 months in prison, while a consultancy that also sold products on Amazon serving 20 months in prison.
Prosecutors recommended a lesser sentence for Rosenberg because there was no evidence that he launched attacks on competitors’ product listings like some of his conspirators, who allegedly filed false complaints with Amazon and bought fake negative reviews for rivals’ products. Other defendants have also pleaded guilty to tax evasion charges in addition to the bribery scheme.
Between July 2017 and September 2020, Rosenberg directly and indirectly paid bribes to Amazon employees to steal sensitive data and gain access to internal systems. In one case, Rosenberg made 33 different PayPal payments worth $18,650 to an Amazon employee in Seattle in exchange for sensitive third-party seller account information.
Most of his payments were for account “notations” or an internal Amazon employee record of violations on a seller’s account, which Rosenberg and another defendant, Joe Nilsen, covertly referred to as “fruit” in the email correspondence.
“Sellers who were suspended from selling on Amazon could use this inside information to see exactly what Amazon had discovered about the sellers’ violations and tailor their restitution appeals accordingly,” prosecutors alleged.
Nilsen bragged to Rosenberg via email about the services he had accessed by bribing employees.
“I’m not trying to make it sound like we have all the skills in the world, but although it took some time and some face-to-face meetings, we got skills that still amaze me,” Nilsen wrote in a January 2018 email to Rosenberg, referring to to their inside contacts as “‘flip the switch’ type guys.”
“I don’t want to have a little menu hanging around, but if you need anything, just ask and I’ll let you know,” Nilsen continued.
Previously unsealed court documents said Rosenberg allegedly sent a “veiled threat” to an Amazon employee at the company’s Seattle headquarters as part of the bribery scheme. Bloomberg informed. The documents also detail elaborate efforts by the defendants to evade detection by authorities, including allegedly stuffing a llama-shaped ottoman with cash believed to be bribes, according to Bloomberg.
Rosenberg’s guilty plea in March marked a change of position in the case. He has repeatedly denied the prosecutors’ allegations and claimed in LinkedIn messages to CNBC that he was being framed, as well as in posts on Reddit forums and Facebook groups. He later admitted that he made false statements about the case and admitted to bribing Amazon employees in a public apology posted online.
An attorney for Rosenberg, Jacob Laufer, wrote in a sentencing memorandum that while Rosenberg’s conduct was illegal, it was a symptom of a marketplace ruthlessly governed by Amazon in which merchants could be arbitrarily forced out of the marketplace at any time. time and were fighting for their business. reinstated, he resorted to illicit tactics.
“Since these sellers were unaware of their alleged wrongdoing, how to correct the problem, and when Amazon might admit their mistake, the sellers were often desperate and sometimes resorted to illegal means to obtain the information necessary to achieve the goal of saving their money.” business,” according to the memo. “The ‘necessary information’ was the annotations.”
Dix said Amazon has processes in place to help sellers avoid deactivation and reinstate them when appropriate. The company has been investing for years in improving its communications with vendors, speeding up response times and flagging policy violations more clearly, he added.
“There is no room for fraud at Amazon and no excuse for resorting to illegal activities,” Dix said in a statement.