Fintech & Ecommerce

Amazon to Pay $30.8 Million to Settle FTC Privacy Claims

Amazon has agreed to pay $30.8 million as part of the resolution of two cases brought by the Federal Trade Commission in connection with violations of the privacy of the company’s smart devices.

Amazon to Pay $30.8 Million to Settle FTC Privacy Claims

In one of these cases, the FTC stated that Amazon had not taken any measures to protect the privacy of users of the video intercom Ring. As part of the settlement of this case, the company will pay $ 5.8 million. A complaint of privacy violations was filed in federal court in Washington, DC.

The second trial was initiated based on going to the Federal Court of the State of Washington on behalf of the FTC. In this case, the prosecution claims that Amazon’s Alexa-based speakers collected personal data about persons under the age of 13 without parental consent. These actions are a direct violation of the Law on the Protection of Children’s Privacy on the Internet. As part of the settlement of this proceeding, the company will pay $ 25 million.

At the same time, Amazon announced its disagreement with the accusations by the FTC. The company claims that the process of functioning its devices is not related to the illegal practice of collecting personal data. The firm claims that the video intercom independently eliminated the problem of ensuring user privacy several years ago, when the regulator still had no intentions of investigating this fact.

Regarding Alexa, Amazon consulted with the FTC to make sure that the program complies with regulations on the protection of children’s data in the virtual space. At the same time, in this case, the company agreed to a change in the policy of actions against users, as a result of which the accounts of minors who have been inactive for 18 months will be deleted.

These are the first actions by the FTC against Amazon since Chairman Lina Khan took over the agency in 2021. Khan, while still a law student, wrote an article about rethinking the concept of antimonopoly regulation in connection with the activities of a virtual commercial platform.

The Ring video intercom was presented in 2014 and is a video monitoring device with which users can remotely monitor what is happening on their doorstep. In 2018, Amazon acquired the company that developed this device. The value of this transaction was about $ 1 billion.

Doorbells and video-enabled Ring cameras have become the centerpiece of Amazon’s growing range of home electronics based on the Echo smart speaker and Alexa digital assistant.

The FTC said in its complaint that until 2017, every Ring employee and hundreds of third-party contractors had access to every video recording from customers’ devices. The regulator stated that this problem persisted on one scale or another until 2020. This position of the FTC means that Amazon has not solved the problem of privacy for several years. The regulator also claims that the security of the credentials of Ring device owners was not properly protected, as a result of which hackers gained access to 1,250 video intercoms.

Amazon said that in 2020, some employees were fired for trying to access customers’ personal information. The company also said that after that, security methods were updated, including encryption was added to video devices. In March 2023, Amazon announced the resignation of Ring founder Jamie Siminoff.

As we have reported earlier, Amazon Tests Dine-In Payments in India.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.