A prominent Amazon.com Inc. consultant pleaded guilty March 30 to bribing company employees in a scheme to give online sellers a competitive advantage that prosecutors say were worth $100 million.

Ephraim “Ed” Rosenberg was the final holdout among five U.S.-based defendants accused of paying off Amazon employees in exchange for confidential company data. Among other things, the data helped them steer business to some merchants and shut out their competitors.

Four other people have already pleaded guilty to the Amazon bribery scheme, and two of them were sentenced to prison. One former Amazon employee who lives in India and allegedly accepted bribes was indicted but never arraigned.

The Amazon bribery scheme, which began as early as 2017, seemed plucked from a Hollywood script, with payments criss-crossing the globe via MoneyGram, PayPal and suitcases stuffed with cash sent via Uber.

Rosenberg, 47, apologized for his actions March 27 in a LinkedIn post, reversing earlier statements insisting he was innocent. The highest-profile of the defendants, he hosted networking events for Amazon sellers in hometown New York and also runs a Facebook page with 10,000 followers that features tips about selling on Amazon.

“On some occasions, I paid bribes, directly and indirectly, to Amazon employees,” Rosenberg said. “These actions were against the law.”

Amazon is No. 1 in the 2022 Digital Commerce 360 Top 1000 database. The Top 1000 ranks North American web merchants by sales. It is No. 3 in the Digital Commerce 360 Online Marketplaces database, which ranks the 100 largest global marketplaces.

Previous charges in Amazon bribery case

Federal officials in 2020 charged Rosenberg and other consultants with paying Amazon employees in India more than $100,000 in bribes to give select Amazon merchants an advantage over competitors selling goods ranging from electronics to dietary supplements.

Some of the defendants got Amazon employees to put products removed for safety issues back on the site, according to the indictment. For a few hundred dollars, merchants could get an Amazon insider to erase negative customer reviews about their products. And $5,000 would buy a “takedown.” In such a case, company consultants conspired to eliminate a competitor from the site by buying its products and leaving negative feedback they knew would trigger a suspension of the product.

Rosenberg could face up to five years in prison and a fine of as much as $250,000. His sentencing is scheduled for a later date. It will close an embarrassing chapter for Amazon that revealed the Wild West mayhem playing out behind the scenes on the popular web store. Some 2 million merchants compete for a piece of the $746 billion shoppers spend there annually.

‘Dangerous precedent’

Amazon maintains its algorithms and customer reviews steer shoppers to the best products offered at the best prices. The bribery scheme showed how company employees can make money on the side by manipulating the system. Amazon consultant Chris McCabe said the company should be more transparent about what it does to enforce rules on the site. McCabe previously worked for Amazon. He also said it should monitor its own employees to make sure they aren’t taking bribes.

“A dangerous precedent has been set,” said McCabe, who specializes in helping merchants appeal account suspensions. “Amazon employees know they can have a lucrative side hustle selling internal information.”

Amazon spokesperson Mira Dix said the company notified law enforcement about the scheme and cooperated with the investigation.

“We have robust systems in place to detect suspicious behavior that we regularly improve upon, and teams who investigate, stop prohibited activity, and proactively report this information to law enforcement and the relevant authorities,” she said.

Sympathy among sellers

Rosenberg still has sympathizers among merchants critical of Amazon’s practices.

Amazon’s practices can include shutting businesses down without warning or a clear explanation. Amazon suspends merchants for selling counterfeit or dangerous products and violating other policies. But some merchants allege it has kicked them off the site unfairly and have little recourse. That leaves them locked out of their businesses.

“I have seen a lot of sellers that were unfairly suspended by Amazon,” said Chad Rubin, who sold vacuum cleaner parts on Amazon and now sells software to online merchants. “They got their livelihoods back with Ed Rosenberg’s help. This does not invalidate the bad things he did, but he has had a positive impact as well.”

Others were less forgiving of the Amazon bribery scheme because the ring sabotaged competitors. Such sabotage is taboo in the tight-knit community of Amazon merchants.

“This isn’t some Robin Hood fantasy,” said James Thomson, a former Amazon executive who is now an ecommerce consultant. “He found a way in and exploited it to make a lot of money for himself and his clients all while pretending to be a leader of this community.”

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