AG Jennings Sues Amazon For Illegally Maintaining Monopoly Power

Attorney General Jennings yesterday joined the Federal Trade Commission and 16 other state attorneys general to sue Amazon.com, Inc. alleging that the online retail and technology company is a monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power. The FTC and its state partners say Amazon’s actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon.

The complaint alleges that Amazon violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging. By stifling competition on price, product selection, quality, and by preventing its current or future rivals from attracting a critical mass of shoppers and sellers, Amazon ensures that no current or future rival can threaten its dominance. Amazon’s far-reaching schemes impact hundreds of billions of dollars in retail sales every year, touch hundreds of thousands of products sold by businesses big and small and affect over a hundred million shoppers.

“Amazon’s exclusionary practices simply cannot be allowed to continue,” said Attorney General Kathy Jennings. “Our households, creators and entrepreneurs, and indeed our free market are being unduly strained and stifled. We will work to hold Amazon accountable.”

“Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies,” said FTC Chair Lina M. Khan. “The complaint sets forth detailed allegations noting how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them. Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”

“We’re bringing this case because Amazon’s illegal conduct has stifled competition across a huge swath of the online economy. Amazon is a monopolist that uses its power to hike prices on American shoppers and charge sky-high fees on hundreds of thousands of online sellers,” said John Newman, Deputy Director of the FTC’s Bureau of Competition. “Seldom in the history of U.S. antitrust law has one case had the potential to do so much good for so many people.”

The FTC and states allege Amazon’s anticompetitive conduct occurs in two markets—the online superstore market that serves shoppers and the market for online marketplace services purchased by sellers. These tactics include:

Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet. For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.

Conditioning sellers’ ability to obtain “Prime” eligibility for their products—a virtual necessity for doing business on Amazon—on sellers using Amazon’s costly fulfillment service, which has made it substantially more expensive for sellers on Amazon to also offer their products on other platforms. This unlawful coercion has in turn limited competitors’ ability to effectively compete against Amazon.

Amazon’s illegal, exclusionary conduct makes it impossible for competitors to gain a foothold. With its amassed power across both the online superstore market and online marketplace services market, Amazon extracts enormous monopoly rents from everyone within its reach. This includes:

Degrading the customer experience by replacing relevant, organic search results with paid advertisements—and deliberately increasing junk ads that worsen search quality and frustrate both shoppers seeking products and sellers who are promised a return on their advertising purchase.

Biasing Amazon’s search results to preference Amazon’s own products over ones that Amazon knows are of better quality.

Charging costly fees on the hundreds of thousands of sellers that currently have no choice but to rely on Amazon to stay in business. These fees range from a monthly fee sellers must pay for each item sold, to advertising fees that have become virtually necessary for sellers to do business. Combined, all of these fees force many sellers to pay close to 50% of their total revenues to Amazon. These fees harm not only sellers but also shoppers, who pay increased prices for thousands of products sold on or off Amazon.

The FTC, along with its state partners, are seeking a permanent injunction in federal court that would prohibit Amazon from engaging in its unlawful conduct and pry loose Amazon’s monopolistic control to restore competition.

Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin joined the Commission’s lawsuit. The Commission vote to authorize staff to file for a permanent injunction and other equitable relief in the U.S. District Court for the Western District of Washington was 3-0.

This matter was handled for the Delaware Department of Justice by the Fraud and Consumer Protection Division’s Consumer Protection Unit.

AG Jennings Sues Avid Telecom Over Billions Of Illegal Robocalls

Attorney General Kathy Jennings today sued Avid Telecom for allegedly initiating and facilitating billions of illegal robocalls. Avid Telecom sent or transmitted more than 7.5 billion calls to telephone numbers on the National Do Not Call Registry, and made 27 million calls to Delawareans.

“We often think of illegal robocalls as a nuisance, but they are also predatory and can be catastrophic when they ensnare innocent consumers in scams,” said AG Jennings. “This lawsuit takes aim at one of the worst offenders in this space, and is a direct result of the states working together on this issue. I’m grateful to all the attorneys, investigators, and staff who worked on this complaint and look forward to stating our case in Court.”

The lawsuit names Michael D. Lansky, LLC — which does business as Avid Telecom — its owner Michael Lansky, and its vice president Stacey S. Reeves.

Avid Telecom is a Voice over Internet Protocol (VoIP) service provider that sells data, phone numbers, dialing software, and/or expertise to help its customers make mass robocalls. It also serves as an intermediate provider and allegedly facilitated or helped route illegal robocalls across the country.

Between December 2018 and January 2023, Avid sent or attempted to transmit more than 24.5 billion calls; more than 90 percent of those calls lasted less than 15 seconds. Further, Avid helped make hundreds of millions of calls using spoofed or invalid caller ID numbers, including more than 8.4 million calls that appeared to be coming from government and law enforcement agencies, as well as private companies.

Avid Telecom allegedly sent or transmitted scam calls about Social Security Administration scams, Medicare scams, auto warranty scams, Amazon scams, DirecTV scams, credit card interest rate reduction scams, and employment scams. Examples of some of these scam calls are available to listen to here and here.

Today’s legal action arises from the nationwide Anti-Robocall Multistate Litigation Task Force of 51 bipartisan attorneys general, including AG Jennings. The task force is investigating and taking legal action against those responsible for routing significant volumes of illegal robocall traffic into and across the United States. The Federal Trade Commission and the Social Security Administration’s Office of the Inspector General provided investigative assistance in this matter.

Top federal and state prosecutors form Delaware COVID-19 anti-fraud coalition

Today, United States Attorney David C. Weiss and Delaware Attorney General Kathleen Jennings announced the formation of a new Coronavirus (COVID-19) Anti-Fraud Coalition, aimed at better protecting the citizens of Delaware from criminal and civil fraud arising from the pandemic.

The Coalition is comprised of local, state and federal agencies, investigators and prosecutors with significant experience in handling complaints and cases related to consumer fraud, financial fraud, heath care fraud, and cybercrime. Together, the Coalition will share information and resources to monitor, identify and investigate misconduct to protect the people of Delaware from those exploiting the COVID-19 pandemic for their own advantage.

Agencies participating in the Coalition include:

Delaware Department of Justice
United States Attorney’s Office
Federal Bureau of Investigation
U.S. Department of Homeland Security-Homeland Security Investigations
U.S. Small Business Administration-Office of Inspector General
U.S. Department of Labor-Office of Inspector General
Delaware Department of Health & Social Services
Delaware Office of Management & Budget
Delaware Department of Transportation
Delaware Department of Education
Delaware Department of Insurance
Delaware Department of Finance
Delaware Department of Labor
Delaware Auditor of Accounts
Delaware State Police
New Castle County

Participating agencies will take information, tips and complaints from the public, as well as other local law enforcement agencies seeking the Coalition’s assistance.

“This pandemic is ripe for exploitation by scammers,” said Attorney General Jennings. “The Delaware Department of Justice and its Fraud Division works each day to educate consumers, prevent fraud, and bring scammers to justice—but our work will never be done as long as consumers continue to be preyed upon by those who profit shamelessly off of their fears and anxiety. Our collaboration with the U.S. Attorney’s Office is the latest chapter in a longstanding record of partnership, and in this public health and economic crisis it has never been more important for everyone at the federal, state, and local level to collaborate on the people’s behalf.”

“Sadly, criminals look to take advantage of people, regardless of the circumstances,” said David C. Weiss, U.S. Attorney for the District of Delaware. “But the people of Delaware can rest assured that we will be relentless in bringing to justice those seeking to illegally profit from this crisis. If you believe you are the victim of a scam, or have been contacted by someone falsely claiming to be a representative of the government, please contact the Coalition at one of the below email addresses immediately. I want to thank our local and state partners for their commitment to combating fraud and protecting Delawareans. By working together, we are more fully able to identify, investigate, and prosecute these criminal acts of fraud related to the COVID-19 pandemic. In these challenging times, I am grateful for this type of collaboration, which represents the best of public service.”

Be on the lookout for and be wary of potential COVID-19 scams and abuses. Any information, complaints, or concerns can be reported to the Coalition by email to COVID.DOJ@delaware.gov or USADE-COVIDFRAUD@usdoj.gov.

Delawareans who may have been scammed can also reach out to the Attorney General’s consumer protection hotline at (800) 220-5424. In addition, you can also contact the National Center for Disaster Fraud (NCDF) by hotline (866-720-5721) or to the NCDF e-mail address disaster@leo.gov.

Common scams and frauds include:

Economic Impact Payment (Stimulus Check): Scammers pretend to be government officials offering false economic impact payments (stimulus checks) in order to obtain personal identifying information including social security and bank account numbers.
Diagnosis Testing Scams: Scammers offer fake COVID-19 testing kits, particularly door-to-door.
Treatment/Cure Scams: Scammers offer fake or unproven treatment regimens that are particularly dangerous because they have the potential to do more harm than good.
Charity Scams: Virtually every time there is a disaster or emergency, scammers set up fake charities to solicit donations that they then spend on themselves.
Overinflated prices: The Coalition will use every tool available to hold sellers accountable who unlawfully use the COVID-19 pandemic to unreasonably inflate prices.
Investment Scams: Scammers make false claims about tests, cures and other matters related to COVID-19 in order to entice victims to make investment decisions based on those false claims that allow the scammer to steal money and assets from Delawareans.
Cyber Scams: Scammers send victims emails related to COVID-19 that appear to be from the victims’ banks, health care providers, the World Health Organization, the Centers for Disease Control and Prevention (CDC), and others for the purpose of obtaining the victims’ personal identifying information and exploiting it for the scammers’ own benefit.
App Scams: Scammers are creating and manipulating mobile apps designed to track the spread of COVID-19 to insert malware that will compromise users’ devices and personal information.
Insurance, Workers’ Compensation and Medicaid Fraud: Businesses and government agencies are not immune to scams. They should also be vigilant to ensure scammers do not take advantage of their businesses or customers during this pandemic.
Scams specifically targeted at seniors: Seniors are more vulnerable than ever to common scams like the Grandparent Scam and Government Imposter Scams. Consumers receiving a call or any contact claiming that loved ones are in danger or hurt, that they owe money and failure to pay will result in their arrest or other harm, or that their benefits are in jeopardy, do not act. Contact your loved ones or the purported agency using known, trusted contact information not sourced from the suspicious communication.

AG Jennings, DOJ Fight Corporate Abuse of Class Action Settlements

Delaware leads bipartisan coalition opposing attempt to weaponize class action settlements against state law enforcement actions

Attorney General Kathy Jennings announced Monday that Delaware has filed an amicus brief in a Minnesota federal court opposing a corporation’s attempt to weaponize a class action settlement against a parallel law enforcement action by the Minnesota Attorney General. Delaware’s brief was also signed by the attorneys general of 35 other states and the District of Columbia.

Following a lengthy investigation, Minnesota’s Attorney General filed suit in 2017 against CenturyLink, Inc. for unlawful business practices, alleging the Louisiana-based telecommunications provider had harmed Minnesota consumers through fraudulent and deceptive billing. Trial in Minnesota’s lawsuit is scheduled for March 2020.

In addition, numerous private litigants have filed class action lawsuits against CenturyLink in connection with the same conduct, which is alleged to have harmed millions of consumers across the United States. In early 2018, the Judicial Panel on Multidistrict Litigation consolidated the private class action lawsuits before Judge Michael J. Davis in the United States District Court for the District of Minnesota.

In October, CenturyLink announced that it had reached a tentative settlement with the private litigants in federal court. Under the proposed settlement, consumers would only receive a small fraction of the losses CenturyLink is alleged to have caused. CenturyLink then asked Judge Davis to bar the Minnesota Attorney General’s state court restitution claims against it, arguing that any further relief ordered by the state court would be “duplicative” of payments consumers will receive under the private settlement.

“Class action settlements aren’t get-out-of-jail-free cards,” said Attorney General Jennings. “This issue is bigger than any one state or business; this is about giant corporations playing by a different set of rules than everyone else. The injunction that CenturyLink has requested would undermine state consumer protection laws and send a message that corporations can violate the law and unilaterally avoid full accountability by leveraging private settlements to squeeze out law enforcement efforts. I’m grateful to my colleagues for standing up to say we won’t let that happen.”

Delaware’s brief makes four principal arguments:

CenturyLink’s request is unconstitutional under the Eleventh Amendment
Additional federal statutes bar the Courts from granting CenturyLink’s request
The approach advocated for by CenturyLink would incentivize class action settlement abuse, diminish recoveries for fraud victims, and enable bad actors to keep more of the proceeds of their misconduct.
State attorneys general are not represented in class actions and are legally separate from private litigants

The Minnesota Attorney General filed a separate brief opposing CenturyLink’s proposal on November 15. A hearing on the matter will be held before Judge Davis on December 11.

Delaware’s amicus brief was also signed by the attorneys general of: Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Virginia, Washington, Wyoming, and the District of Columbia.

Delaware’s work in this matter was led by Deputy Attorney General David Weinstein, with assistance from Fraud Division Director Owen Lefkon, Director of Impact Litigation Christian Wright, and Deputy Attorney General Michael Clarke.

Delaware, Newark Manor Nursing Home Reach Settlement

This settlement resolves allegations that Newark Manor provided substandard and worthless care to residents of the nursing facility.

Attorney General Kathy Jennings announced today that the State of Delaware has reached an agreement with Newark Manor Nursing Home (also known as Premiere Healthcare, Inc.), its owner Bruce Boyer, administrator David Boyer and former administrator Susan Comegys, to settle allegations that Newark Manor: (1) provided substandard and worthless services to its residents; (2) inaccurately reported certain residents’ clinical conditions; (3) failed to provide adequate staffing to provide resident care; and (4) failed to prevent harm to its residents. Newark Manor is a privately owned for-profit intermediate care nursing facility in Newark and licensed by the State of Delaware.

“Elderly nursing home residents are among the most vulnerable citizens of Delaware. We are committed to holding facilities accountable and will not tolerate substandard care, or an unsafe environment, for residents of facilities. Today’s settlement holds Newark Manor and its owner responsible for the substandard care provided and sends a message that we will continue to hold facility owners responsible for resident care provided throughout Delaware,” said Attorney General Jennings.

The civil settlement resolves allegations that, from 2011 through 2017 Newark Manor:

1. persistently failed to provide adequate nursing care including supervision to vulnerable residents of Newark Manor, causing falls, fractures, and other significant injuries;
2. failed to meet the required daily care hours per resident;
3. failed to act on monthly pharmacy recommendations, and supply prescribed medication to certain residents;
4. failed to take steps so that residents were not burned by hot coffee, and failed to adequately treat burns;
5. failed to maintain hygiene standards;
6. failed to maintain effective strategies to prevent falls;
7. failed to ensure that the resident environment was free of accident hazards; and
8. created incorrect care plans for their residents.

Newark Manor and its owner have agreed to pay $381,000 to resolve this case with $175,000 going to the Division of Medicaid and Medical Assistance within the Department of Health and Social Services. Newark Manor’s owner will reinvest the remaining $206,000 into capital improvements at the facility that will enhance resident care. Additionally, Newark Manor will be subject to a two-year Corporate Integrity Agreement, which subjects Newark Manor, its owner and management, to extensive compliance obligations. The Attorney General’s Medicaid Fraud Control Unit will monitor Newark Manor’s compliance with the settlement terms.

Director Christina Kontis, Deputy Attorney General Laura Najemy, special investigator Paul Reutter, nurse analyst Brian Galbreath, all of the Medicaid Fraud Control Unit, along with forensic accountant Clyde Hartman of the White Collar Crime Unit, handled this case.