Amazon to Pay $30M Settlement Over Alleged Privacy Violations

WASHINGTON — Amazon.com Inc. agreed Wednesday to pay more than $30 million to settle complaints by federal regulators who say the tech giant trampled the privacy of children who used its Alexa voice assistant and of users of its home security camera company, Ring LLC.

The Justice Department and Federal Trade Commission say Amazon violated privacy laws by storing recordings of children collected by Alexa, despite telling parents the company would delete the data.

Amazon is required as part of the settlement to modify its algorithm for collecting and storing private information.

The dispute with Amazon over Alexa and Ring is part of a growing conflict between government and technology companies over privacy, artificial intelligence and corporate marketing.

Amazon faces a separate class action lawsuit in New York over biometric information it collected on customers at its Amazon Go stores. The lawsuit says palm scans and measurements of shoppers’ bodies as they were tracked throughout the stores were stored without their consent.

The Amazon Go stores allow customers who download an app to shop without checking out. Their purchases are stored in a “virtual cart” and paid through the charge accounts.

Amazon operates the stores at 29 locations nationwide with plans to expand.

Google, Microsoft and OpenAI are other tech companies that have faced recent regulatory crackdowns or lawsuits over privacy concerns.

In congressional hearings and public statements last month, executives from tech companies admitted struggling with privacy concerns as they market their services. They also warned the concerns will only grow as artificial intelligence becomes more sophisticated.

So far, federal regulations governing online privacy are spread among a series of laws that each govern a small part of data collection and storage.

Congress’ most high profile effort was the American Data Privacy and Protection Act introduced last summer. It sought to regulate how organizations use consumer data with standards for data minimization, individual ownership and private rights of action. 

Opposition from the California delegation and some of their technology industry supporters resulted in the bill dying without a final vote of approval. A Democratic spokesperson told The Well News an amended form of the bill is likely to be reintroduced soon.

The other option so far has been a series of privacy lawsuits, similar to the one that snared Amazon with the $30 million settlement.

The Federal Trade Commission accused Amazon of breaching the Children’s Online Privacy Protection Act by not deleting children’s voice and geolocation data gathered by Alexa.

The company told regulators it retained children’s voice and other data to train its Alexa algorithm to respond to children. Although the data was supposed to improve the service, the result was that Amazon was “benefiting its bottom line at the expense of children’s privacy,” according to a Federal Trade Commission statement.

Amazon continues to deny wrongdoing. It says it cooperated with the Federal Trade Commission while it designed its Amazon Kids service.

“While we disagree with the FTC’s claims and deny violating the law, this settlement puts the matter behind us,” an Amazon statement said.

A separate part of the settlement requires Amazon to refund $5.8 million to its Ring home security camera customers after employees and contractors were granted access to consumers’ private videos. Amazon purchased Ring in 2018.

The Federal Trade Commission said Ring and Amazon also failed initially to install security systems — such as multifactor authentication— to protect consumers from cyberattacks.

In some cases, hackers gained access to Ring cameras’ two-way functionality to harass and insult consumers, according to the FTC. They included children who endured racist slurs or sexual propositions.

In one case, a hacker threatened to injure family members unless they paid a ransom, the FTC said in its complaint.

The cases are United States v. Amazon.com Inc. et al., case number 2:23-cv-00811, in the U.S. District Court for the Western District of Washington and Federal Trade Commission v. Ring LLC, case number 1:23-cv-01549, in the U.S. District Court for the District of Columbia.

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