While warehouse workers and upper-level corporate employees at Amazon are airing their own grievances against their employer about various internal issues, other people involved with Amazon are frustrated as well. Even Amazon’s shareholders are seeking legal action against the company.


Shareholder Claims Amazon’s “Astronomical” Misuse of Customer Data Could Ruin Company, Files Lawsuit

By: Trey Heller & CJ Rosenbaum

Amazon has allegedly violated state laws regarding user data and privacy and top executives essentially turned a blind eye. This is according to Stephen Nelson, a top Amazon shareholder, who is suing 17 of the company’s top executives, including Executive Chairman Jeff Bezos and CEO Andy Jassy. Other defendants named in legal filings include CFO Brian Olsavsky, General Counsel David Zapolsky, and 11 members of Amazon’s board of directors. Nelson claims that each of these executives knew the company was illegally misusing customer data and made no changes in response. This lawsuit is unique in that Nelson is suing specific Amazon executives and not the company as a whole.

Biometric Data 

Nelson’s lawsuit is just one of many instances where Amazon’s use of biometric data has come under fire. Biometric data is data from users which includes fingerprints and images; it is essentially data regarding a user’s physical makeup. Amazon has been accused of using biometric data fraudulently, using the data without users’ consent for profit, which is in direct violation of the law in many states. Nelson’s suit, filed in April with the U.S. District Court in Seattle, states that the company’s top executives knowingly made false statements about its use of biometric data, with his attorneys saying they “made a conscious choice to turn a blind eye to Amazon’s conduct” and “substantial financial and reputational harm to Amazon.”

Amazon’s use of biometric data is very important to its ability to utilize its many products. Voice recognition is a necessary function for Amazon’s Alexa virtual assistant, using vocal cues to satisfy user requests. The new Amazon Echo Show 15 will use visual data, with the device displaying user-specific notifications, playing user-specific music, and performing other tasks as the user comes into view. Amazon Web Services (AWS), the company which Jassy was previously an executive at, also makes heavy usage of biometric data. Examples of AWS’ usage of biometric data include fingerprint recognition for security software, vocal recognition to identify callers, and facial recognition to identify other customers.

Controversial uses 

The most controversial source of biometric data Amazon uses, however, is facial recognition, which is collected by the application Rekognition, which was launched in 2016. Rekognition has slowly been applied to many of Amazon’s products, including Alexa and other smart devices, and has been licensed for use by law enforcement and U.S. customs enforcement. Amazon’s use of Rekognition in its applications has come under fire from shareholders like Nelson as well as activist groups due to possible errors in its software. Many people believe that Rekognition can “unfairly and disproportionately” target people of color. Such concerns have led Amazon’s shareholders to propose a vote to request a report on the company’s use of the biometric data collector, and how its use can potentially violate civil rights or the right to privacy.

Amazon has already placed a moratorium on the sale of Rekognition to law enforcement organizations which has been in effect since 2020. Amazon’s board of directors has released a statement urging its shareholders to vote against the proposal, saying that they are “committed to the responsible use of our artificial intelligence and machine learning products and services.”

Legal conflicts

20 of the 50 states in the U.S. have some sort of laws and regulations about the use of biometric data by tech companies. Illinois was the first state to set such guidelines, passing legislation in 2008 requiring companies to gain consent from users to use their data, as well as informing them thoroughly about where and how their data will be used for a given duration of time. In short, these guidelines require that companies like Amazon provide informed consent to its users about the use of their data. Washington, the state where Amazon’s headquarters are located, passed similar legislation in 2017.

With these laws in place, Amazon has now become the subject of legal action regarding the misuse of their customers’ biometric data. According to Nelson’s court filings, Amazon is currently facing more than 14 class action lawsuits as well as 75,000 individual cases regarding this issue. Other tech companies, such as Apple, Facebook, and Google are facing litigation over their mishandling of biometric data as well.

Clearview AI, a startup company focusing on facial recognition technology, recently settled a two-year legal battle and agreed to restrict the use of its biometric data after it was found the facial images they collected were obtained without consent. In Nelson’s court filings, he argues that the heavy litigation Amazon is facing proves they have been egregiously negligent like their fellow tech companies with users’ biometric data, and that its executives and board of directors are legally responsible for the circumstances before and after the lawsuits. According to Nelson, the potential damages the company can face are “astronomical to the point the company could be put out of business if the violations are not immediately addressed, stopped and remedied.”

Lawsuit against Amazon

Nelson’s legal filings allege that Amazon’s top corporate leaders failed to warn shareholders about how their use of biometric data could adversely impact them financially and legally. Nelson also alleges that Amazon may potentially be violating the legislation passed in Illinois in 2008, named the Biometric Privacy Information Act. A similar lawsuit was recently settled between Facebook and users in Illinois, with the company agreeing to pay $650 million to 1.6 million named plaintiffs in the class action lawsuit over its misuse of biometric data taken from facial images.

The lawsuit claims that Amazon and its executives were not responsive to concerns from shareholders like Nelson about its potential legal violations. Nelson alleges that they all approved various “false statements” about these violations, failing to inform shareholders about their misuse of customer biometric data. Nelson’s legal filings state that the actions of Amazon’s executives “jeopardizes and harms one of Amazon’s most important (and fragile) assets: consumer trust. Reputational damage is particularly devastating for technology companies like Amazon.”