Internal incidents and external incidentals can have damaging reputational risks on a company if not address quickly and honestly. Internal incidents are sudden and catastrophic failures that are either self-inflicted or perceived by the public to be the organizations doing. They put people, communities, and the environment at risk. The internal incident can be physical or non-physical. There can likely be many other actors involved, such as government, emergency services and regulators. External incidents are not an organizations’ faut but still threaten the reputation. It can include acts of terror, sabotage, political uprisings, health scares and natural disasters. Operational, communication and strategic crisis response are required to mitigate the effects on reputation. Internal and external incidents can happen to a company, even the most admired ones, the success of them is measured in how they handle the situations. Amazon, currently the second most admired company in the world, has experienced an internal incident that put people at risk and an external incident caused by a natural disaster.
Ring security cameras, which were acquired by Amazon, are inexpensive and easily set-up cameras that people put in their houses or doors. In May 2023, the Federal Trade commission announced that the cameras gave all employees full access to customer videos for years, and one former employee used thousands of video recordings from bedrooms and bathrooms to spy on at least 81 female users for months back in 2017 (Barr, 2023, Ring Security Cameras Gave Every Employee ‘full access’ to All Customer Video for Years: FTC). Amazon Ring was required to pay a $5.8 million settlement for privacy violations and failing to notify the FTC and customers of incidents with unauthorized access or exposure of private customer videos. To make matters worse, the FTC also found that Amazon violated children’s privacy rights by failing to delete Alexa (Amazon cloud-based AI service) recordings at parent’s requests. The company was ordered to pay another $25 million in a settlement as the FTC agency is taking a stance to “hold big tech accountable for policies that critics say place profits ahead of privacy (The Guardian, 2023, Amazon’s Ring Doorbell Was Used to Spy on Customers, FTC Says in Private Case, para. 3).” Amazon put people, especially children, at risk with these privacy violations and failed to notify when they became aware of wrongdoings. Amazon’s response to the incident was denial: “while we disagree with the FTC’s claims regarding both Alexa and Ring, and deny violating the law, these settlements put these matters behind us (The Guardian, 2023).”
On December 10, 2021, a tornado running through Edwardsville, Illinois caused an Amazon warehouse to collapse killing six people and injuring serval other employees. “Many of the victims were delivery drivers, who pulled into the facility just before the storm hit and frantically fled to a bathroom in the building’s south side (Palmer, 2021, Amazon Drivers Sought Safety at Warehouse as Tornado Hit but Found Only Death and Destruction).” In response to the horrific incident, Amazon stated they would no longer build storm shelters in warehouses. They emphasized that they followed guidelines from the Occupational Safety and Health Administration and Notational Weather Service, and will continue to. However, days after the incident an employee shared: “I feel something could be said or a plan of action to review tornado and [severe] weather safety could be announced (Klippenstein, 2021, After Deadly Warehouse Collapse, Amazon Workers Say They Receive Virtually No Emergency Training, para. 1).” More complaints from employees were voiced about lack of measures and honesty about those measures taken beforehand by Amazon when protecting its workers. Due to these statements coming out, the public is now raising questions as to if Amazon did everything it could to prevent the catastrophic event. “Sen. Elizabeth Warren, D-Mass., and Reps. Alexandria Ocasio-Cortez, D-N.Y., and Cori Bush, D-Mo., wrote to Amazon in December 2022, seeking more information about Amazon’s plans to rebuild the Edwardsville warehouse, and questioning why it didn’t have a storm shelter or safe room on site. (Palmer, 2023, Amazon Told Lawmakers It Wouldn’t Build Storm Shelters in Warehouses after Fatal Collapse, para. 5).”
Was Amazon successful in managing reputational risks with the internal and external incidents? Despite being the second most admired company in 2023 among other highly successful rankings, Amazon was not successful in managing these risks. Amazon not only hid but denied wrongdoing in the Ring security camera and Alexa privacy violations. Had the FTC not intervened and financially punished them, they would have attempted to avoided it. People are now very skeptical of a product that was intended to provide security to the general population and skeptical of Amazon as well. In regard to the warehouse collapsing and killing employees, there is much controversy between employees and company explanation of the security measures taken. Although Amazon was not fined or found guilty of wrongdoing, there are many articles to this day that blast Amazon and believe they did not take any appropriate measures in giving employees safety.
Amazon is a very successful and admired company that has faced internal and external incidents that have caused a threat reputation. They have created skepticism among customers, as they believe they are focused more on profits rather than the privacy of customers and safety of employees. Although they have many positives as a brand, they still have learning to do in reputational risk and acknowledgment of wrongdoing.
References
“Amazon’s Ring Doorbell Was Used to Spy on Customers, FTC Says in Privacy Case.” The Guardian, Guardian News and Media, 1 June 2023, www.theguardian.com/technology/2023/may/31/amazon-ring-doorbell-spying-ftc.
Barr, Luke. “Ring Security Cameras Gave Every Employee ‘full Access’ to All Customer Video for Years: FTC.” ABC7 New York, 1 June 2023, abc7ny.com/ring-doorbell-amazon-settlement-ftc-camera-lawsuit/13327977/.
Klippenstein, Ken. “After Deadly Warehouse Collapse, Amazon Workers Say They Receive Virtually No Emergency Training.” The Intercept, 13 Dec. 2021, theintercept.com/2021/12/13/amazon-illinois-tornado-safety-protocols/.
Palmer, Annie. “Amazon Drivers Sought Safety at Warehouse as Tornado Hit but Found Only Death and Destruction.” CNBC, CNBC, 20 Dec. 2021, www.cnbc.com/2021/12/20/amazon-warehouse-in-illinois-hit-by-tornado-killing-6.html.
Palmer, Annie. “Amazon Told Lawmakers It Wouldn’t Build Storm Shelters in Warehouses after Fatal Collapse.” CNBC, CNBC, 2 Feb. 2023, www.cnbc.com/2023/02/02/amazon-to-lawmakers-we-wont-build-storm-shelters-in-warehouses.html#:~:text=Amazon%20said%20it%20won’t,public%20policy%2C%20wrote%20on%20Jan.
