Internet delivery service Kozmo.com was sued Thursday by the Equal Rights Center, a Washington D.C.-based civil rights group, and two African-American co-plaintiffs who claim the company refused to deliver merchandise to their homes because they reside in predominantly African-American neighborhoods.
The suit alleges that “Kozmo refuses to contract with, and serve, persons with Internet access in predominantly African-American neighborhoods in Washington because of their race.”
The suit further states that “Kozmo denies persons with Internet access in predominantly African-American neighborhoods in Washington, D.C. the full and equal enjoyment of its goods, services, facilities, privileges, advantages and accommodations because of their race, place of residence and place of business.”
In a statement released Thursday, David Berenbaum, director of the Equal Rights Center said, “The Equal Rights Center believes that the Internet should be the great equalizer — race should not be a factor in any transaction. Kozmo.com has implemented an intentional policy of discrimination against its consumers.”
Berenbaum said Kozmo’s practices “document the fact that consumer racism has reached the digital divide.”
The lawsuit, filed in Washington D.C. District Court, requests unspecified compensatory and punitive damages.
Kozmo Denies Allegations
Phillip Pierce, a spokesperson for Kozmo.com, told the E-Commerce Times that the company “rejects the irresponsible allegations that Kozmo.com’s delivery areas are drawn to exclude minorities.” He added that the allegations are “completely false” and “a clear misrepresentation of how Kozmo.com conducts its business.”
Kozmo, which also operates in Atlanta, Georgia; Boston, Massachusetts; Seattle, Washington; Los Angeles, New York and San Francisco, “makes decisions about which markets and areas it serves based on where there is the greatest Internet penetration and usage,” Pierce said. “As a technology-based company, we believe in and look forward to the expansion of Internet access to all Americans across the country,” he added.
The company is currently in a quiet period after filing for an initial public offering with the Securities and Exchange Commission (SEC).
An Underserved Majority?
Berenbaum said his group launched its national investigation of Kozmo.com because the company is red-lining many African-American communities.
“Washington D.C.’s African-American population is Internet savvy and online,” he said. “The national capital region is one of the most connected areas to the World Wide Web in the nation and a profitable area to do business in.”
In fact, according to a new geographic Internet usage report released by Nielsen//NetRatings (Nasdaq: NTRT), Washington, D.C. is one of the top five markets for Internet penetration in the United States.
Nevertheless, according to MSNBC, 350,000 of the city’s 400,000 African-American residents are ineligible for Kozmo’s service — strictly because of their zip codes.
In Washington, D.C., the population is 66 percent African-American, but 65 percent of the residents in Kozmo’s service area are white. Those figures do not add up, according to a new study released by Forrester Research.
The Forrester study shows that the gap between the races is rapidly closing, in terms of Internet penetration. African-Americans had the highest growth rate of Internet usage of any ethnic group in the U.S. last year, growing 44 percent.
The study also reveals that African-Americans are more likely than whites to buy the items Kozmo sells.
Berenbaum said the Equal Rights Center will now investigate the other cities in which Kozmo operates to determine if similar violations occur elsewhere. “It is our hope other cities will join to make this a nationwide class action suit,” he said.