Amazon has cut ties with Hess, a security firm whose staff have been accused of harassing more than 5,000 of the retailer's temporary foreign workers in Germany.
Following pressure from Chancellor Angela Merkel's government, Amazon launched an investigation into allegations that its workers had been intimidated by black-clad security guards with alleged neo-Nazi links, who terrorised them by searching their bedrooms and kitchens.
"Amazon has a zero tolerance limit for discrimination and intimidation and expects the same of other companies we work with," spokeswoman Ulrike Stoecker said.
The security firm employed by Amazon went under the name of Hess Security. Critics pointed out that the name could be a reference to Adolf Hitler's deputy, Rudolf Hess.
The head of the company, named only as Uwe L, has a police record for football hooligananism and espousing neo-Nazi beliefs.
The guards were employed to monitor hostels and budget hotels where foreign workers stayed, said the report. "They tell us they are the police here," a Spanish woman complained, as reported by the Independent.
However Hess has rejected accusations that it endorses far-right opinions.
"We employ Christians, Muslims and Buddhists," the company said. "The allegations of far-right sympathies can't be reconciled with that."
The German government announced that the Federal Labour Agency was investigating the Amazon subcontractor. "We expect the results of the special investigation during the course of the week," ministry spokeswoman Christina Wendt said.
"There is the option, if mistreatment actually took place, of removing [the subcontractor's] licence," she added
The scandal has already damaged Amazon's brand in the country, according to reports.
Norbert Faltin, an employee of the online giant who is an official of German trade union Verdi, told Deutsche Welle that he had received a lot of negative feedback from seasonal workers.