[AT/FT] Amazon marketplace crackdown has sellers searching for legal help

Merchants who have been suspended from selling goods on Amazon’s marketplace are turning to a cottage industry of lawyers to regain access to their accounts and money, amid growing scrutiny of how the retailer treats independents.

Millions of accounts on the leading ecommerce platform have been prevented from engaging in sales for alleged violations of Amazon’s broad range of policies and other bad behavior. Even temporary suspensions can be a critical blow to the small business owners who rely on online sales.

Four ecommerce-focused US law firms told the Financial Times that the majority of the cases they took on were complaints brought by aggrieved Amazon sellers, with each handling hundreds or thousands of cases every year.

About a dozen sellers also said they had grown worried about Amazon’s power to suspend their accounts or product listings, as it was not always clear what had triggered the suspension and Amazon’s seller support services did not always help to sort out the issue.

Account suspension was “a big fear of mine,” said one seller, who declined to be named. “At the end of the day, it’s not really your business. One day you can wake up and it’s all gone.”

Amazon’s recent efforts to crack down on issues such as fake product reviews have come as US and European regulators have upped their scrutiny of the online harms facing shoppers.

But critics said the existence of a growing army of lawyers and consultants to deal with the fallout from Amazon’s actions pointed to a problem with the way the retailer treats its sellers.

“If you’re a seller and you need help to navigate the system, that’s a real vulnerability for the marketplace. If you’re operating a business where the people you’re deriving revenue from feel that they’re being treated in an arbitrary way without due process, that is a problem,” said Marianne Rowden, chief executive of the E-Merchants Trade Council.

“The fact that there are entire law firms dedicated to dealing with Amazon says a lot,” said one seller, who, like many who spoke to the FT, asked to remain anonymous for fear of reprisals.

Amazon declined to comment in detail but said its selling partners were “incredibly important” and the company worked hard to “protect and help them grow their business.” The company worked to “eliminate mistakes and ‘false positive’ enforcements” and had an appeal process for sellers in place.

Sellers on Amazon’s marketplace account for more than 60 percent of sales in its store. In the nine months to September 30, Amazon recorded $96 billion in commissions and fees paid by sellers, a jump of nearly 20 percent compared with the same period a year earlier.

As the marketplace has grown, Amazon has had to do more to police it. During the first half of 2023 in its EU store, Amazon took 274 million “actions” in response to potential policy violations and other suspected problems, which included the removal of content and 4.2 million account suspensions. Amazon revealed the numbers as part of its first European transparency report newly required by EU law.

Amazon typically withholds any money in the account of a seller it has suspended for alleged fraudulent or abusive practices, which it may keep permanently if the account is not reinstated and the merchant is deemed to have been a bad actor.

Figuring out what caused a suspension and how to reverse it can be difficult. “We had a listing shut down during Prime Big Deals Days with no warning, no cause, no explanation,” said one kitchenware seller who has been selling on Amazon.com since 2014. “That’s pretty common.”

Amazon gave no further information when the listing was reinstated days later, the seller said.

Such confusion drives some sellers towards lawyers and consultants who advise on underlying problems, such as intellectual property disputes.

Amazon-focused US firms said they typically charged flat fees of between $1,300 and $3,500 per case.

CJ Rosenbaum, founding partner of the Amazon and ecommerce-focused law firm Rosenbaum Famularo, said the practice experienced a “big jump” in demand during the pandemic.

Many cases related to IP complaints from bigger brands “trying to control who sells their products” and making “a baseless counterfeit complaint” against a smaller Amazon seller, he added.

Lawyers said some sellers had been wrongly accused by the company’s automated systems that identify breaches of rules and policies. They added though that others had broken Amazon’s rules.

The retailer has become “more draconian” in the enforcement of its policies in recent years, said attorney Jeff Schick.

“Clients will say Amazon is unfair,” he said, but added that if the company did not strictly enforce its rules “then the platform becomes the next [US classified advertisements website] Craigslist.”

As part of escalated disputes, lawyers might steer merchants through a costly arbitration process that the company requires US sellers to use for most issues, rather than filing lawsuits against it.

Sellers were subject to “forced” arbitration clauses that required them to “sign away the right to their day in court if a dispute with Amazon arises,” said a 2022 US government report.

The details of arbitrations are not public, and decisions do not typically set binding precedents. They can also be hugely expensive: the up to three arbitrators that preside over a case can charge hundreds of dollars an hour.

“Quickly, you’re at $25,000 of costs or more,” said sole practitioner Leo Vaisburg, who left firm Wilson Elser in 2022 to pursue Amazon-related work full time. For many small businesses the high costs were “a barrier to entry,” he added. “Very few cases are worth that kind of money.”

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They left out the cost of arbitration, $25K, is about a tenth of the cost of a lawsuit, $250K.

No doubt because none of the lawyers who pushed this story wanted to tell them that.

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The article also does not even remotely say how many of those cases were legitimately suspended due to seller incompetence/negligence.

I assert zero barriers to entry is the core problem, with the actual amount of good honest sellers being ruined being a tiny percentage.

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Whoever wrote this article is so biased it’s not even funny.

Fact is, Amazon has improved a lot in terms of reducing arbitrary suspensions (both listing and account) compared to a few years ago. The account health score system, though flawed, does actually provide insight and transparency into what’s negatively affecting you, and a lot of times you get a chance to appeal a listing/account problem prior to being suspended, especially if you have account health assurance.

Listings being taken down/put back up randomly does happen, but with the sheer volume of products, glitches are going to impact some of them and that’s a risk you accept by selling on Amazon. If your business relies on a single SKU on a single channel, that’s a business model problem.

4.2 million account suspensions… conveniently leaving out the fact that the majority of those are bogus account creation attempts, not arbitrary account suspensions. While I will agree that some of the policies are unfair, for the most part when I see people complain about being suspended on NSFE, they usually did something to cause the suspension and it wasn’t just arbitrary.

The “arbitration being unfair because it’s expensive” is just hogwash, and they’re intentionally pushing false and misleading information. A lawsuit in federal court will cost multiples of what arbitration would cost for any type of case.

More so when Amazon pays for it when they lose.

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True but it would provide precedent for other sellers to stand on, instead of this “each every case on its own merits” BS. Imagine if a federal court ruled against Amazon for negative inventory receipts. It would never happen again. But instead every small seller has to take one in the A because $2K is not worth 1-300$.

Yes, there’s plenty of reasons to attack Amazon on the forced arbitration that actually have merit (another one being that it blocks any kind of class action), which makes this article so much worse when it’s a blatant smear article that chooses to use false information to make their point.

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I noticed a former industry expert who was quoted in almost every article before last year is NOT quoted here.

Yeah this article was clearly not well researched.

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I hate to hear when any ASIN or Seller is shut down, but simply put, on Amazon you are indeed guilty until proven innocent–and as much as that sucks individually, frankly it is a strength for 3P Sellers as a group and for Buyers, and a retailer can’t operate safely any other way.

The fact is that plenty of 3Ps (probably most) receiving “action” are actually guilty of violating Amazon policy or worse, even unintentionally.

Too many Sellers make the mistake of being Amazon-only businesses, so that an ASIN or account being deactivated is catastrophic instead of merely inconvenient.

Although I recognize that the false positives are incredibly unfair, I also see that If Amazon was more transparent, then it would just further empower the bad actors.

But all of this is why I personally worked hard on the OSFE to try to help Sellers with their appeals–for free.

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This

ALL DAY THIS.

I bet between ever seller here on SAS we have all collectively been suspended less then once each (as a seller)

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Amazon actually removed the forced arbitration from their agreement a couple years ago.

“After facing more than 75,000 individual arbitration demands over the last two years, in 2021 Amazon removed the mandatory arbitration provision and class action waiver from its consumer online terms of service.”

Retail Industry 2021 Year in Review: Retail Giant Drops Arbitration Clause—Is This the Right Move for Your Agreement?.

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That’s for buyers only

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I guess you are including the cost of a lawyer in there? If so even still I think that might be high.

Here’s what I’ve gotten in studying things (admittedly several years ago), and after exchanges with bunga confirming some.

Cost/Amount of claim filing :
Claim type ...................... Filing Fee ...... Proceed Fee .............. Final Total

Nonmonetary Claims < $75,000 .... $925 ............ $800 ($1725 total) ....... $1975 ($1725 + $250)

That is $925 + $800 + $250 Admin Fee, so $1975

Mediation—Administrative Fee Schedules
A $250 non-refundable deposit, which will be applied toward the cost of mediation, is required to initiate the AAA’s administration of the mediation and appointment of the mediator.

The cost of mediation is based on the hourly or daily mediation rate published on the mediator’s AAA profile. In addition, the parties will be assessed an administrative fee for the AAA’s services of $75 for each hour charged by the mediator. There is a four-hour or one-half day minimum charge for a mediation conference. Expenses referenced in Section M-17 of the Mediation Procedures may also apply.

If a matter submitted for mediation is withdrawn or cancelled or results in a settlement after the request to initiate mediation is filed but prior to the mediation conference, the cost is $250 (to which the deposit will be applied), plus any mediator time and charges incurred. These costs shall be borne by the initiating party unless the parties agree otherwise.

It’s always possible that I might have missed something in there.

Note: Bunga apparently did win his arb, but of course he couldn’t talk about it.

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Not what I read…

“The arbitration will be conducted by the American Arbitration Association (AAA) under its commercial rules.”…"For all cases, the AAA commercial fee schedule governs the payment of all filing, administration and arbitrator fees. "
image

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I also remember $250 filing fee, but this was many years ago

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This is the worst part.

I’ve been suspended exactly zero times but I have had pretty much every listing taken down for no reason only to get it back up in a few days. Amazon owes me at least $20K in lost sales. Where do I sign up??? LOL JK - I know it’s all part of Amazon’s game.

With that said, you need to work really hard and dumb to get a listing removed recently (at least a year). Amazon is doing that because Amazon makes more $, not because they care more about the seller or their precious customers.

ETA
BTW - remember that seller we reported for fake reviews? They now have a “6% discount by Amazon” on one of their listings. How does this happen on a listing that sells 400 units a month? I’ll tell you how…

I’m kind of over that. We did some significant damage to their listings by getting them yanked 10X. They keep piling up fake reviews and it’s not moving their now crappy star avg.

I was looking at some of the other listings we reported over the last 2 years and they have all been damaged to the point where they don’t really matter anymore thanks to us but it sucks that the Amazon consumer is still exposed to all of this fraud.

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Thank you for supplying this information I would not otherwise have seen, even though I read several newspapers online every day.

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Like I said …

… so I suppose it went up from $250 to $500, which would make sense.

I am surprised though that the rest is still the same. $925 & $800.

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None of us can see everything. Having a community to share these things with when any one of us finds it is a gift!

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