Third-party sellers at the retail giant are subject to suspensions at alarmingly high rates
By Attorney Kenneth Eade
Amazon, the e-tailer behemoth, began by crushing the publishing industry and has become a dominant force in the retail arena which will soon be counting large department stores and grocery chains as its next victim. But recently the company has become more aggressive with its third-party sellers, due largely to a failure to vet them. Anyone can become a seller on Amazon, and, as a result, the site has become infamous as an outlet for counterfeit goods, intellectual property violation and unfair business competition. Suspensions of third-party sellers have become so common now, a cottage industry has arisen to help sellers with appeals of seller account suspensions, made up of ex-Amazon employees and a small number of law firms. It has become so complicated that it is almost impossible for the average seller to compose one of these plans themselves. Amazon is aware that the plans of action, which are ghostwritten for sellers, are professionally done and has, accordingly, raised the bar as to what it considers a viable plan, entitling the seller to a second chance.
Amazon considers selling on their site a “privilege.” This selling privilege can be taken away by them at will. However, if they give you the opportunity to appeal, you may file a plan of action which identifies the policy violations, the root causes of the policy violations, your resolution of the violations, and a plan to prevent future violations. If accepted, Amazon’s Seller Performance Team will reinstate a seller account. Typically, the cases we see fit in several defined categories:
- Inauthentic or counterfeit products: This can be selling knock offs, or the genuine product without sufficient authorization to resell. Often sellers will buy products from eBay or close-out sales and then wonder why Amazon does not accept their invoices as provenance. They must buy from a wholesaler authorized by the brand owner, with rights of resale. And there is another scenario where competitors, trying to knock the competition out will make false counterfeit or inauthentic claims to eliminate their competition. There are two resolutions to these types of complaints:
- Provide the invoices from an authorized wholesale distributor and a plan of action; or
- Permanently delete the offending product, offer a refund to customers, and file a plan of action.
Amazon has formed a dragnet to try to eliminate counterfeiters which has trapped many third-party sellers who actually do have resale rights to genuine products. These sellers are put through the listing or account suspension process along with the counterfeiters, and the result can put legitimate business out of business. One client of mine, who holds the sole, exclusive rights to market a national sports brand in the United States, was recently suspended from selling authorized, genuine products on the erroneous grounds that it was selling counterfeits, and the matter had to be escalated to Jeff Bezos, the CEO of Amazon, because the Seller Performance division did not accept a legitimate license agreement as proof.
- Intellectual property infringement: These are typically copyright or trademark violations. These complaints can often be settled by sending an attorney letter to the rights owner, offering to give written assurances not to sell their product and a deletion of the product from the seller’s inventory.
- Poor seller performance: This consists of late shipping, order defects (damaged products either by poor inventory quality control or damaged during shipping), cancelling orders before they are fulfilled. These matters are solved with quality control programs written in the plan of action that sellers can also follow as a business practice. A lot of sellers are uneducated or don’t have a command of the English language and have difficulty communicating with customers. This accounts for many poor selling practices.
- Related accounts: It is against Amazon’s policies to have more than one account and sellers often get suspended because they open another account under a different name or company, with a different computer, or with a relative, etc. The Amazon database is very good. It coordinates many pieces of data to match one account to another, such as: ISP address, the same computer, same office or home address, same surname, same geographical location, same banking relationship and related products.
The solution in these cases is either to prove the accounts are not related, which is very difficult, or to admit the violation, promise not to do it again, and propose a plan of action to restore the former suspended account by addressing all the issues in that account.
- Listing errors: This occurs when a product does not match the detail page, variations of products are not classified correctly as parent and child products, or images or listings have information that encourages the customer to go off-site. These can be solved with a listing review and plan of action.
- Review manipulation: Since October 2016, it has been against Amazon’s policies to offer any type of incentive or discount in exchange for, or in the hopes of, a positive review. Sometimes, sellers use an automatic feedback service which can be the culprit.
- Listing hijacking: This occurs when a seller’s listing is taken over by someone who sells a knockoff product or product that doesn’t match the listing page. If the client has a registered trademark, an attorney can send a cease and desist letter and file a takedown notice to Amazon and kick the offending competitor off the product listing. If no trademark protection exists, but the competing product does not match the listed product in every way, including packaging, the offending competitor may often be eliminated from the product listing.
Attorney Kenneth Eade runs a legal practice concentrating on e-commerce and intellectual property issues. He can be reached at: www.amazonsellers.attorney.