Latest! Several banned sellers in Shenzhen collectively sued Amazon

In this account suspension incident, Chinese sellers were at the center of the storm and suffered heavy losses. This incident also attracted the attention of relevant domestic government departments, aroused extensive discussion inside and outside the industry, and was reported by industry vertical media and mainstream media.

Previously, there was news that Chinese sellers whose accounts were blocked were going to file a class action lawsuit against Amazon, but it has never been confirmed. Today, a complaint suddenly leaked, which confirmed the news, and many domestic and foreign media have followed up with reports.

In the lawsuit, the sellers did not deny that they violated Amazon's policies, but instead focused on getting Amazon to return the withheld funds.

Several Shenzhen sellers filed a class action lawsuit to get their funds back

In response to Amazon's account suspension, Chinese sellers have begun to fight back. According to the latest court documents, on September 13, several Chinese sellers filed a class action lawsuit in the U.S. District Court for the Northern District of California, accusing Amazon of banning accounts and freezing funds on the grounds of cracking down on cashback for positive reviews.

According to the complaint, the companies filing the lawsuit include Sopownic, Slaouwo, Deyixun, Cstech, Recoo Direct, Angelbliss and Tudi.

The editor learned that these companies are all from Shenzhen. As the base camp of cross-border e-commerce, the funds frozen by Shenzhen cross-border e-commerce companies in this account blocking incident are difficult to estimate.

The sellers filed this lawsuit to recover funds that were illegally and improperly withheld by Amazon and to further prevent thousands of Amazon sellers and merchants from having their funds misappropriated and abused under legal and legitimate circumstances.

It is understood that in 2016, Amazon formulated a strict policy prohibiting "rewarding good reviews." Amazon's "Service Business Solutions Agreement" clearly states that if a seller violates Amazon's policies, Amazon reserves "sole discretion" to decide whether to permanently withhold the seller's funds.

The plaintiff sellers did not deny that they violated Amazon's policies, but they believed that the hundreds of thousands of dollars withheld by Amazon were their own income and should not be frozen. They should be returned. The plaintiff sellers gave the reason that in the process of using Amazon FBA service, Amazon was responsible for shipping, so they knew from the beginning that these sellers would provide gift cards to customers who gave good reviews.

Indeed, Amazon’s cleanup operation came so swiftly that many sellers were caught off guard.

According to previous reports, Amazon's global vice president Dai Xuefei said in an interview that this "account blocking" incident was not targeted at China, and merchants from other countries were also involved. However, this "account blocking" incident did not affect the overall business growth of Chinese sellers on the Amazon platform.

Amazon said that in the past five months, it has closed the sales rights of about 600 Chinese brands, involving about 3,000 seller accounts of these brands.

However, the speech of Amazon's vice president was also criticized by many sellers:

Seller A: 3,000 plus two zeros and I’ll believe it.

Seller B: 3,000 units? Will Amazon tell the sellers who are banned the specific reasons? Can I get the inventory back normally? I replied to the email with the removal address and nothing happened. Tens of thousands of units of inventory just disappeared. Many friends also said that the funds that were banned for fake orders cannot be recovered. Amazon is really a tyrant.

According to statistics released by the Shenzhen Cross-border E-Commerce Association in August, more than 50,000 Chinese sellers had their stores blocked on the Amazon platform in more than two months, causing losses estimated to exceed 100 billion yuan.

Wang Xinxiang, president of the Shenzhen Cross-border Association, pointed out that the above data does not include a large number of mid-sized and below enterprises. "Many enterprises are unwilling to register. For example, one enterprise in eastern Guangdong may have nearly 100 accounts blocked, and 10 accounts have a loss of 900 million yuan, but they did not take the initiative to contact us."

The case is still ongoing. Whether the plaintiff can win the case is a key factor affecting the interests of the sellers. You can continue to pay attention to the progress of the case.

What are the chances of Chinese sellers winning the lawsuit against Amazon?

Seeing the actions of the above sellers, the resentful sellers are ready to follow suit, but they can't help but wonder: Can these sellers win the lawsuit? If they also take this path, what are their chances of winning?

You should know that Amazon has set up unfair terms in black and white in its entry policy, one of which is to cut off sellers from class action lawsuits. Only by agreeing to Amazon's terms and policies can you continue to register a store.

But it's not all hopeless. A German seller named Mi.to Pharm is a successful case not long ago. After the seller of cosmetics was blocked by Amazon, his lawyer immediately appealed. The result was surprising. The Hanover Regional Court ruled that Amazon's behavior was an abuse of market dominance! The court also emphasized that Amazon seriously violated the EU Marketplace (P2B) Regulation, which came into effect on July 12, 2020. In short, this seller won the case. The court ordered Amazon to unblock the company's seller account and not to destroy the buyer company's stored and unsold goods. In addition, after Amazon unblocked the company, it still had to protect its right to continue to appeal on the platform.

There is no doubt that this is a victory of profound significance, and the German seller is lucky. If Chinese sellers sue Amazon, will they be so lucky? What problems will they face?

The problems faced by sellers include the large number of accounts involved, the complexity of each account, and the high cost and time of overseas litigation. According to relevant news, sellers whose accounts are blocked by Amazon have to go to the United States to defend their rights. The average arbitration cost is US$80,000 and the average duration is nine months.

Therefore, in the previous "Ningbo Industrial Belt E-commerce Evolution Camp" event, lawyer Yu Yudong also emphasized that sellers need to consider the cost-benefit ratio before deciding whether to sue Amazon. Because the cost of hiring American lawyers is high, even if you win the lawsuit, it is still unknown how much money you can get back.

So during this period of account suspension, if the seller is determined to sue Amazon, what are the reasons for the lawsuit?

We know that sellers have signed a contract with Amazon, the Amazon Services Business Solutions Agreement. The main basis for Amazon to shut down the Chinese merchant accounts this time is the provisions on "Validity and Termination" in Article 3 of the agreement .

Therefore, "Bottom Line Thinking" analyzed in the report that, first of all, the seller may not have constituted a substantial breach of contract. Secondly, if the seller 's behavior does not include cash back, deletion and modification of comments, forced positive reviews, etc., it can be argued that their behavior is only neutral behavior, that is, it only requires customers to provide neutral feedback or comments. Thirdly, after Amazon closed the account this time, it never responded to the seller's complaint from beginning to end. Among the e-commerce companies that were shut down, some should be misjudged by the system. At least for these people , they did not breach the contract themselves. The complaint channel stipulated in Article 3 of the agreement did not work, and Amazon should be in breach of contract. Finally, according to previous cases of the U.S. Supreme Court, e-commerce companies can sue the court for certain standard terms in the contract, such as mandatory arbitration clauses, which are invalid.

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