Amazon is sued again by sellers, claiming more than 35 million RMB

Since 2021, Amazon has never stopped blocking accounts, and Article 3 of the Amazon Services Business Solutions Agreement has become a nightmare for sellers. Some sellers have been forced to withdraw from the market, while others have taken legal action to protect their rights.

Amazon was sued by sellers

According to foreign media reports, at the end of December last year, Amazon was sued by a seller on a Mexican site because its account was blocked, demanding compensation of more than 100 million Mexican pesos ( equivalent to about 35.53 million yuan at the latest exchange rate for RMB), and in the first instance, Amazon was at a disadvantage .

Between 2021 and 2023, seller Alejandro N ( anonymous) achieved sales of more than 60 million Mexican pesos ( equivalent to approximately 21.32 million yuan at the latest exchange rate for RMB) on Amazon . However, in December 2023, Amazon blocked the seller's account on the grounds that the products he sold were banned products.

But Alejandro N said that Amazon did not provide clear evidence, so the allegations were unfounded . More importantly, the so-called banned goods are still sold by dozens of sellers on the Amazon platform .

Unable to bear it any longer, Alejandro N took Amazon to court, accusing the platform of unfair terms and other improper practices. The seller also believed that it was suspected of breach of contract and abuse of terms . Alejandro N's lawyer said that the above showed that Amazon had malicious behavior as a legitimate reason to withhold his funds.

One of the core points of the seller's lawsuit is that Amazon has imposed unilateral and unreasonable terms on sellers, including:

1. Sellers cannot submit their disputes to ordinary courts, but can only resolve disputes through arbitration controlled by the company itself ;

2. The platform determines the arbitration rules, arbitrators and conditions, putting sellers in a completely disadvantageous position ;

3. Amazon grants itself the right to withhold sellers’ revenue indefinitely, without transparency or clear rationale.

At present, the lawsuit has completed the first instance, and a Mexican judge has ruled that the arbitration clauses imposed by Amazon on sellers are invalid, pointing out that the clauses are suspected of being operated in bad faith . The judge also believes that these clauses violate the fundamental right to fair justice in the Mexican Constitution and violate the Consumer Protection Law.

Currently, Alejandro N not only demands the recovery of the withheld funds, but also claims losses of more than 100 million pesos and requires Amazon to pay for moral and reputational damages caused by the misconduct. Under Mexican law, the amount of damages may be significantly increased due to Amazon's malicious behavior, especially the double blow to sellers, both financially and mentally.

If Amazon loses the case , it will face serious legal consequences, including having to modify its contracts with sellers to comply with Mexican law.

Amazon frequently becomes a defendant due to account blocking

The losses caused by Amazon's suspension of seller accounts are difficult to estimate. A "wave of account suspensions" in 2021 pulled the big sellers who were standing on the top of the mountain to the cliff, and the world changed overnight.

For example, Youkeshu. As of July 2021, as many as 340 of its sites were suspended or frozen for suspected violations, accounting for about 30% of its total Amazon stores. This directly led to its annual loss of nearly 2.7 billion yuan that year, and the company's capital chain was on the verge of breaking.

The data that has been continuously updated since then mentioned that Youkeshu had about 400 Amazon stores blocked during the entire "account blocking wave", and the funds in the frozen stores reached 128 million yuan, which became its bad debts for many years.

In 2024, Youkeshu filed two lawsuits against Amazon for abuse of market dominance, involving a total amount of 8.62 million yuan . The Changsha Intermediate People's Court accepted the case and issued a court summons to Amazon.

Let’s take a look at another big seller – Zebao.

It is reported that in the "account blocking wave" in 2021, six major brands under Zebao were banned from sales, 367 related Amazon stores were blocked, and the balance of funds in the frozen stores was equivalent to more than 30 million yuan. The following year, Zebao determined that 16.82 million yuan of Amazon store funds could not be recovered, and another 13.17 million yuan had overdue and was expected to be unrecoverable .

This caused Zebao to face huge operating pressure, so it sued Amazon.

In 2023, Zebao won the case, and the American Arbitration Association ruled that Amazon should pay it $2.4827 million (about 17.65 million RMB) . However, Amazon still withheld tens of millions of yuan from Zebao. The first half of 2024 financial report pointed out that Zebao still had a book value of 12.6125 million yuan in suspended stores on Amazon, and it is expected that bad debts cannot be recovered.

Many of the top sellers at the time, such as Global Easy Shopping and Tongtuo, were also caught up in this turmoil, and even gradually disappeared from the cross-border circle.

For example, the audit report of Global Easy Shopping's parent company, Cross-Border Link, showed that in 2021, Global Easy Shopping had bad debts of up to 83 million yuan for some platform sales accounts , of which more than 46 million were affected by the "account blocking wave " incident that year , and the amount of bad debts directly deducted from the Amazon platform was 19.16 million yuan .

As of August 5, 2021, Tongtuo Technology has been banned from selling and closed a total of 54 stores, with suspected frozen funds of 41.43 million yuan .

Countless small and medium-sized sellers also disappeared in this sensational "account blocking" operation.

According to statistics, more than 3,000 Chinese seller accounts, more than 50,000 stores, and about 600 brands were banned on Amazon in 2021, causing an estimated loss of more than 100 billion yuan to the industry. MarketPlace data also shows that among many popular Amazon sites, Chinese sellers have the highest proportion of banned accounts.

It is difficult to protect rights, and sellers rarely win cases

Alejandro N is not the first seller to be banned by Amazon, nor is he the first seller to turn Amazon into a defendant.

Shortly after the "account ban wave" at that time , many Chinese sellers filed class action lawsuits against Amazon in US courts. Big sellers such as Zebao and Youkeshu also filed lawsuits later. The former won the case, while the latter is reorganizing while waiting for the result.

Over the years, many blocked sellers have been actively seeking legal protection and getting back their frozen funds.

A big seller in Dongguan fell into trouble because Amazon froze all the store funds in 2021. In 2022, the seller sued Amazon and won. In the final ruling, the court ruled that Article 2 of the Amazon agreement freezing the seller's funds was invalid, and that all the frozen funds of the seller must be unfrozen and the seller must be compensated 12% interest .

In November 2023, Justitia DAO, LLC filed an arbitration application against Amazon with the American Arbitration Association on behalf of 2,301 Chinese small and medium-sized sellers in the United States, demanding compensation from Amazon for closing their accounts and withholding all payments. The claim amount was US$ 2.308 million . The arbitration application was subsequently accepted by the American Arbitration Association.

A Shenzhen seller repeatedly appealed due to the "account blocking wave" in 2021, but Amazon rejected the seller's application and directly froze and transferred the seller's account funds. In 2024, the seller won the lawsuit and not only got back the millions of frozen funds, but also received up to 130% interest in compensation .

Among the few cases of appeals against Amazon’s account suspension, only a few have been successful, and most of them are from Chinese sellers. Nowadays, account suspension has become a daily practice for Amazon, and repeated account verification means that Amazon is bound to ensure that sellers operate in compliance with regulations.

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