The seller was sued for a sky-high price! The buyer wanted 100 million yuan

Recently, a seller on Amazon received a claim for compensation from a buyer who demanded 100 million yuan in compensation, shocking the industry. Sellers complained that buyers now often ask for tens or even millions of dollars, and the products involved range from high-risk electrical items to sports equipment treadmills, and even a towel can cause trouble.

If a claim is made, the seller does not have to just pay compensation. There are three ways to eliminate the crisis or reduce the damage.

The seller was sued for a huge sum of money, and the buyer asked for 15 million US dollars

A seller said that his US store received a personal injury claim notice in December. The customer hired a lawyer to file a lawsuit against the seller's store and the Amazon platform, demanding US$10 million and US$5 million in compensation respectively, equivalent to more than 100 million yuan.

Amazon notified the seller in an email: Your seller account payment has been suspended. We took this action because Amazon received a claim notice that the claimant claimed that ASIN ** you sold caused personal injury. Under the sales agreement, you must defend and indemnify Amazon against these claims. To understand your indemnification obligations, please contact a coordinating attorney.

The seller said that although the store payment was frozen , the account was still able to sell normally. Amazon explained that it needed to maintain sufficient funds to deal with the plaintiff's lawsuit against the Amazon platform. For sellers, this is mixed news.

As the deadline for responding to the lawsuit approached, the seller asked his peers for advice on their experience in resolving such cases and urgently sought out lawyers who had handled personal injury claims, hoping to negotiate with the buyer's lawyer for a reasonable amount of compensation.

The industry is paying close attention to this case. On the one hand, the amount of compensation is staggering, and whether the seller can solve it and how to get out of it is of great concern; on the other hand, sellers who sell a large number of products overseas cannot guarantee that they will not fall into similar situations, and hope to gain some experience from this. This incident has also changed the views of some people. One seller said, "I have never bought insurance, and now I feel that being sued is quite terrifying."

Many Amazon sellers have encountered claims, and some of them spoke out on Speak Up. "This happened to me this year too. My funds were frozen in early 2023 for an order placed in 2020. I currently have $150,000 in my account, and the other party wants $500,000. Amazon has already ruled on the specific amount some time ago." "In October, I was sued for personal injury by a customer, and my funds were frozen. The insurance company has intervened and is communicating with Amazon's lawyers."

The risks of products with electrical charges are great, and sellers of general goods cannot stay out of it. At the end of April, a seller sold towels and was sued by a customer for property damage and/or personal injury. Amazon said that if the claim amount is less than $1,000, it can be resolved by providing compensation to the buyer; if the claim amount exceeds $1,000 and the seller has insurance records, Amazon will contact the seller and its insurer to resolve the claim. However, the seller had no insurance and only had this one account, so he was panicked.

If there is a claim, the seller has three solutions

Sellers don't need to panic when they receive a claim notice, because paying compensation is not the only option.

First, Amazon will investigate the claims and the authenticity of the accident, and will revoke any claims that are false or have no actual evidence. Second, sellers who have insurance can contact the insurance company, which will then determine whether the buyer’s claim conditions are met, and will deny claims if it is not a product issue. Thirdly, even if the claim is true, the insurance firewall can take on the main compensation liability and protect the seller from heavy losses.

Not long ago, a rechargeable heating pad sold by a seller caught fire, causing damage to the buyer's bedding, clothing, etc., and the buyer made a claim for compensation. The seller reported the case to Ping An Insurance, which underwrote the insurance.

After the company's overseas appraisal and investigation, the accident was true, the time of the accident was within the insurance period, the buyer's purchase information was in line with the policy, there was no improper use and other exceptions, the insurance liability was established, and the insurance company should pay compensation. The final loss was $12,000, and the policy had a $10,000 deductible, so the insurance company paid $2,000.

In some cases, the seller does not need to pay compensation. A seller sold a treadmill and was sued for injuring a child. Ping An Insurance verified the case: the treadmill was used by an adult in the buyer's family, and the child was not supervised while running. The child climbed to the side of the treadmill and stuck his finger in the gap, causing the finger to be injured. The product photos provided by the seller showed that there was a very obvious color warning sign next to the gap of the treadmill, "Please supervise your children, do not touch or approach with your fingers to prevent injury."

In other words, this accident was not a product liability issue and compensation could be rejected according to the process. The buyer finally agreed to give up the claim. A crisis was resolved.

Cross-border sellers are aware that North American laws have characteristics such as class action lawsuits, high-value lawsuits, punitive damages, and consumer orientation. Product defects may lead to huge compensation. Currently, most sellers have equipped their stores with commercial insurance to reduce risks. This is mainly due to two considerations:

First, Amazon explicitly requires that all Amazon sellers with a total revenue of $10,000 in any month must purchase commercial insurance. In order to operate in compliance, sellers need to respond;

Secondly, in the event of a claim, the seller not only has to compensate the buyer, but if the seller does not provide the platform with insurance certificates with a total amount of at least US$1 million and designating Amazon as an additional party, the seller may also have to compensate Amazon for the compensation provided by the platform to the buyer, facing two expenses. Therefore, insurance is purchased to transfer risks.

Amazon urges renewal of insurance

In fact, compared with Amazon's stacked warehouse configuration fees, low inventory level fees, return processing fees, etc., the insurance cost of about 1,000 yuan is not high, but it can solve urgent problems at critical moments. This has become a talisman for sellers to venture overseas. One seller said: "If it is a risky product, no matter how big or small the hidden danger is, it is recommended to spend some money to buy peace of mind, preferably without deductible."

It should be noted that products sold by sellers before the policy takes effect are not covered by the policy; if the policy is based on an accident-occurring system, then if the accident does not occur during the policy period, it is not covered by the insurance. This is also the embarrassing reason why some sellers only find out that their insurance is invalid after being sued. Therefore, Amazon often reminds sellers to renew their insurance in a timely manner before the insurance expires.

Ping An Insurance is an insurer officially recognized by Amazon. From seller consultation, insurance, to issuing policies and certificates, it takes as fast as 10 minutes to issue a policy. The certificates issued have been reviewed by Amazon and cover more than 95% of the products sold on the platform . Scan the QR code on the poster below, or click "Read original text" to purchase insurance.