Amazon Withholding of Funds from Sellers with Paid Reviews Class Action

This class action is brought by a group of Chinese companies against four Amazon companies (Amazon.com, Inc., Amazon.com Services, LLC, Amazon Payments, Inc., and Amazon Capital Services, Inc.). The group alleges that Amazon owes them billions of dollars in merchant payments. At its core is an Amazon zero-tolerance policy against “incentivized” or paid reviews.

The class for this action is all persons or entities who opened a seller account with Amazon and sold products with the Fulfillment by Amazon program, who have been terminated by Amazon for allegedly violating Amazon’s policies against incentivized reviews, and who have had the total amount of their funds withheld from them for longer than ninety days.

The group of plaintiffs include such companies as Shenzen Shileziyou Technologies Co. Ltd. (doing business as Sopownic US), Shenzhen Aiwoli Technologies Co. Ltd. (doing business as Slaouwo), and Shenzhen Shide Yixum E-Commerce Co. Ltd. (doing business as Deyixun).

The complaint alleges, “Amazon touts a ‘zero-tolerance’ policy against incentivized reviews and punishes third-party sellers for engaging in such activity, yet Amazon hypocritically reaps enormous benefits and profits from this activity.” It claims that Amazon is refusing to hand over funds that are owed to the plaintiff companies in this case.

The plaintiff companies’ accounts or “storefronts” on Amazon were terminated by Amazon.

The complaint alleges, “Amazon routinely holds payment for longer than permitted by its own ‘Amazon Services Business Solutions Agreement’ in violation of state laws and withholds funds without offering any reasonable justification and without any reasonable business purpose.” The amounts that are owed, the complaint says, may be several hundreds of dollars or hundreds of thousands of dollars. The group protests that Amazon reserves to itself sole discretion over whether any of these funds will be paid.

Amazon has a Fulfillment by Amazon (FBA) program for which sellers send their products to an Amazon warehouse and sell them from an Amazon “storefront.” The sellers have no direct relationship with buyers or potential buyers; Amazon handles the payments for the products and packages and ships them.

The complaint alleges that, because of this extensive control, Amazon was aware that some sellers offered buyers gift cards or monetary incentives in exchange for reviews. However, it claims, Amazon allowed businesses to build up a customer base and only then enforce its “zero-tolerance policy” towards fake reviews.

Among the steps Amazon reserves the right to take are withdrawal of the seller’s ability to sell on Amazon, withholding of funds, permanent delisting of the products on Amazon, and legal action. Amazon permits itself to withhold all funds in a seller’s account.

The counts include breach of contract, unfair competition, and money had and received, among other things.

Article Type: Lawsuit
Topic: Contract
Tags: Breach of Contract, Money Had and Received, Unfair Competition