Third-party sellers unhappy with Amazon.com

The Seattle TimesNovember 25, 2012 

— For many small merchants, selling on Amazon.com is an easy way to boost business in a tough economy – if only they can get paid.

Dozens of online sellers complain that Seattle-based Amazon.com Inc. arbitrarily withholds their payments for as long as three months, jeopardizing their ability to replenish inventories and stay in business, according to a Seattle Times review of state records.

Sellers who say they’ve been hurt by this practice are the single most common source of complaints filed against Amazon with the Washington state attorney general’s office in the past three years, The Times found.

All told, the attorney general’s office received more than 370 complaints against Amazon, ranging from customers worried about their online privacy to game-application developers demanding better financial terms.

But about 40 percent of the complaints came from small merchants who use Amazon’s Web platform to sell their products. And of those, three-fourths – nearly 120 sellers – complained that Amazon abruptly suspended or closed their accounts, tying up anywhere from several hundred dollars to more than $20,000.

In many cases, the world’s largest Internet retailer stacked the deck against them by providing no real explanation or chance to appeal.

Service agreement

Jack Caruso, who owns a party and janitorial supplies store in Amherst, N.H., began selling on Amazon last year to reach new customers.

But he complained to the attorney general’s office in May after Amazon notified him via email that it had begun a review of his account and suspended his daily disbursements.

“Things are tight enough as it is,” he said. “And then, all of a sudden, I have $30,000 sitting with Amazon, wondering if I’m ever going to get my money. It’s not right.”

Caruso, like many complainants, expressed frustration that Amazon did not explain the hold.

Left to speculate, he believes it was because of a low number of online customer reviews, one of the many metrics Amazon uses to evaluate sellers.

Amazon, which declined to comment for this report, suggested to the attorney general’s office that Caruso’s hold was typical of what happens to sellers who suddenly do a lot of business without sufficient buyer feedback.

It also encouraged Caruso to “send a friendly reminder to buyers requesting that they leave feedback.”

The attorney general’s office closed the books on Caruso’s complaint, saying it lacked legal authority to force a resolution or to act as an attorney on his behalf.

Amazon requires sellers to accept a Participation Agreement that gives it “sole discretion” to withhold payments for up to 90 days if it believes their behavior could cause problems with customers.

The agreement also excuses Amazon from liability and allows it to refuse service to “anyone for any reason.”

Third-party sellers

While Amazon sells many products itself, it relies on thousands of small merchants to expand its selection of everything from books and electronics to hardware and jewelry.

When customers buy from a third-party seller, Amazon processes their credit-card payments, then takes a cut of between 6 and 25 percent, depending on the product.

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