Amazon is constantly growing and evolving its algorithm to protect buyers and ensure a positive buying experience. As a customer, I appreciate it a lot. As a seller…sometimes its harder. The old saying of having to break a lot of eggs to make an omelet comes to mind, especially when our clients are the eggs. This week I look at recent Amazon seller suspensions and other moves that sellers need to know.
Amazon Gives Your Seller Info to States Seeking Sales Tax
I started signing up to pay sales tax as soon as Amazon capitulated back in 2012. They made it clear in their press releases that they would cooperate with states. The day has come. Amazon is releasing seller sales information to the State of Massachusetts:
“Amazon has received a valid and binding legal demand from the Massachusetts Department of Revenue requiring that Amazon disclose the following information about sellers to the DOR:
- Contact information (name, address, federal tax ID number, phone number)
- Estimated value of the seller’s inventory in our Massachusetts fulfillment centers, calculated based on the seller’s selling prices in late 2016 and in 2017.
To comply with our obligations under the law, we plan to provide your information to the DOR by January 26, 2018. Because each seller’s business and tax needs are unique, we encourage you to consult with a tax advisor to answer any questions you may have.
I don’t know about you, but I sure as hell wouldn’t want my taxes estimated for me by the state. I assume that sellers will get a chance to provide accurate information, but the letter you get from Massachusetts will no doubt include a figure they think you owe them. Prepare for the heart attack.
It is not clear what the threshold of sales is, or the criteria that Amazon/Massachusetts chose. I didn’t get this notice, for example, but I know sellers who did. I already pay there, and my account is small so that may be why. Regardless of the criteria, sellers need to know that they have a tax risk that needs to be reviewed if only to make sure the information Amazon gives to the state is accurate.
A recent article on CNBC puts this move by Amazon in context. I was delighted to read that Washington, Minnesota and Rhode Island have recently passed laws making online platforms like Amazon responsible for the collection of sales tax. If only all the states would do that!
In my opinion, it is only a matter of time before other states follow Massachusetts’ lead. Legally, all sellers should have been paying taxes from the day they began selling. If you are not registered for sales tax, you are at risk for an audit and could be spending time in 2018 negotiating settlements and retroactively figuring out your taxes.
I’ve already had sellers reach out to me asking for a referral to an expert: Chris Stout is a Sales and Local Tax guy. His company is Sales Tax Solutions and you can reach him at [email protected]or http://salestaxsolutions.us. He’s been doing this for 20 years and really knows the ins and outs can help you assess your risk. Just as important, Chris understands Amazon.
Amazon Has a Message for Arbitrage Sellers
As recently as last June Amazon executives stated that the company allows arbitrage and that they would never tell a seller they couldn’t use arbitrage as a selling model on the platform. In reality, they have made it much harder to be successful through extensive category and sub-category approvals, brand approvals, brand takedowns, refusal to accept receipts from other retailers (including their own platform) and more.
This week I saw a post on Facebook of an email from Seller Support where they stated for the first time that they are moving away from the arbitrage model and would not accept receipts from Sam’s Club. The Sam’s Club part we already knew, but this statement about arbitrage was a departure from their previous public position:
“…Amazon is getting away from being able to buy items from a retail store and then sell them on Amazon. They are looking for manufacturer/authorized distributor proof that shows you are approved to be listing and selling those items. I apologize this isn’t the outcome you were looking for, but without the needed documentation, this process cannot move forward.”
What does this mean to sellers? It means that when you get an inauthentic or counterfeit or safety complaint that takes down your listing or your account, it will be harder to get it back. You may not be able to sell that product ever again if they don’t accept your receipt. It means that Amazon really wants invoices from brands or authorized distributors or they want you to be a real brand yourself if you are private label (trademarks, certified testing of your product, proper labeling, etc.).
We struggle constantly for our clients who sell Nike, for example. Most are buying from the Nike Outlet Store. In the past, Amazon accepted those receipts. Lately, they have been inconsistent in their acceptance. It’s frustrating. What could be more authentic than buying from Nike itself? They also won’t accept Nike Outlet Store receipts for brand approval. This has been devastating for our clients who have tens of thousands of dollars of Nike products at the FBA warehouse and who have suddenly – after years of selling Nike – been asked to get brand approved.
All retail/online arbitrage, liquidation and drop-ship sellers need to be aware that your selling model is at a higher risk for suspension (for many reasons) and that your receipts will not be accepted for brand approval. Amazon’s latest email response confirms what we’ve been seeing in our client portfolio since 2016. Things are changing.
Dirty Seller Tricks Continue with Brand Registry 2.0
The latest way for evil sellers to take out sellers who are brand owners is through Brand Registry 2.0. In this latest case, a brand registered seller with active trademarks was taken down because another seller listed his trademarks and claimed our client was infringing. The audacity! We got him back quickly by proving – duh – that they were his trademarks and the other guy was a liar. And within two hours, they were filing complaints again! This one has me hopping mad. Iupdatt’s evil, it’s wrong and it shouldn’t be working. This is a major flaw in the system if two sellers can claim the same trademarks. It shouldn’t be able to happen in the first place. When it happens, it shouldn’t be able to happen again, right? Wrong. The other guy is still making my client’s life hell. I hope Amazon will fix this issue fast. Who am I kidding? It’s never fast enough.
Another trick we’ve seen by evil sellers is to take someone else’s common law brand and register it themselves with the USPTO. Once the trademark comes in, they take out their competition with trademark infringement. This is some serious dedication on the part of the evil seller as trademarks can take a year or more to go through. That’s not even the worst part. The worst part is that it is legal. If they get the trademark, you’re out of luck. We encourage all our clients to protect their intellectual property today by registering their trademarks. If you’re serious enough to build products around this brand, be sure you don’t lose it.
You can check out our worldwide trademark filing services on our website.
Fake Documents = Banned Forever
We’ve been trying for weeks to get our clients reinstated who submitted fake invoices to Amazon. They were taken down solely for this reason and Amazon is not relenting. I’ve asked my colleagues in the industry and so far, I’ve not found anyone who has gotten Amazon to give their client another chance. The moral of this story is don’t fudge, fake, tweak or in any way manipulate the invoices you give Amazon. It is OK to add red arrows and stuff to point out the UPC code or whatever – that’s called annotating – but never mess with the actual invoice itself. My clients were trying to get ungated in a category or for a brand and the services they hired forged documents and turned them in on their behalf.
These were big brands like Apple and my clients were naïve to think that a service could wave a magic wand and get them approved without real invoices or a real letter of authorization. I’ve had other clients submit faked utility bills to Amazon as part of verification and lose their selling privileges. I hope everyone in the community reads this and takes heed. We can’t get you back.
Don’t fudge, fake, tweak or in any way manipulate the invoices you give Amazon.
Failed Verification = Fail Forever
Some sellers have a real problem. They’ve set up multiple accounts against terms of service or they have hidden partners, or they don’t have a physical location. They then try to fake documents to get verified. This does not work. We help sellers before they submit documents but not after they’ve failed. Once you fail, it’s over. Some of these problems can be overcome, some can’t. I strongly urge sellers not to send Amazon verification documents until they have verified them themselves. Make sure your bank, credit card, utility, etc. will confirm all your documents. Verification means that Amazon will call them to confirm. That’s why it takes so long. Don’t take this lightly. Your account is at stake.
If you are interested in a pre-verification document review, click here.
New Amazon AWS Rules Could Affect You
Amazon created a new Code of Conduct for Software Providers that plug in to Amazon’s API. They can’t access certain data improperly, they can’t scrape the site, they can’t make excessive demands on the platform, etc. What does this mean to you as a seller? One of the new rules says they are required to turn in sellers who are abusing the platform with their tool. If a provider knows that sellers are using their tool to violate Amazon’s TOS in some way, the provider must turn them in or risk losing their AWS privileges altogether. This means that software provider would be out of business.
The software providers I talked to made immediate changes to their services to make sure they comply. This means some features they previously offered had to be removed. Features such as matching a reviewer to an order, for example, are not allowed by Amazon.
Some programs are not inherently against TOS, but sellers abuse them. I’m thinking here about sellers who use an email service like Feedback Genius or Feedback Five to spam sellers, ask for reviews improperly, upsell products, etc. Used properly, tools like these are very helpful to a seller and provide value to buyers. Used improperly? Now you might get turned in by your software provider…if Amazon doesn’t get you first.
Don’t be mad at your provider if they take a feature away. They are complying. The companies I talked to are very uncomfortable with the role of “Cop,” but realistically they have a business to preserve. I strongly urge all sellers to look at the tools they use and think about how they provide the service they do. Are they scraping the platform? Is the data they provide against TOS? Also, look at your own use of these tools. Are you confident of your compliance in how you use that tool?
Right now, these changes affect providers who connect with Amazon’s API directly through AWS. There are tools that do not. How long before Amazon gets around to them? I don’t know. How will Amazon enforce against providers who don’t access the API? I don’t know. In the past, they went after the sellers who used these tools rather than the tool providers.
Bottom line? If you are using a tool – any tool – that violates Amazon TOS for sellers or software providers, it’s a risk. You will hear software providers tell you they are compliant. Make sure they are. Ask them how they get their data if it isn’t obvious. Look at the Software Provider Code of Conduct and Amazon’s TOS and Code of Conduct for sellers to make sure you are using the tool in a compliant way.
Buyer Safety Beats Out Common Sense at Amazon
There are other ways Amazon is making it harder for sellers through safety complaints. We know sellers who have sold product on the platform that was suspected to be defective – think about all those explosive Samsung devices, for example – and found out to their dismay that Amazon was holding them responsible, not Samsung. They were required to prove the safety of their inventory, get testing and do all the things you’d expect the manufacturer to do. This was an expensive proposition for these sellers.
Personally, I think it is unfair for Amazon to expect arbitrage and wholesale sellers to be responsible for every product they sell. They buy it in good faith from a brand. Diligent sellers ask for and review the company’s MSDS. Companies like Samsung have (usually) tested their products and gotten them certified. We have a client dealing with a Mophie juice box where the buyer claimed it “nearly set my house on fire!” Our client buys directly from Mophie. The company has safety certifications in every country where it sells. Its MSDS is 17 pages long. Is that good enough for Amazon? Not today.
We don’t know anything about the buyer complaint. Did they use the cords that come with the Mophie? How did a cell phone case/recharger nearly burn down a house? Is this buyer even credible? Are they a competitor? To Amazon’s safety team, it doesn’t matter. Our client did everything right. Bought directly from the brand and yet…they are having to spend time and money on something they have no control over.
Consumer safety is very important, and I urge all our private label clients to get their products tested regularly. It’s possible we will find out that these Mophie’s are time bombs like the Samsung were. In that case it is Mophie who will need to fix the problem and it will be very unfair if my client’s account is dinged for it. If anyone at Amazon is reading this, I urge common sense. Don’t punish the seller for the sins of the manufacturer.
Infringements Get Tougher
When a client’s account is suspended for Infringement, we go back and resolve all the previous infringement cases with the rights holder. Sometimes, the rights holder won’t work with our client and we escalate to hiring our IP attorney partner Jeffrey Breloski. Even he can’t always get the job done if the rights holder refuses to talk to him.
In these cases, it is much harder to get our clients reinstated. Amazon has heard so many sellers say, “the rights holder isn’t responding” that they don’t believe it anymore. This is frustrating as hell. The UK seems to be even tougher than the US. A client of ours hasn’t sold the product in over a year and has tried for a long time to resolve the issue. He’s gotten all the other infringement cases retracted but this one and Amazon UK still won’t let him back on the platform.
Most of the time when a seller’s account is suspended for infringement, it is because he/she has multiple unresolved infringement complaints on the account. For this reason, we strongly urge sellers to resolve every infringement case as soon as possible even if they do not intend to sell the product ever again. If sellers did this, fewer of them would lose their selling privileges.
In the UK, infringement takedowns are still done the old way. They don’t have Brand Registry 2.0 (yet) so rights holders send their proof to the legal team for review. This means Amazon most likely has the patent, trademark, etc., in question and has received a legal document from a law firm confirming the validity of the complaint. They won’t back down. It’s retraction or nothing. In the US, there are so many brands making mistakes and improperly using Brand Registry 2.0, Amazon is likely to be more lenient or to recognize a mistake might have been made.
However, if a seller lets infringement cases pile up unresolved, they are less lenient. If you have a patent issue, you need an attorney to help negotiate the situation. The repercussions are more serious, and the rights holder usually wants restitution.
Infringement Support Services
Besides normal ASIN and account reinstatements, eGrowth Partners offers support specifically for sellers dealing with infringement issues. These include:
Infringement Reinstatements – we have helped dozens of sellers navigate the confusing waters of infringement issues on Amazon since the launch of Brand Registry 2.0.
Legal Support – our partner Jeffrey Breloski is one of the fiercest IP attorneys in the country. He’s very familiar with Amazon as well as eBay and other online platforms. Whether our clients need help resolving an infringement issue, filing a lawsuit against another company or competitor, or filing trademarks, we have a solution. Check out our negotiated flat-fee services for infringement and trademark filings.