CNBC reports that Amazon seller Cheapskates Liquidators received an email from an Amazon employee who calls himself Paul (no last name provided) stating “Jeff Bezos received your email and I am responding on his behalf…”
“Paul” goes on to say that “I have thoroughly reviewed your account and the information you have provided and determined that you may not sell on Amazon.com.”
Cheapskates Liquidators is small company owned by George and Diana Schappert that used to only sell on eBay but then expanded its business to sell on Amazon.
The company sent over $200,000 worth of inventory to Amazon to have it fulfilled by Amazon FBA but was suspended in mid-March for allegedly selling a few inauthentic items.
The Schapperts have been appealing their suspension multiple times to Amazon, claiming to be able to explain the circumstances around the items that apparently caused the suspension.
It also appears they were able to escalate their appeal all the way to Amazon CEO Jeff Bezos’ for review, but apparently it was either delegated back to the company’s seller team or denied at the executive level.
CNBC says in its story that it has reviewed the correspondence and it appears to be to backup Cheapskates Liquidators’ claim.
In a statement to CNBC, Amazon replied:
“The seller in question was found violating multiple Amazon policies, including our anti-counterfeiting policy. They were given multiple opportunities to address the situation but showed a repeated pattern of behavior that was not in our customers’ best interest, so we took actions to protect our customers and stop their illegal activity.”
Amazon Statement to CNBC about Cheapskates Liquidators suspension
With inventory at Amazon, The Schapperts are now faced with either continuing to try to fight their suspension hoping for a positive outcome while paying nearly $370 per month in storage fees, or have Amazon return all inventory back to their warehouse at the seller’s expense.
Amazon already has threatened to destroy some of their inventory because Amazon claims the company has missed the deadline for removing it.
What also may be complicating the matter is that this is not the first time Cheapskates Liquidators was suspended on Amazon as in 2017, a buyer complained they received an inauthentic Teenage Mutant Ninja Turtle camera but the seller was reinstated after telling Amazon they had receipts to show the product was authentic.
Trademark and Intellectual Property Rights Issues Plaque Marketplaces
Just last week we reported that Chanel was suing an eBay seller for $56 million in damages for selling open box products and testers.
To some degree, it is easy to understand why Amazon, eBay, and other marketplaces will take a hard line on intellectual property rights problems by sellers because they can become entangled in lawsuits by brands enforcing their legal rights.
Especially for Amazon, this can become tricky as they often have direct business relationships with brands, so they want to be seen as a valuable partner and maybe more inclined to sacrifice a small seller to keep up a good relationship with a brand.
Fighting Back = $$$
The big problem for small sellers is that fighting back can be very expensive, especially if the root cause of the problem involves a valid intellectual rights issue.
Marketplaces will provide one or two warnings, but after that, they often will pull the plug on accounts to protect their own liability exposure from lawsuits. And at that stage it becomes extremely difficult to request an account reinstatement.
For sellers that purchase distressed or discontinued goods, the lack of a direct brand relationship can make it very difficult to prove to a marketplace they are selling authentic products.
And, as it may have happened in this case, small errors in the product description may cast doubt about the authenticity of a product, or not recognizing a product as a fake product, can have disastrous results.
All Eggs in One Basket Problem
Amazon FBA makes it so easy to sell products on Amazon’s platform as sellers can just ship products to Amazon and have the company fulfill them.
But by using Amazon FBA, sellers may end up placing significant or all inventory in Amazon’s hands and give the marketplace almost absolute power.
Unless a seller has a direct brand relationship or is the owner of the “brand” of the products being sold, intellectual property (IP) rights claims can easily and quickly entangle a seller with draconian marketplace policies when a customer or rights holder makes a claim.
For thrifters, liquidators, and others that purchase goods from third-parties that sell discontinued or opened goods, it may be best to stay away from Amazon FBA and handle their own fulfillment.
The risk of getting shut down over claimed infringements and inauthenticity allegations are less costly to deal with when the inventory is in their own warehouse. It is a small “insurance policy”, but one that sellers may want to consider.
And the final word of advice to anyone selling on a marketplace is that if the marketplace sends a notice about an infringement to the seller, quickly and succinctly deal with it. Trying to drag out the situation or ignoring it completely is a sure fire way to account suspension.
For more about the Schappert’s story dealing with Amazon, please see the article on CNBC.
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