Amazon Seller Suspension Q&A with Lawyer CJ Rosenbaum

Amazon Seller Suspension Q&A with Lawyer CJ Rosenbaum

Amazon seller suspensions have been a hot topic issue in the Amazon FBA community for a long time, and this is for good reason.  Amazon consistently changes the way they implement policies, and there is sometimes limited visibility into what triggers a suspension for a seller on Amazon.  I know first hand what this is like as my account was suspended for a brief time in the summer of 2015.  If you are interested in hearing the full story, you can read about it HERE.

To get some more clarify on this subject, I did a Q&A session with CJ Rosenbaum, from www.amazonsellerslawyer.com, who is a lawyer in working primarily with Amazon sellers.  We covered a wide variety of topics in our conversation.  The full Q&A will be broken up into 2 separate blog posts as it would have been an extremely lengthy post.  This first post is all questions and topics relating to Amazon account suspensions, and the second post will be about other legal related issues that affect online sellers.

If you don’t want to wait for part 2, or if you don’t want to read through this entire post, you can listen to the audio version of my conversation with CJ instead.  This isn’t a fancy edited version of the conversation like you would see in a podcast.  It’s just a recording of our call.

Let’s get into the Q&A:

cj-imageQ: Can you give me a breakdown of the most common issues sellers come to you for help with?

A: About 40% of the practice is helping people with run of the mill suspensions.  They call them “inauthentic,” “used sold as new,” or “not as described.” Seller’s basically get suspended or they receive performance notifications and we address those.  Another 40% of the practice is dealing with intellectual property rights complaints that result in suspensions.  That’s when we reach out to the companies or people that asserted the complaints, which are usually bogus, and we work on getting them to withdraw their complaints and therefore restore the selling privileges of our clients. The other 20% of the practice could be dealing with a single individual being related to multiple seller accounts, as one individual has multiple accounts without approval, and they get caught.  Or this could be us helping them setup multiple accounts, issues relating to buying and selling Amazon seller accounts, getting their products back from FBA among some other odds and ends type of issues.

Q: What are the most common reasons you see sellers getting suspended?

A: Intellectual property rights complaints and these things called “inauthentic” complaints.  Amazon butchers the English language a bit with the word inauthentic, inauthentic to Amazon doesn’t mean that products are fake, it just means they want to see where you purchased them from.  Amazon  is really just looking to verify the distribution channel.  Intellectual property and inauthentic complaints are the 2 most common reasons for Amazon seller suspensions.

Q: Do you see any correlation between size of business, what types of products, or any other correlation that leads to account suspensions?

A: Well, the larger sellers certainly have more issues, but their accounts can withstand more issues before they’ll get suspended. You know, if you’re doing a quarter billion dollars a year, you seem to get a lot more breaks from amazon than if you’re doing $10,000 a month. Now, while all sellers are treated relatively the same, you know Amazon doesn’t really seem to care about anybody, the larger you are, the more volume you do, you seem to get a little bit more leeway because the percentages work in your favor.  For example if a seller has 5 problems when selling a million items a month the percentage of dissatisfaction is much lower than if you are selling 100 items a month and have the same 5 complaints.

Q: Is there a specific number of issues with an Amazon seller account where you notice more issues with suspensions?

A: Some people think there is, I personally don’t. Everything I’ve seen with Amazon is pretty erratic. Both in their responses to customer complaints and dealing with my client’s plans of actions. A plan of action is a document you follow at Amazon to get your selling privileges reinstated. They’re very very erratic. I could send the same exact plan of action at 1PM and it gets approved in 15 minutes, and then send the same plan of action for the same issue for a different client at 1:15PM and it takes 3 weeks and multiple re-submissions. So they’re very very erratic both in their policies and in the implementation of their policies.

Q: Any trends in the types of products that lead to more suspensions?

A: Electronics seem to have a higher percentage of problems and also certain clothing products have a higher percentage of issues in terms of trademarks.  I think electronics maybe higher simply because there’s just a tremendous volume of them. Health and beauty supplements, they are kind of hot in terms of issues as they are arguably a medical product.

Q: What types of trademark issues do you see in the clothing category? 

A: Well, for example lot of clients do what you call retail arbitrage where they go to discount stores or else they go to closeout distributors and they’ll buy massive quantities of products that didn’t sell at one area regionally, but will still sell very well on Amazon and other regions.

For example, sneakers or yoga pants or workout clothes where in the northeast US the volume goes down in the winter, but it is a pretty steady market for Florida and Southern California year around. So, they’ll buy stuff and they’ll go back online and sell it. The brands will make these bogus trademark and copyright allegations against them to stifle the competition where there is actually no valid claim. If you buy a pair of running shorts on this discount rack at a Marshall’s in the northeast, then sell them exactly the way they are on Amazon to a customer in the southwest, there is no trademark or copyright violation.  You are selling the exact item in the exact packaging with no changes. There is no trademark or copyright violation, it’s all nonsense but a lot of brands will assert those complaints, and many sellers will stop selling. They thwart competition that way and other sellers will find me and we stand up for them. We say “hey Wal-mart this is nonsense withdraw your complaint” and we stand up with them and we are almost always successful.

Q: Generally speaking, relating to IP complaints and cease and desist letters, if someone reaches out to a seller via email or via buyer messages that’s where you guys can really come in and help? 

A: Yes.  Also there are many Amazon “consultants” out there, and some of them are pretty good in terms of helping with plans of action. None of them, not a single one, who is not a lawyer should be touching anything that has something to do with an intellectual property issue. If you have been accused of copyright infringement, trademark infringement, or some they call a “trade dress,” a patent violation, nobody should touch it except a lawyer. I don’t care if you work at Amazon, I don’t care if you had an Amazon account, or if you put a book out there about Amazon suspensions, if you are not an attorney, you should have zero involvement in trademark, copyright, patent, or trade dress complaints. It’s illegal practicing law without a license. Only an attorney should deal with intellectual property right complaints.

Q: What about cease and desist letters from brands saying that you do not have the rights to sell their product? Is that the same exact thing that we are talking about now or is that separate?

A: Yes, in regards to the cease and desist letters, they generally accuse you of intellectual property right complaints or being an unauthorized seller. Being an unauthorized seller is also a legal issue because the United States Supreme Court addressed this when they dealt with something called “MAP Pricing” and this also had to do with Amazon policy.  For example Amazon generally up until this brand protection, they didn’t care whether a brand said that it was okay for you to sell their products.  As long as it was a genuine product there was no other violation. They follow what’s called the First Sale Doctrine, which means you can buy something in one place, you then own it, and you can resell it. I also think that those things should be handled by an attorney but not as specific as the intellectual property.

A lot of these consultants will write cease and desist letters for clients, I don’t think it is appropriate, but it’s not as serious of a legal issue as an intellectual property violation.  I still suggest you use an attorney when you are dealing with either sending out cease and desist letters, or when you receive them.  When you receive them a lot of times a cease and desist letter will threaten a complaint to Amazon which now threatens the entire business and what people are doing.  So I think when someone receives a cease and desist letter they should hire an attorney who can handle it and can contact the person who sent it and say “we have received the cease and desist letter and you had zero grounds for that letter, withdraw that letter, and don’t take any further steps.  If you take any steps against my account, you are violating the Sherman Act, the Lanham Act, could be some libel, and could be some slander.”  There could be a lot of legal issues mixed up in there. So if anyone gets a cease and desist letter they should get ahead of the ball before the complaint goes to Amazon.  Once the complaint goes to Amazon, the seller has the possibility of being suspended, or that ASIN is likely to be suspended, and this could have been prevented by proactively addressing the issue at the outset.

Q:  What do you recommend a seller do if they get suspended from Amazon, what should their next steps should be?

A: When they get suspended first of all, I understand it causes a huge knot in everyone’s stomach and everyone freaks out or lives in fear of that suspension.  So now you get the suspension notice, what you need to do is really take a look at your own account and figure out why.  Amazon used to not to tell you at all why you were suspended and required you to do self-analysis deep dive, and some self-loathing to find out why. Now that the suspension notices are coming mostly out of India, Ireland, and Costa Rica, they’re pretty specific is to as to why.

Look at the reason, and then take a look at why did this happen, find some internal cause, what could you have done better?  Often it really is not an internal issue and the customer has made a complaint. You know the customer bought a product, like a part that did not fit his particular car, or they expected it to look one way and it looks slightly different, or they made a mistake, or ordered the wrong size; so just the different expectations.  But you can identify ways you could have provided better customer service, that is what Amazon is looking for. While I don’t necessarily agree that it’s always the seller’s fault, as the seller, you have to take responsibility to figure out a way so that these complaints don’t continue.

Once you identify it, that’s the root cause, you want to spell out to Amazon that’s the root cause for why we think we are having this problem. Number 2 is going to be how you immediately correct it. Number 3 is kind of like a long term business plan to say how we can prevent this from happening again in the future. So those are the three elements of a plan of action. Plans of action I think are very similar to your tax returns. Can you do it yourself? Absolutely! Does a professional who does it every single day do it better? Yes, there’s no reason why people cannot give it a shot themselves first and then hire someone to help them out if needed.

Q: If your initial plan of action is not accepted by Amazon, how many times will Amazon go back and forth with you to get a reasonable plan of action in place before they say “okay we’re not going to work with your account anymore”? Are there any guidelines that you have seen related to that?

A: I have not seen any particular number. We’ve even worked with one of the other consultants who used to work for Amazon when it came to an intellectual property issue. A lot of the other Amazon consultants refer their business to us when it comes to an intellectual property issue. And in this particular one, it was probably like a dozen or more submissions, at some points they’ll start writing that they may not respond, they may not read any more plans of action, but so far nothing that we have ever submitted has failed to get some response.

So there’s really no number of times you can submit stuff. At some point I think they’ll stop reading it, and then there are also escalations. You can start with seller performance, and then go to a policy team, and then take it to the Bezos escalation team.  It’s not actually Mr. Bezos reading through these emails.  However once you hit the Bezos escalations, if you get turned down there it’s very hard to take steps backwards.

You know you just want to take as many bites of the apple as you think might be fruitful.  So we tend to do a lot more submissions at the lower levels so you get more bites of the apple. Certain issues also we then bring to legal. From time to time I’ll write to the Senior VP of legal at Amazon, we both cut our teeth in the same venue in Brooklyn, NY.  I’ll reach out to him and say, “Hey I’m having this issue, I know you are not the person to deal with it but can you please refer me to whomever the organization should handle it.”

They’re not bad people; they are people that work at a large company trying to do their job. And so you’ll have a seller-performance, product quality, policy team, Bezos escalation, and sometimes we escalate to the legal department.  And to answer your question, there’s no limit to the number of times.

Q: What are the stickiest issues for getting reinstated? Or if there has been an account that you haven’t been able to get reinstated, are there themes with the types of problems they are having in those situation?

A: I don’t think so. The most problematic intellectual property cases come when Apple makes complaints. This is because they are incredibly zealous, and even when they know their claims are non-sense; they don’t seem to withdraw them. What they are really trying is to just sweep all of Amazon from people selling their products. They just don’t retract. We have one case where they were clearly a hundred percent wrong because the product they were complaining about never came from my client. They still refuse to withdraw that complaint. Ultimately we convinced Amazon to let our seller get back online again to keep selling because we were able to show to Amazon that the products were not from my client.  But Apple’s lawyers from New York refused to withdraw even though it is one hundred percent clear that this complaint was bogus.  The sellers don’t want to finance a legal battle; they don’t want to get a fight with Apple. So they were problematic.  Other than that, I can’t really put my finger on anything that’s more problematic than others.

Q: Do you think it’s fair to say that if you put the right plan of action in place most of the time it is possible to get back one way or another on to selling in Amazon?

A: Yes.  Yeah, most sellers are doing incredible jobs. If you think about the history of retail, in retail there’s always a return rate somewhere between like 15-20% or 10-20%. Our retailers on Amazon run less than 4%, that is unheard of in the history of retail. This feeling in Amazon that any friction, anything that interferes with the sale of goods, even the customer writing that “thank you very much it was a good experience” to Amazon they see this as friction. That’s unheard of that the compliments could somehow harm an account. I see like my own dad who will order three pair of pants at once and to plan to keep one and return the other 2 with no idea that his returns are hurting the seller. And they do. And why if the seller is willing to absorb the cost of returns which is normal retail, why is that a problem for Amazon? But it is. They see returns as friction and they don’t like it.

Q: Any major things you would recommend for sellers to mitigate the risk of suspension or like major red flags from Amazon that might be common for sellers to do today?

A: Certain brands you want to avoid.  Apple, just avoid it.  Do I like hightailing to a bully? Absolutely not, I’m a David vs Goliath type guy, I love the fight, I love beating the big guys, I’ve been doing it my whole career.  But, since my job is to keep people making money, I say if there are certain brands you know are problematic. Stay away from them. Don’t sell Apple products. Just stay away from it and find other things to sell. I think that sellers need to be diversified. You can’t have all your eggs in one basket; one product line. I think that you want to go with different product lines, go beyond your comfort zone, entrepreneurs are entrepreneurs whether they are selling popcorn or mugs. So you need to expand so you are diversified and protected to some extent.

They have to follow Amazon’s level of ideal customer service. They are the largest retailer on the planet for a reason, because they focus on the customer. I think that sellers should really follow that lead and they’ll be successful by doing that whether they continue to sell on Amazon or any place else. The more you focus on customer service the better you are going to be.

There’s always a lot of “Amazon bashing” and I think a lot of it is a bit misplaced because while they have a lot of strict rules that require you to be an absolutely awesome business person. Nowhere in the history of commerce on this planet has anyone been able to get access to 80 million customers with nothing more than a cell phone and a credit card to buy some products.  You go back to Christopher Columbus, he needed the monarchy to fund the ships to get into commerce.  10 years ago, 20 years ago, you’d have to go borrow $10,000 to $50,000 to open up a store or business.  Now, literally you have your phone and $100 on a credit card you can go to Wal-mart and do retail arbitrage and get into business.  It’s a tremendous opportunity. In regards to the Amazon bashing, we deal with it every single day, day in and  day out. There’s tremendous opportunity both for large businesses and for the little guy to get really into global business.

Q: Do you notice any correlation with the suspended clients between using stickered inventory and commingled inventory? Any notes there?

A: There’s definitely a higher level of suspensions from people who allow their inventory to be commingled. And also we always recommend that they do not allow returns to be placed back into inventory. For one thing, the commingled inventory, your genuine products might be mixed up with somebody’s counterfeit products.  And now you are on the hook for that and it wasn’t even your product. You can trace actually whose product was shipped, but it’s after you have been suspended and it’s a major pain in the neck. So I’d opt-out of co-mingling. Also the returns, you have people in Amazon warehouses that are good hardworking people, but I doubt they have the time to really look at the product to see whether the packaging is damaged and all.

Regarding returns, have them either destroyed or sent back to you depending on their value. It’s just simply not worth the risk, if the product was shipped to somebody, they look at it, they open it, they damage the packaging or whatever and they send it back. And it goes back into your inventory. It gets sold to your customer number 2 and they complain that it was used.

It is a product to product analysis, if it’s like a 500 dollar part for a car maybe you don’t want to have it shipped back because they are heavy and they’re expensive and less likely to be damaged, but if it’s something like under 10 bucks; it’s not worth the risk of getting suspended for the one return to save the fee. It’s all business decision, risk versus reward should govern every decision you make. So the risk of the product coming back damaged and people in the warehouse not catching it, versus of the reward of saving that product that will cost you a few bucks doesn’t make any sense.

Thank you to CJ for being willing to do this Q&A.  The reminder of the conversation will show up in a blog post in the next week or 2.  If you would like to get in touch or learn more about CJ’s services, you can checkout his website: www.amazonsellerslawyer.com.

If you have any questions or comments, please leave them in the comments section below!

 

 

 

Free Online Sourcing Tips
Receive a list of 4 tools that are free to use to help you when sourcing products to sell online