Amazon now permanently holding funds for a wide range of “sins”

Apr 9, 2019

By: Lesley Hensell

Amazon now permanently holding funds

If your Amazon seller account gets suspended, will you get your funds?

Maybe not. Amazon is now permanently holding funds for a wide range of “sins”.

For years, Amazon dispersed the funds for closed accounts in almost every case. Fraud and counterfeit were the occasional exceptions.

But now, Amazon is permanently attaching sellers’ funds for a wide range of alleged violations of its Business Services Agreement. And frankly, some of these offenses seem quite minor. While the seller’s mistakes may have warranted account deactivation, our team has been shocked that they have resulted in permanent loss of earned revenues.

First, here are some basics. When a seller’s account is deactivated, Amazon stops disbursing funds. The account balance just sits there while the seller tries to get back on the platform. If Amazon refuses to reactivate the account, funds are supposed to be released after 60 days. This allows for any A-to-z claims, returns and other fees to be debited from the seller’s balance. After the magical 60 days, remaining funds are sent to the seller’s bank account. (It’s important to know that Amazon’s calculation of when the 60 days starts is somewhat confusing. It’s usually when the company decides to permanently block the seller for the last time – which can be months after the original suspension.)

But then came the decisions to not release funds. The first volley in this new offensive was somewhat predictable. Sellers of e-cigs and vaping accessories had long abused the platform by creating bogus listings, selling a few units, and deleting the listings. This would be repeated ad nauseum, until Amazon caught the seller and suspended their account.

These sellers would then create a new account and repeat the entire process over again. Amazon got tired of the rule-breaking and held funds permanently for these folks – thus stopping the cycle of launching yet more new accounts in the vaping space.

Over the last few months, however, much more typical – and seemingly harmless – suspensions have resulted in permanent holds. We will start with the most egregious seller sins, and then move to the lesser ones:

  • Counterfeit goods. Amazon will (rightly) hold your funds, destroy your inventory, and block you from the platform. (This does beg the question of how Amazon can keep the funds from the sale of counterfeit goods, rather than turning them over to the Secret Service or another government agency. But that’s an Amazon rant for another day.)
  • Forged documents. It’s tempting to believe that this is the same as counterfeit goods. But alas, it is not. Many forged documents suspensions we are seeing relate to invoices submitted for ungating, rather than in response to a suspension or Seller Performance inquiry. Since the seller probably wasn’t ungated based on their forged invoice, they are essentially suspended for items never sold. When funds are then held, it’s based on an assumption of counterfeit by Amazon – even though counterfeit goods likely were never involved. Just wow. Also, there are more false positive suspensions for forged docs than you would like to believe – sadly.
  • Inauthentic. In the past, only having your products labeled as “counterfeit” would trigger a funds and inventory hold. But now, Amazon is refusing to return funds in many cases when products were labeled as inauthentic – a lesser crime than counterfeit in the Amazon hierarchy of broken dreams. In the cases of our clients, the products generally were authentic goods. Our clients bought gray market or otherwise couldn’t provide good invoices, so Amazon slapped them with the inauthentic label and decided to keep their money and their FBA inventory. Forever.
  • Linked accounts. This is perhaps the most surprising reason for holding funds we have seen thus far. Clients with more than one account on Amazon – without permission – have seen a denial when they requested a release of their funds. Amazon specifically stated in the notice that this was a consequence of having multiple accounts. Perhaps an argument can be made that this is similar to the vaping situation mentioned above. Yet in some cases we have worked, there was no major rule-breaking going on.
  • Fraudulent and systematic abuse of customers. Recently, a client was denied funds for this stated reason. We had thoroughly reviewed his account and were absolutely baffled as to how his mistakes led to such a strongly worded denial. Fortunately, we were able to get the account reinstated and his nearly $400,000 in funds released for disbursement just a few days later. What did he do wrong? There was definitely poor customer service, as well as serious product quality problems. But the account was suspended for suspected inauthentic – which we disproved with invoices and a strong letter from the seller’s supplier. What was Amazon Payments thinking? We still don’t know.

Unfortunately, we anticipate that the list of reasons for holding funds – permanently – is only going to grow. How can sellers protect themselves?

  1. Shore up your sourcing. Make sure your invoices meet Amazon’s standards, and that you have authorization letters whenever possible.
  2. Keep good banking records. If an invoice shows a balance, it helps to prove that you paid it. This is one more step toward convincing Amazon you have valid relationships with quality suppliers.
  3. Don’t open multiple accounts. If you want a second account, get Amazon’s approval. Just do it the right way.
  4. Don’t submit forged documents – for any purpose. This means don’t alter a date, a quantity, a product, an address – nothing. If it’s not an original invoice, please don’t submit it to Amazon.
  5. Be on your game with customers. Tempted to circumvent the opt-out? Thinking about yelling at an abusive customer? Just don’t. Create great template email responses and outsource customer service to experts who have the time to follow through with every transaction.
  6. Monitor your ASINs. Do you have problematic ASINs that make up a significant portion of your returns or customer complaints? Pull those suckers and solve the problems. Amazon is going to hold you responsible if they perceive your products are fraudulent.

If your funds are being held, reach out to Riverbend. We have strategies for getting your money released – and your account reinstated. Contact us.

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