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As predicted, the California legislation will not make Seller Performance any friendlier

By: Lesley Hensell

This summer, optimistic Amazon sellers believed there was change in the air. Amazon made changes to its Business Solutions Agreement (see our previous blog post), and the California legislature began work on a bill that purported to protect sellers from abusive online marketplaces.

Over the last few weeks, as the updated Business Solutions Agreement (BSA) has come into force, it’s unfortunate that my predictions have come true. As I suspected, nothing has really changed in Seller Performance and its actions toward sellers – at least not that anyone on the outside can see. It’s not kinder, it’s not gentler, it’s not more responsive, and there are no 30-day cure notices, as the BSA said there would be.

Also as predicted, the California legislature’s AB-1790 has been watered down to a point that it means almost nothing. The most recent version of the bill strikes out the few provisions that I truly believed would have a positive impact for sellers. At the same time, it’s clear that someone (an Amazon lobbyist?) explained “risk management” to the legislature, as there are now provisos to protect every step of the investigation and enforcement processes in Seller Performance.

Striking out the good

One provision originally in the bill said it would “prohibit a marketplace from destroying products in its possession that are the property of a marketplace seller without offering the marketplace seller a reasonable opportunity to retrieve the marketplace seller’s property.”

That language was struck out completely, however, from the most recent version of the bill.

Why? I’m speculating. But I believe this was far too broad, as it would allow bad actors to place removal orders for counterfeit or stolen goods. The legislation refused to wade further into the devilish details by saying something like, “a reasonable opportunity to retrieve authentic, legitimate goods.” I suppose they believed it would take too much work to define “authentic” or “legitimate,” so they just abandoned the hard work altogether.

Unfortunately, I’ve seen far too many deactivated sellers have their inventory seized and destroyed – even when they attempted to place removal orders and were selling legitimate goods. This will continue to be an uphill battle.

Embracing risk management

The legislature added many provisos to the bill, essentially giving Amazon and other marketplaces complete power to implement their current risk management structure. For example, a section initially said when a marketplace suspended a seller, it then had to provide a “written statement of reasons” including “the specific facts and circumstances that led to the decision.”

Check out the revised version. It now says the written statement of reasons must do this: “Without disclosing information that would result in the disclosure of any proprietary, confidential or trade secret information, or disclosing information that would hinder any investigation or prevention of deceptive, fraudulent, or illegal activity, describe the facts and circumstances that led to the decision unless the marketplace reasonably believes that giving a written statement of reasons could negatively impact the safety or property of another user or the marketplace itself.”

In other words, Amazon doesn’t have to tell you anything. And the word “specific” was removed. So your suspension notice will be generic, just like they always have been.

Another section has Amazon’s fingerprints all over it. The past language stated that the marketplace must “identify the terms or conditions that permit the suspension or termination.” That has been changed to “identify the term, condition, or policy that serves as the basis for the suspension or termination.” This is the same-old same-old, but now California’s legislature is adopting specific language that recognizes what has always been – Amazon’s policies have the force of contract law with sellers. In other words, third-party sellers will see no improvement or relief.

What does it all mean?

Just as the changes to the BSA made very little positive difference to Amazons sellers, the California legislation will have little to no positive effects. The only question I have at this point is what it means for those sellers whose accounts are frauded. Let me explain. Sometimes, Amazon designates an account as “frauded” because Amazon suspects one of a wide range of fraudulent activities has occurred. This can be anything from money laundering to buying/selling fake gift cards to violating laws about overseas ownership, and more.

In these rare cases, the account is closed with no notice whatsoever. The seller cannot login, and there is no appeals process in place. Sometimes, we can get these accounts reinstated if the fraud designation was made in error (yes, it happens – twice in the last month at Riverbend, in fact!). But it is an extremely tough uphill battle.

Under the new legislation, Amazon would have to provided frauded California sellers with a reason for their account’s deactivation. Don’t be surprised if this provision disappears down the memory hole by the time the next version of the bill is considered.

Have more concerns about the California legislation? Riverbend Consulting navigates online retail. Get your Amazon account reinstated, sell with confidence, and increase your bottom line. Contact us.

Lesley Hensell is Partner at Riverbend Consulting, she offers practical know-how to improve retail performance. Lesley’s experience with Amazon compliance gets accounts back up fast.

If you were looking for a legislative rebuke of Seller Performance…keep looking.

By Lesley Hensell

The Amazon Seller Community rejoiced this week when a California state senate committee approved a bill designed to give more power to third-party sellers. Also known as the “California Sellers Bill.” Celebratory Facebook posts and blogs shouted that Amazon would finally be forced to treat sellers fairly.

But a careful reading of the “California Sellers Bill” reveals that under the new law, little to nothing would actually change. Let me repeat that “Almost nothing would change”

Why? Contrary to online claims, the bill does not make sellers a “class” or a “protected class.” But more importantly, Amazon already follows most of the provisions in the law. They can also fend off the more ridiculous requirements that would gut its risk management strategies.

Here is a Point-by-Point Explanation…

The text of the proposed law:
Every marketplace shall ensure that their terms and conditions regarding commercial relationships with marketplace sellers meet all of the following requirements:
(1) Are drafted in plain and intelligible language.

Reality:
Amazon sellers should refer to the Business Solutions Agreement. While there are some sections that could be written in more accessible verbiage, for the most part the agreement is in plain English. What makes this provision absurd, however, is that it is completely open to interpretation. Who defines “plain and intelligible”? This is vague and unenforceable. In addition, “terms and conditions” are a legal and binding contract. Of course they will include some lawyerly language. That is the entire point, and it is unavoidable.

The text of the proposed law:
(2) Are easily available online for marketplace sellers at all stages of their commercial relationship with the marketplace, including, but not limited to, during the stage prior to the formation of a contract.

Reality:
Amazon sellers have instant access to the Business Solutions Agreement (BSA). The plain fact is, most sellers never bother to read it. That is a much more pressing problem than its accessibility. I could not, however, easily find a copy without logging into Seller Central. The law would require Amazon to have a publicly available page with the text, or to provide it during the registration process. At best, this is a minor administrative change and has no real impact on sellers.

The text of the proposed law:
(3) Set out the grounds for decisions to retain, or refuse to disburse, funds in its possession belonging to a marketplace seller pending investigation or resolution of a dispute between the marketplace and the marketplace seller and the objective grounds for suspending or terminating a marketplace seller from participating in the marketplace.

Reality:
Amazon already explains this in the BSA and the “Policies and Agreements” section of Seller Central.

For example:
“We may establish a reserve on your account based on our assessment of risks to Amazon or third parties posed by your actions or performance, and we may modify the amount of the reserve from time to time at our sole discretion.”

“Violating the Code of Conduct or any other Amazon policies may result in actions against your account, such as cancellation of listings, suspension or forfeiture of payments, and removal of selling privileges.”

“When we identify a violation of our policies, we take appropriate action, which may include suspending or terminating Amazon privileges.”

You can log-in to find the BSA here

You can log-in to find the Policies and Agreements here

Here is another reality that the average seller may not understand. There are endless ways to lose your account, as well as an increasing number of ways to have your funds permanently held. Amazon cannot and will not lay out every possible seller indiscretion in black and white. For one thing, they cannot keep up with the black hat folks. And they also cannot – and should not – provide a blueprint to the bad guys on how to break the rules and/or get away with it.

The text of the proposed law:
If a marketplace decides to suspend or terminate, in whole or in part, a marketplace seller, the marketplace shall provide the marketplace seller, without undue delay, with a written statement of reasons for that decision. The written statement of reasons shall refer to the specific facts and circumstances that led to the decision and the terms or conditions that permit the suspension or termination.

Reality:
Amazon already does this. Seller Performance provides a written statement that explains why an account was suspended or terminated. For example, Amazon will say that a seller violated the code of conduct, sold counterfeit products, or manipulated the platform. That is as specific as Amazon will ever be. Why? Because risk management matters to Amazon. What’s more, it should matter to sellers, and it certainly matters to consumers. More on that later.

The text of the proposed law:
A marketplace shall not destroy products in its possession that are the property of a marketplace seller without offering the marketplace seller a reasonable opportunity to retrieve the marketplace seller’s property.

Reality:
Amazon already does this. If inventory is not deemed counterfeit, Amazon provides 60 days for sellers to remove it. If inventory is counterfeit, Amazon holds or destroys it. Amazon cannot and will not be a party to trafficking counterfeit goods. I’ve had several clients complain that their items were destroyed without adequate notice. In almost every case, investigation showed that this was simply not true. They received notice from Amazon and ignored it.

The text of the proposed law:
A marketplace shall require marketplace sellers to purchase and maintain liability insurance to cover claims by customers related to the services or tangible personal property sold by the marketplace seller through the marketplace. A marketplace shall disclose the requirement in its terms and conditions … and shall establish reasonable and effective policies and practices to ensure that the requirement remains in effect.

Reality:
Amazon already requires liability insurance for professional sellers. Establishing a process for sellers to prove this is a minor detail that really only hurts sellers – not Amazon. In fact, this creates a disadvantage for online sellers over brick-and-mortar retailers, who are not held to a similar insurance requirement under California law. (That being said, I definitely recommend liability insurance for all sellers.)

Now that we have reviewed the bill’s provisions, it’s important to talk a little about risk management. Sellers who think Amazon should provide a point-by-point dissertation on the reason for account suspension may not realize how this violation of traditional risk management principles puts the entire platform – and all 3P sellers – at risk.

Our next blog will explain more about the “California Sellers Bill”…or you can reach out to us at Riverbend Consulting. Phone 877-289-1017

Lesley is Partner at Riverbend Consulting, she offers practical know-how to improve retail performance. Lesley’s experience with Amazon compliance gets accounts back up fast.

BSA

California legislation de-fanged, gives no relief to Amazon sellers