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The other side of IP complaints against Amazon sellers

October 28, 2019 Leave a Comment

Many brands are clueless about the damage they do with IP complaints and fake claims

By: Lesley Hensell

The number of account suspensions for alleged intellectual property (IP) violations on Amazon continues to skyrocket. There are several reasons this is so. But perhaps one of the most disturbing of these is a complete lack of understanding by brands that they are destroying small businesses. Last week, a lawyer called me. He wanted to discuss a pending lawsuit between a past client I worked with and a brand that helped get them suspended from Amazon. As we discussed the issues in the case, I found myself being sucked into a vortex of nonsense.
The lawyer laughed. “It’s insane,” he said. “What makes a seller think they can win this kind of lawsuit against a brand?” This attorney truly believes what he was saying. His client agrees. And in my opinion, they couldn’t be more wrong.

Anatomy of a lawsuit

For the purposes of this blog, let’s call my past client Acme. Acme was a pretty good-sized seller. In addition, he had quite a few IP complaints in his scorecard, mostly for trademark infringement. In my view, these IP complaints were likely all false and an attempt by the brand owner to control distribution. My client did not sell fake goods, nor did he list on the wrong ASIN. He had high-quality sourcing.
My client listed a product we shall call Supplement. He purchased Supplement from a large distributor. The product was real, with a perfect chain of custody.
One day, the maker of Supplement received a phone call or email to their customer care department. In this communication, a buyer stated they received an expired unit of Supplement that they purchased from someone on Amazon. This buyer did not give the name of the Amazon seller who sold the expired product to them.
The maker of Supplement had brand registry. They logged into their brand registry account and promptly reported every single seller of Supplement for IP infringement/counterfeit. My client was one of those sellers, and his account was deactivated by Amazon.

The seller fights back

Ultimately, Acme was reactivated. The company is now actively selling on Amazon. But they lost significant sales on Amazon during their suspension. Acme decided to sue the brand owner of Supplement for:
  • Tortious interference. Essentially, this claim asserts that the brand owner wrongly and intentionally interfered in the business relationship between Amazon and Acme.
  • Slander. By stating that Acme was selling counterfeit merchandise, the brand owner slandered the company as a lawbreaker and someone whom nobody should engage in business with.
Here’s where the lawyer’s dismissive comments enter the picture. The attorney for Supplement brand said the entire lawsuit was ridiculous on its face and would never result in an award for Acme.
During our conversation, I pushed back.
“You do realize counterfeiting merchandise is a crime,” I said. “If Supplement had filed an IP claim for trademark or copyright infringement, that claim wouldn’t have been true, either. But calling the product counterfeit raises this to an entirely new level. It was unethical, wrong and puts Acme at risk.”
The lawyer disagreed and then blamed Amazon, rather than his client.
“Supplement had no idea that something like this could happen,” he claimed. “They were just trying to stop the problem.”

Amazon’s culpability

And there, my friend, is where Amazon’s blame lies in all this. Because the platform must enforce IP complaints, it has erred on the side of ease for brands. Simply report a problem, and the listing is closed.
Unfortunately, many brand owners don’t seem to comprehend the seriousness of making false reports. And these reports are made – in abundance – every day:
  • Brands trying to control distribution lie about IP violations
  • Brands concerned about product quality report all sellers on a listing instead of pinpointing bad actors
  • Brands rely on lawyers or services to report “bad actor” sellers on their listings, which often results in authorized sellers being reported as well
  • Brands don’t recognize storefront names of their authorized sellers and report them
  • Brands don’t bother conducting test buys and just call everything “counterfeit”
At the same time, many brand owners honestly don’t understand how enforcement works at Amazon. They likely believe – like Supplement – that their report will only result in a single ASIN being blocked in a seller’s account. They don’t realize that false reports could result in account suspension, permanent closure, destruction of inventory and permanent holding of funds by Amazon.
Should brands have control over their products on Amazon? Brands definitely have cause for concern when their products are counterfeited, sold past expiration dates, sold in terrible condition, bundled in strange combinations, etc. All of these circumstances damage brand equity and dilute value.
But at the same time, making false claims of criminal behavior is problematic. And at least a few companies like Acme are going to see if they can help the IP pendulum swing the other way.
Concerned about your account, no matter the size, we can help put your mind at ease. Call Riverbend Consulting at 877-289-1017

Filed Under: 3P, Account Health, Amazon, General Tagged With: 3P, 3P seller, Account Suspended, Amazon, Amazon FBA, Amazon seller, Amazon vendor, Appeal, Brand, Brand registry, Copyright, Counterfeit, Deactivated, Guru, Intellectual property, IP, Patent, QPD, Shipment, Suspension, Trademark, Warehouse

What does Amazon really think about third-party sellers?

October 2, 2019 Leave a Comment

High-volume sales and a large catalog don’t protect your Amazon account

As we head into peak season, it’s easy for large third-party Amazon sellers to be over-confident about their position with Amazon. Many assume that their high revenue, large order volume or wide selection of offers protects them from enforcement actions by Amazon Seller Performance.
In other cases, sellers have had long-time personal relationships with account managers, sales folks or even executives in Amazon’s Seattle offices. These person-to-person interactions must offer some degree of protection, right?

What does Amazon really think about third-party sellers?, bicep

Unfortunately, the larger Amazon becomes, the less any of these factors truly help a third-party seller:

  1. Broad selection means nothing. Unique selection, however, is seen as a virtue. If you sell items that have a lot of other sellers on them, Amazon is not concerned about losing you as a seller. Someone else is already providing your inventory on the platform.
  2. Similarly, a high volume of orders or big revenue numbers don’t protect you. Amazon can get those same sales from other third-party sellers or vendors.
  3. Personal relationships are becoming less important as the company gets bigger. Many sellers make the mistake of believing that an “account manager” – who is really in sales at Amazon – can protect their account. That’s simply not true. These sales folks are responsible for bringing in new sellers and product selection. They do care about their accounts, since they are goal based on revenue. But they don’t have the power to make enforcement issues go away. Strategic account managers sometimes can help, but their arguments to Seller Performance must be based on facts – not your account’s size or selection.
What do Amazon executives care about? They love feel-good stories that prop up Amazon’s reputation:
  1. Amazon executives like seller-owned brands that sell exclusively on Amazon and spend money for PPC, Early Reviewer, etc. These sellers bring in sales that Amazon wouldn’t have otherwise.
  2. Amazon executives like sellers who bring unique products to the platform, through exclusive relationships with manufacturers, wholesalers and the like.
Being a unique brand or having exclusive offers on Amazon still won’t prevent Seller Performance from taking action if it perceives your products or customer service as poor or risky.

What is the takeaway for large third-party Amazon sellers?

Invest in strategies that ensure your Amazon customers receive excellent-quality products and fantastic service with every transaction. That will protect your account sooner than volume, catalog size or even Amazon relationships.
Concerned about your account, no matter the size, we can help put your mind at ease. Call Riverbend Consulting at 877-289-1017

Filed Under: 3P, Account Health, Amazon, General Tagged With: 3P, Account Suspended, Amazon, Amazon FBA, Amazon seller, Amazon vendor, Appeal, Deactivated, Guru, QPD, Shipment, Suspension, Warehouse

Who gets suspended from Amazon, anyway?

October 2, 2019 2 Comments

Don’t believe the Amazon boosters who say only “bad guys” are deactivated

By: Lesley Hensell

Who gets suspended from Amazon? It isn’t just “bad guys.” While cruising seller groups on Facebook, I saw a disturbing comment from a “guru.” It followed a news article about seller account suspensions from the Amazon platform.

This highly respected businessman said that Amazon suspends “thousands of scammer accounts daily.” (That number seems high to me.) He then went on to imply that any legitimate seller who is suspended is “caught in the net” accidentally, and then gets their account back “shortly thereafter.”

As someone who works with suspended sellers every day, I take exception to this characterization of my clients and friends. It implies that anyone who loses their seller account deserves it. It also completely misrepresents the appeals process, making it sound simple, short, and with the foregone conclusion that good sellers always get their accounts back with relative ease. For some sellers, nothing could be further from the truth.

Before the horror stories, a caveat. Do most of our clients get reinstated? Yes. Are some reactivations relatively fast and easy? Sure. I’ve gotten an account reinstated in as little as 20 minutes. But for most suspended sellers, reality lies somewhere between 20 minutes and blocked for all eternity.

woman checking rear view mirror

Suspended – for no reason

I’ve always viewed my friend Connie as an ideal Amazon seller. She runs a small operation, doing 80 percent of the work in her Amazon business. Occasionally, she hires helpers during busy season to help with shuffling inventory, organizing products, and packing orders.

Connie is Amazon’s dream. She buys only legitimate product, with invoices or receipts for every single item. Her record keeping is impeccable. She carefully packs every item and includes personalized notes for buyers. If problems arise (and they rarely do), she takes care of the customer efficiently and with the goal of making them happy. She has a high repeat buyer rate. Connie also cares about the Amazon catalog. She spends dozens of hours a month correcting listings and ensuring that her products are accurately represented in the Amazon catalog. When I think about Connie as a seller, the word that comes to mind is “conscientious.”

Connie’s account was recently suspended. Why? Nobody knows. The suspension notice said that she had not provided a valid plan of action. But Amazon had never asked her for a plan of action. In addition, the suspension notice said there were specific ASINs involved. In the space where those ASINs should have been listed, there was blank space.

Connie reached out to Seller Performance and asked for more details. They responded by permanently blocking her account. Escalations to various executives were met with silence. Connie was burning through her savings and eyeing storage spaces packed with inventory she intended to sell in Q4.

I have two team members with 30 years of Amazon Seller Performance and Strategic Account Management experience between them. They reviewed her case and her account carefully, and they were baffled. They believed the suspension was a mistake, but that the account had been notated in such a way that nobody would give Connie a second review.

After weeks of suffering financially, mentally and emotionally, Connie was finally reinstated. But it took multiple escalations to executives that, frankly, an average seller would never know to contact. Without that, who knows if and when she would have gotten her account back.

Frauded for weeks, then an apology

Jacob called us in a panic. He was completely locked out of the seller account for his small, family-owned business. He literally had no idea why. In Amazon parlance, he had been “frauded,” meaning he could not log into Seller Central, and Amazon refused to respond to any emails or calls.

Jacob’s business was gradually falling apart. A few years ago, his family decided to close their Manhattan store because of outrageous rents. They focused solely on Amazon, but they did not diversify further. Now, they were suffering as a result. Almost a month had passed since they were frauded, and they had to lay of employees. Their personal mortgage payments were about to be late, and their vendors were unpaid.

Jacob had tried several appeals and letters, but he had gotten nowhere. We took over and escalated to several executives. After a few weeks, Jacob received an apology from Amazon. It essentially said: “Oops. Sometimes we err on the side of caution. Sorry about that.”

We have our suspicions about why the fraud designation happened. In all possible scenarios we dreamed up, it was a flat-out mistake by someone at Amazon. That mistake almost destroyed a multi-generational family business. We will never know the real reason for sure.’

 

Wrongly accused of forged invoices

Ali sells replacement computer parts. Some customers complained about receiving these items in non-retail packaging, so Ali’s account was suspended for suspected inauthentic. He provided Amazon with detailed invoices from his supplier – a major distributor of PC parts and accessories.

In response, Amazon blocked Ali’s account for forged invoices. Why? Your guess is as good as mine. Ali has given Amazon a supplemental letter from the corporate headquarters of his distributor, confirming his invoices are accurate. In addition, he has sent Amazon stamped bank statements showing that he paid the invoices.

Ali is a good guy and an honest seller. Amazon continues to hold his funds and refuses to communicate with him about his account. How can this be, if only scammers are blocked?

Ali is not alone. Another client was accused of forged invoices because his supplier could not find a document when Amazon called him. The supplier confirmed three of four invoices, and he found the fourth only after the phone call ended. It took multiple escalations and a full month to get the “forged invoices” designation removed from the seller’s account – even though none of this was his fault. A month is not “shortly thereafter.” It’s 8 percent of the year without sales.

Taken down by a serial IP abuser

One of our clients, Darryl, sells seasonal items in the Outdoors category. He called us when most of his catalog was made inactive, thanks to intellectual property complaints alleging patent infringement. When we investigated, we determined that Darryl was the victim of a large company with an even larger reputation for filing false IP complaints.

Not only was Darryl not infringing on the patents cited in the notice from Amazon. In this case, the complaining party was trying to enforce patents it did not even own.

Darryl’s account wasn’t suspended, but it may as well have been. All of his key ASINs were down, right at the beginning of the season for these very seasonal items. It took almost two months to get his ASINs back up and running. Why? A successful Jef Bezos escalation was somehow overruled by Seller Performance. It took another Jeff escalation and several follow-ups to resolve this discord inside of Amazon.

The worst part – to me – is that Amazon is fully aware that this particular complaining party has a history of abusing other sellers. Yet that did nothing to cure the problem promptly. Unfortunately, even “rights owners” that have internal notations as “abusive” at Amazon have their complaints taken seriously and enforced.

Destroyed by a devious competitor

Chris isn’t a social media guy. He doesn’t have any personal or business accounts on Facebook, Instagram or other similar platforms. So imagine Chris’ surprise when Amazon suspended him for review manipulation based on a Facebook giveaway.

Unfortunately, Chris manufactured a private-label product in a particularly crowded niche with cutthroat competitors. From what we can tell, one of these competitors created a fake Facebook group or logged onto Facebook freebie groups spoofing Chris’ company. The competitor then offered free product and asked for positive reviews.

Chris got “caught” by Amazon, even though Chris didn’t do it. His competitor was so crafty that Amazon flat-out didn’t believe his appeals. He was stuck with thousands in unsold private-label inventory and walked away from Amazon in disgust.

When good people do bad things

There are sellers who do the wrong thing on Amazon. I see it all the time:
  • Knowingly selling product in the USA meant only for sale in Asia or Europe
  • Drop-shipping from retailers
  • Buying items from a friend of a friend, with no invoices or receipts
  • Selling Alibaba inventory that is essentially counterfeit or infringing on legitimate patents
  • Playing games with Best Seller Ranking and Review Manipulation
But the average suspended seller who walks through our doors committed “minor” Amazon infractions. Do you think someone should be blocked forever because their mom bought their PL product and wrote a review? Should they lose their account for late shipments when their warehouse lost power, or when their inventory management software messed up their feed? Are these people “scammers,” as the guru would label them, or did they make mistakes? People in these exact situations hired Riverbend after they were blocked from Amazon and failed to get reinstated through their own efforts. I’m not going to defend their violations of Amazon policy. Yet to characterize them as unsavory individuals or fraudster businesses is just not right.

Risk matters

This mischaracterization also misleads people – and businesses – about the true risks of selling on Amazon. Don’t get me wrong – I’m a huge fan of third-party selling on Amazon. I’ve been a seller since 2010, and I think there is still incredible, long-lasting and sustainable opportunity on the platform. I would never discourage a legitimate seller from taking the plunge because there is a chance that theirstorefront could be suspended.
However, all businesses carry risk. And the best businesses address risk as part oftheir strategic planning process. You must understand the risks you face and act tomitigate those risks – not pretend like they do not exist. I realize that someconsultants are only interested in Amazon Boosterism, since they cannot sell theirproducts and services to people who won’t sell on Amazon out of fear. But isn’t it more intellectually honest to provide a complete, accurate picture of what it is like to sell on Amazon?

If sellers don’t comprehend the danger zones, they will fail in many ways. Why? They will believe that their good intentions are understood and accepted by Amazon, in place of following policy. Here are examples I see every week:
  • New sellers start of by listing garage sale and thrift store products as “new.” Amazon, however, expects receipts or invoices to be available for all new merchandise. This way, you can prove items are authentic and new. If Amazon asks for invoices and you don’t have them, you’re on a fast track to suspension.
  • Sellers with cash-flow issues launch their accounts by drop-shipping, hoping to stockpile cash they can use to buy wholesale inventory. Unfortunately, they sometimes choose to drop-ship from retail stores. This is a violation of Amazon policy – even though the items are authentic. Amazon has become less and less tolerant of this violation and often blocks new accounts it finds drop-shipping from Walmart, Home Depot and the like.
  • Struggling sellers do Amazon-to-Amazon flips of private-label products purchased through discount sites. The brand owners get angry and file IP complaints against them, resulting in an account suspension. Again, good intentions and being a nice guy are not a credible defense in Amazon’s eyes. Currently, IP suspensions are some of the most difficult to overcome, and they often require hiring a professional.

If new sellers understood how these techniques put them at risk, yes, they may choose another business model. Successful Amazon sellers usually have at least a little capital available to get them started.

All sellers need to also understand that Amazon is can be a cruel mistress. We get the vast majority of our clients reinstated. But in all cases, sellers who are deactivated suffer from cash flow issues, lost revenue, and sleepless nights.

For the unfortunate few who are permanently locked out of Amazon, a scarlet A is not always deserved. Rather, kindness and understanding are demanded from those who comprehend how truly heartless the machine of Amazon has become.

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.

Filed Under: 3P, Account Health, Amazon, General Tagged With: 3P, Account Suspended, Amazon, Amazon FBA, Amazon seller, Amazon vendor, Appeal, Deactivated, Guru, QPD, Shipment, Suspension, Warehouse

Vendors are getting ripped off by Amazon at the warehouse level

October 1, 2019 Leave a Comment

How many millions does Amazon owe to its 1P vendors, and why won’t they pay out?

By: Lesley Hensell

For years, I’ve heard horror stories from Amazon third-party sellers about inventory lost, damaged or destroyed by Amazon fulfillment centers (FCs). But just when I thought these tales couldn’t get any worse, we started getting calls that 1P vendors are getting ripped off by Amazon at the warehouse level. Amazon owes them hundreds of thousands of dollars, and the e-commerce giant won’t pay up.
damaged box
How common is this? Probably more common than most people would imagine, since the cases just keep coming in to Riverbend, where we specialize in helping sellers and vendors deal with Amazon problems.
Check out these recent scenarios:
  • A snack food vendor shipped product to an Amazon FC. Amazon then put about $40,000 worth of the product on a truck to send to another warehouse. The truck was involved in an accident, and the product was destroyed. The carrier (hired by Amazon) filed a claim with its insurance company, and the vendor was told to expect a resolution and reimbursement in three to five business days. Six months later, no money had come. The vendor hired Riverbend, and after an executive escalation, the vendor finally got their payment from Amazon.
  • A long-time Amazon vendor of beauty products had many, many shipments that were not received in a timely manner at the Amazon FC. They filed claim after claim, and Amazon eventually “found” the inventory and paid the vendor for the items. But, even for payments made after two, three or more months, Amazon automatically deducted a quick-pay discount of 2 percent. This discount should not have been taken unless the invoice was paid in less than 30 days. The fraudulent discounts added up to over $300,000. The vendor hired Riverbend and asked us to go after the most recent two years of fraudulent discounts. After multiple executive escalations, we helped them shake $76,000 out of Amazon. Now, we are going after the balance.

We are currently working on more of these appeals, for companies whose inventory was delivered at the FCs but never received. Amazon refuses to pay up, saying they don’t have the items. Yet approved carriers show a signature at the Amazon dock.

These stories bring up many questions:
  1. Why is there no easy way for vendors to get paid when out-of-process exceptions happen? It seems like there should be some simple methods for vendors to follow, such as reaching out to the Vendor Support team or Accounts Payable. But these emails get no results. Instead, the vendor is told their items is being “researched” by the “appropriate team” – sometimes for months or even years!
  2. Why does it take Accounts Payable so long to research, respond to and reimburse these issues – which are often quite simple? When a truck crashes and food items are destroyed, clearly the vendor should be paid. There’s no two ways about it.
  3. What kind of (bad) incentives are in place to encourage this kind of terrible behavior by Amazon team members on behalf of their employers? Amazon’s vendors are – in many times – small businesses. They cannot afford to be ripped off, or even to have payments delayed for months at a time. Yet Amazon FCs feel justified in delaying receipt of goods to positively impact their numbers and slow payments. Amazon Accounts Payable has no problem holding funds – indefinitely – that do not belong to them. In fact, they have no problem wrongly taking millions in discounts – and refusing to reimburse them.
  4. When Amazon is being watched by the Federal Trade Commission, why would they allow such blatant fraud, abuse, and breach of contract to occur on a regular basis?
If your Vendor account has been stiffed by Amazon, or you have missing 3P inventory that Amazon won’t reimburse, please reach out to our team. We can help.

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.

Filed Under: Account Health, Amazon, Fulfillment, General, Private Label, Seller Performance, Vendor Tagged With: 1P, Amazon, Amazon FBA, Amazon seller, Amazon vendor, Damaged, Inventory, Lost, QPD, Shipment, Suspension, Warehouse

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