An anonymous seller sued Amazon for $1.72 million

It is learned that according to foreign media reports recently, Amazon Mexico is involved in a lawsuit worth more than 100 million pesos (about 1.72 million US dollars) due to alleged breach of contract and abuse of terms.

The lawsuit was filed by a seller who accused Amazon of unfair enforcement of arbitration clauses and pointed out various misconducts on the platform.

It is understood that the plaintiff in the case is the anonymous seller Alejandro N, who was once one of the top sellers on the Amazon platform. Between 2021 and 2023, Alejandro N's sales on Amazon have exceeded 60 million pesos.

However, in December 2023, Amazon listed the products it sold as "restricted items" and deactivated its store for this reason.

In response, the seller firmly denied the accusation, believing it to be completely unfounded. He pointed out that other sellers were still selling the products that were originally identified as illegal on the Amazon platform, which made him more suspicious of the fairness of the platform's handling. Alejandro N's lawyer also believed that Amazon acted maliciously in the process of handling.

Fortunately, in the first instance, a Mexican judge ruled that the arbitration clause imposed by Amazon was invalid, believing that the clause was operated in bad faith. The judge also stated that Amazon's long-term withholding of sellers' funds had a serious impact on them, and that these clauses violated the basic right to fair justice in the Mexican Constitution and were contrary to the Consumer Protection Law.

Currently, Alejandro N not only demands the recovery of the withheld funds, but also claims more than 100 million pesos in damages and requires Amazon to pay for mental and reputational damages caused by its misconduct. Under Mexican law, if the court finds that Amazon acted maliciously, the amount of compensation may increase significantly, taking into account the double blow that Amazon's actions have dealt to the seller's financial and mental health.

If the case is ultimately ruled against Amazon, Amazon will face serious legal consequences, including having to modify its contracts with sellers to comply with Mexican legal requirements.

In fact, this is not the first time Amazon has been sued. In recent years, as Amazon's regulatory policies have become increasingly strict, many sellers have suffered huge losses due to account suspensions and fund freezes. During this period, many sellers resolutely chose to appeal to Amazon, while others chose to quietly withdraw from the market amid the turmoil.

It is learned that according to the latest data from Smartscout, as of January 23, more than 1,000 Amazon sellers have chosen to close their stores this year.

It is understood that at the critical period of last year's performance sprint, a large number of sellers were severely punished by Amazon for various violations. According to statistics, about 5,000 Chinese sellers' stores were suspected to be frozen. Many sellers suddenly stopped selling, largely because they violated the platform's policies, resulting in their accounts being banned.

According to SmartScout data, about 5,000 Chinese sellers' stores were suspected to be blocked by Amazon between November 1 and 20, 2024. On November 20 alone, about 500 Chinese sellers' stores stopped selling on Amazon, and 31 stores were blocked on November 21.

Industry insiders pointed out that although stopping sales does not directly mean that the account will be blocked, this phenomenon still reflects a significant problem - Amazon's tolerance for violations is gradually decreasing.

This has undoubtedly sounded a wake-up call for the cross-border e-commerce industry: Sellers should not take chances and violate regulations. After all, Amazon’s punishment came late. Especially those stores with annual sales of more than 10 million US dollars have not escaped this storm, which is enough to show that the platform has a zero-tolerance attitude towards violations.

At the same time, in addition to the accounts that were misjudged, sellers in the industry generally believe that Amazon’s account blocking action mainly involves the following three violations:

• Listing Refurbishment

When a product has poor sales, too many negative reviews, or has infringement issues, some sellers may try to reverse the situation by refurbishing the listing. This usually involves frequently submitting merge requests or modifying product detail page information, which are actually illegal operations.

• Illegal manipulation of comments

In order to increase sales and product reputation, some sellers may resort to unfair means to manipulate reviews, such as purchasing fake positive reviews or tampering with review content.

• Protocol 3 Video Authentication

Previously, many sellers received video verification emails from Amazon regarding Protocol 3, requiring them to complete the video verification within a specified time. If sellers fail to complete the verification on time or fail to pass Amazon's review, their accounts may face the risk of being blocked. In addition, if sellers provide false information or other violations during the verification process, their accounts may also be blocked.

"There is no order without rules." As Amazon's supervision of sellers' behavior becomes increasingly strict, sellers can only make their business move forward steadily in the wave of e-commerce and go further and more steadily if they operate within a compliant framework.