Amazon.com sellers complain of payment delays
SEATTLE — For many small merchants, selling on Amazon.com is an easy way to boost their business in a tough economy — if only they can get paid.
Dozens of online sellers complain that Seattle-based Amazon.com Inc. arbitrarily withholds their payments for as long as three months, jeopardizing their ability to replenish inventories and stay in business, according to a Seattle Times review of state records.
Sellers who say they've been hurt by this practice are the single most common source of complaints filed against Amazon with the Washington state attorney general's office in the past three years, The Times found.
All told, the attorney general's office received more than 370 complaints against Amazon, ranging from customers worried about their online privacy to game-application developers demanding better financial terms.
But about 40 percent of the complaints came from small merchants who use Amazon's Web platform to sell their products. And of those, three-fourths - nearly 120 sellers - complained that Amazon abruptly suspended or closed their accounts, tying up anywhere from several hundred dollars to more than $20,000.
In many cases, the world's largest Internet retailer stacked the deck against them by providing no real explanation or chance to appeal.
Jack Caruso, who owns a party and janitorial supplies store in Amherst, N.H., began selling on Amazon last year to reach new customers. But he complained to the attorney general's office in May after Amazon notified him via email that it had begun a review of his account and suspended his daily disbursements.
“Things are tight enough as it is,” he said. “And then, all of a sudden, I have $30,000 sitting with Amazon, wondering if I'm ever going to get my money. It's not right.”
Caruso, like many complainants, expressed frustration that Amazon did not explain the hold. Left to speculate, he believes it was because of a low number of online customer reviews, one of the many metrics Amazon uses to evaluate sellers.
“It's not my fault that 200-some-odd people don't want to give feedback. I've bought 50 or 60 items from Amazon and never once given any feedback. The average person just doesn't,” he said.
“You try to talk some sense to them, and their attitude is, ‘We have all the power.' “
Amazon, which declined to comment for this report, suggested to the attorney general's office that Caruso's hold was typical of what happens to sellers who suddenly do a lot of business without sufficient buyer feedback. It also encouraged Caruso to “send a friendly reminder to buyers requesting that they leave feedback.”
The attorney general's office closed the books on Caruso's complaint, saying it lacked legal authority to force a resolution or to act as an attorney on his behalf.
Many sellers, noting the difficulties of defending themselves against vague or unstated allegations, described communications with Amazon as a one-way street.
“They won't even give you a last name,” Caruso said. “How am I supposed to have a conversation with ‘Chris F.?' ”
Amazon requires sellers to accept a Participation Agreement that gives it “sole discretion” to withhold payments for up to 90 days if it believes their behavior could cause problems with customers. The agreement also excuses Amazon from liability and allows it to refuse service to “anyone for any reason.”
Amazon is not alone in holding sellers' money. Rival eBay does the same thing, and Internet giant Google is known to ban advertisers without explanation.
In 2010, eBay sellers whose accounts were frozen filed a class-action lawsuit in Northern California, accusing payments processor and eBay subsidiary PayPal of breach of contract and unjust enrichment. But U.S. District Judge Jeremy Fogel ruled that PayPal's pact with sellers gave it broad discretion to freeze accounts without disclosing the reasons.
“You're talking about a black box,” said plaintiff's lawyer Jeff Leon.
“You have people whose money is being held for no other reason than their behavior fell within a certain profile.”
While Amazon sells many products itself, it relies on thousands of small merchants to expand its selection of everything from books and electronics to hardware and jewelry.
When customers buy from a third-party seller, Amazon processes their credit-card payments, then takes a cut of between 6 and 25 percent, depending on the product.
Experts say this enables Amazon to try out new product categories without the risk of surplus stock, shifting the financial burden to other sellers.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Offense awakens to lead Steelers past Panthers
- Pirates, Worley edge Brewers, 1-0, move to cusp of playoffs
- Pirates notebook: Bucs set single-season attendance record
- Game changers: Turnover leads to elusive TD for Steelers
- Steelers notebook: Rooney says owners support Goodell
- Kids get kick out of new comic club at Homestead library
- Rossi: State of NFL gives Steelers a chance
- Penguins notebook: Carcillo hopes to give team physical edge
- Utility company helps customers prep for cold
- Penguins forward Megna’s skill set might be perfect fit
- Volunteers spruce up McKeesport trail