Can I Sue Amazon? Consider this First

If you're a third-party seller on Amazon and have been suspended from selling on the platform, you may be wondering if you can sue Amazon for damages. It's a common question that many sellers ask, but the answer can be found in Amazon's Business Solutions Agreement.

When you fill out an application to become a third-party seller on Amazon, you agree to adhere to the terms of this agreement. One of these terms is that, in the United States at least, your remedy is limited to arbitration, and you cannot sue Amazon in a court of law.

This means that if you want to seek a remedy for damages, you must demand an arbitration before an arbitrator of the American Arbitration Association (AAA). In arbitration, you and Amazon will present your case to a neutral third party, who will make a decision based on the evidence presented.

While arbitration may seem like a disadvantage for sellers, it can actually be a faster and less expensive way to resolve disputes than going through the court system. It also offers a level of confidentiality that may be appealing to some sellers.

If you're facing a suspension on Amazon, it's important to understand your options and to work with a team of experienced Amazon sellers attorneys who can guide you through the arbitration process. They can help you understand your rights and the best course of action to take to get your account reinstated and recover any losses you may have suffered.

In conclusion, if you're a third-party seller on Amazon, you cannot sue Amazon in a court of law for damages if you have agreed to the terms of the Business Solutions Agreement. Your remedy is limited to arbitration, which can be a faster and less expensive way to resolve disputes. If you need help with an Amazon suspension or dispute, contact Amazon Sellers Attorney for a free consultation with our team of experienced Amazon appeal experts.

Amazon arbitration

​AAA operates like a “private court,” where an attorney or judge is appointed as an arbitrator to decide your case. It functions much like a real court, except that, since the situs of the arbitration against Amazon is King County, Washington (also by agreement) the agreement also permits the hearing, or trial, to be conducted by telephone. ​
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Depending on the amount in controversy, the cost of an arbitration, which includes AAA filing fees, arbitrator hearing fees, and your own attorney’s fees, can be anywhere from $7500 to $10,000, and, in some cases, even more. The arbitration is typically set within a few months of the arbitrator’s appointment which means, in a relatively short time compared to a lawsuit, which can take years, your controversy will be decided.

What kind of relief can you expect to receive from Amazon in an arbitration?

This is also something determined by the agreement. Some third-party sellers on Amazon feel they have been genuinely wronged, and their account should be reinstated.

​However, Amazon’s business solutions agreement has been adjudicated by Washington State Courts to be an “at-will” contract, which means that, if Amazon wants to terminate the contract with a seller, it can do so at any time, for any reason, or no reason at all.

​But what about Amazon’s internal appeal system? Doesn’t that mean they have to determine your appeal in good faith? Again, Washington courts disagree and have failed to apply the doctrine of good faith and fair dealing to the at-will contract in these cases.

​What about losses for the time your store was down? Again, the business solutions agreement has a clause that provides that Amazon will not be liable for any loss of profit, revenue, business or data or punitive or consequential damages arising out of or relating to the agreement. And, again, Washington courts have held such agreements to be enforceable, although not specifically in the case of Amazon.

So why even sue Amazon at all?

Many clients sue for outstanding sales proceeds which, in certain cases, Amazon claims the right to withhold permanently, which is also in the business solutions agreement. However, this time, the law is not on their side.

Amazon says that it needs to hold proceeds indefinitely, for example, in cases where buyers seek refunds or could sue Amazon for counterfeit products. Case law distinctly holds that, as between Amazon and the third-party seller, the seller, and not Amazon, is the seller of the goods, which means that they cannot be held liable by companies claiming the seller sold counterfeits.

​Recent changes in the Copyright Act (the DMCA) provides immunity for Amazon with regard to copyright claims, and equity demands that Amazon cannot be the holder of the seller’s funds forever. It holds them as a constructive trustee, with the duty to turn over the funds to the seller, unless there is a court order compelling them to do otherwise. Sellers also arbitrate for lost or damaged inventory claims that have been denied by Amazon.

So, it is possible to sue Amazon, but, as with everything, prevention is always better than the cure. Although Amazon’s systems are fallible, and may result in unjust discipline against some third-party sellers, a good compliance program to educate third-party sellers and their employees on Amazon’s selling policies, and to put systems into practice to ensure compliance with those policies; whether it be sourcing, listing, packaging, order fulfillment, or shipping, can keep you out of court.

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