Season 1, Episode 81

 

Category Approval Doesn’t Equal Proof of Authenticity

Invoices previously accepted for ungating are getting rejected by Amazon for proof of authenticity, resulting in a withholding of funds, creating panic among many Amazon sellers. In this episode Chris and Leah tread into the murky waters of this issue, the reason it might be happening and provide solutions if you find yourself in this distressing situation..

Show Notes

Transcript

[00:00:07] Leah: Hello, Amazon Sellers. Welcome to the Seller Performance Solutions podcast. I am Leah Mchugh from eCommerceChris, and I am here with Mr. eCommerceChris. Chris McCabe. How are you today? 

[00:00:20] Chris: Seller Performance Solutions, Chris. How are you doing? 

[00:00:22] Leah: Yeah, it doesn’t have the same ring to it as Mr. eCommerceChris, which I’ve never actually called you before, but now that I’ve done it, I think that’s gonna be a thing. 

[00:00:31] Chris: It sounded like you said mystery Chris . I’m trying to keep the mysteries to a minimum . The one interesting mystery that you pointed out a moment ago was, The mystery of getting approved with certain invoices. We’re gonna dispel any notion of where this mystery comes from, but the idea that you can submit invoices, get approved to sell a brand or in a category, and then magically, suddenly with no explanation or reasoning, those invoices are suddenly unacceptable for authenticity or proving that you belong in that category or in that brand. 

[00:01:08] Leah: Right. Particularly when your account is suspended and Amazon is holding your money and inventory hostage, suddenly those invoices that they accepted to sell that product in the first place are now no longer acceptable for them to give you back your money or your account, or inventory. 

[00:01:24] Chris: Right, and we’re referencing, there are a lot of suspended sellers who are trying to get their accounts and their funds back, but some sellers have had enough of this charade.

They only want their funds and they’re just in a disbursement appeal process, funds dispersal process, and they can’t get their money. 

[00:01:45] Leah: It’s been a long time since I’ve heard of anybody get their money back without getting the account reinstated. 

[00:01:49] Chris: They’re kind of creating a new process for themselves to decide if they want to keep funds permanently. This didn’t used to be an appeals process just to get your money. Now it is after the last year or two, but, it’s interesting and I’m starting to see antitrust investigator interest in stuff like this.

 Because if you are your own court system, if you’re your own fiefdom or government and you’re judge, jury and executioner over the appeals process, and you decide. well we’ve reviewed this and we’ve decided not to send your money for our own reasons, which arbitrarily changed from the moment we accepted your invoices to sell to this moment, and we don’t feel that we have the any obligation to tell you why that is.

[00:02:41] Leah: Right. Well, and it’s changing the approval process based on what Amazon wants. So yeah, we want lots of people selling new products because we want competition and we want prices to be competitive. So yes, you’re approved, but oh wait, now we have your money and we kind of like it where it is. So now we don’t approve those documents.

[00:03:03] Chris: And it’s kind of a question, are they trying to play the angle that I think banks used to play where there was unclaimed money in an account that they would just keep? Usually they have to give it to somebody maybe after a certain amount of months or years if money’s sitting in an account not being accessed, they absorb it. Is that the game they’re playing? Or is it like being terminated for cause? We found cause to remove your selling privileges, you granted us the right.

[00:03:32] Leah: The cause is the rejection of the same documents that they have already approved before you could even sell.

[00:03:42] Chris: Right. I mean, it’s paradoxical at its core, but I’m just trying to get into the Amazon collective brain here to figure out what their reasoning will be. If they’re ever in court or called upon by antitrust investigators to defend this practice, will they say sellers have already granted us the right, I suppose is the word you need to use, the ability to judge their access to our selling platform, using our own procedures, our own reasons for suspension. And then once they’re suspended, once we deny their appeals permanently, then they’re in the funds disbursement process. But, As a result of deciding that they can never sell again, we are then granted the right to decide if the reasons by which we suspended them are worthy of keeping their funds forever.

[00:04:37] Leah: Well, and I think if you look at it the way most sellers are seeing it, like yes, it’s a lot, often it’s a lot of money to the seller, but you know, on the Amazon scheme of things, it probably isn’t that much of a line item. But the fact is we have seen this with so many accounts at this point, that that dollar amount of funds being held has gotta be pretty big. If you’re thinking that at least some of the ones we’ve seen are like a seven figure amount being held on one account. And we’re talking about many accounts that we’ve seen, and obviously we’re not seeing all of the cases of this happening.

[00:05:17] Chris: Right, of course. But between the numbers of people that came to us with six figures being held and some seven figures, a lot of the larger amounts, six figures and above, might be getting some of it back in arbitration, but anything under six figures. I had a lawyer say anything under 90,000, don’t pursue an arbitration. This is an attorney that does arbitration, by the way. 

[00:05:41] Leah: Right. I mean, you have to figure out the costs on your end as well, right? 

[00:05:44] Chris: So, But we’ve had people that are in six figures who didn’t even go after it. They gave up, and then of course, people at the lower amounts gave up. So all those people never go to arbitration, never get reinstated.

Maybe they didn’t manage their appeals process correctly. Maybe they could have been reinstated. Everyone who gets reinstated gets their funds, but as we know, a lot of sellers don’t know how to get themselves reinstated or their attorney told them, don’t pursue arbitration. So all those don’t even get adjudicated and Amazon keeps the funds. I mean, God only knows what that number is over the last two or three years. 

[00:06:19] Leah: Yeah, it has to be astronomical. And just from an accounting standpoint, I’m like, what is that line item called? 

[00:06:25] Chris: Other. I’m gonna say miscellaneous. But we now live in an age where sellers know much more, at least since 2020, about this antitrust investigation that’s been ongoing, not just on the federal level, on the state level as well. And sellers seem to understand that we’re not necessarily initiating those conversations, they initiate it with us. Because it was live on national television two years ago. So ever since then, this is commonplace and extremely well known.

 Sellers also know to approach the FTC and file complaints there. Because I think that traces back to the FTC investigating fake product reviews on the site, and then it just bled into other issues from there but that started five, six years ago. This idea of going to the FTC when you’re not getting your funds paid out is growing into these other things of approaching your State Attorney General because now everyone knows that state ags, depending on where you live, are creating their own independent antitrust investigations or have had their own investigations ongoing for a while.

If you’re looking at California, New York and Washington. I mean, they’ve had their own investigations publicly discussed and reported on in the media. So the game has changed. Amazon picked a really interesting time, I guess late 2019, early 2020, to start doing this because that coincided exactly with the uptick of interest and coverage and scrutiny of the antitrust investigations.

 So whoever’s deciding to keep everyone’s money, seller money, permanently held at Amazon. That person made a curious decision at a very interesting time. 

[00:08:10] Leah: Yeah, the timing was definitely like an interesting choice. Same as the pricing, the we won’t show your listing if you don’t lower your price.

They started doing that full scale at a very interesting point in the antitrust scrutiny. I’m not sure if that was, that could have been coincidental. Who knows? But just interesting timing. 

[00:08:30] Chris: Well, I think it’s intentional. I think they’re doubling down. Kind of like, if somebody like Elizabeth Warren puts out a tweet criticizing how Amazon does certain things, they double down, instead of saying, Hey, Senator would love to sit down with you. We think your staff or you misunderstand this. We can clarify this if you’re willing to approach us with questions instead of tweeting. That’s how most PR professionals I thought would handle stuff like this. Instead, they like retaliate with a double down message like you don’t understand small business in America. You’re a stupid senator. Go away. What are you doing? What are you saying? This I think is just the Amazon arrogance and the Amazon approach for antitrust, for public criticism in a lot of areas, any scrutiny of their business, right? Because they seem to be very disinterested in having the government try to break them up.

[00:09:21] Leah: Well, yeah. I mean, most companies are not interested in the government breaking them up.

[00:09:24] Chris: Right. I’m being sarcastic of course, but I’m saying they’re drawing the battle lines here. They don’t wanna wait and kick the can down the road and fight. 

[00:09:33] Leah: Yeah. And I guess it could also be like, well, if we start changing our behavior based on demands now, imagine what’ll happen in the future. So they’re just sticking to their guns no matter what. And sometimes, like you said, doubling down onthe interesting, possibly monopolistic behaviors. Alleged monopolistic behavior. 

[00:09:53] Chris: Right. I realize we drifted away from the original concept of why are you rejecting invoices you accepted a year ago, but this is part and parcel of how do you deal with a company that arbitrarily decides things, turns on a dime and then what do you do about it? Part of your solution is to figure out how you can draw attention to some of these practices, because they’re not really planning on stopping things unless they’re stopped. Or unless there’s public criticism or scrutiny. There aren’t congressional subcommittee investigations every day for every pricing issue. For every permanent funds hold. You know, we’re talking about macro, not micro here. But what matters to each seller is the micro, which is like, why are you keeping my money?

How do I get my money back? And what’s your justification for rejecting invoices you accepted yesterday, rejecting that today. You’re going to have to push them for explanations and pressure them. I mean, some people just go to the social media teams and Twitter. 

[00:10:59] Leah: Which is really kind of having diminishing returns as everybody starts doing that.

[00:11:04] Chris: Yeah. Right. And then to even go down another tangent, we don’t have time for, if Elon Musk concludes his purchase of Twitter, don’t forget Bezos and Musk are at each other’s throats in the space race. So if Musk thinks Twitter can be a good vehicle for criticizing Amazon and Amazon’s business practices and potential antitrust violations of Amazon. Maybe he’ll be tweaking the algorithm and bumping up those tweets so that they’re more visible. 

[00:11:32] Leah: That’s an interesting conspiracy theory. Well, that was a little further than I was expecting. 

[00:11:37] Chris: Conspiracy of the week. I just came up with that on the fly. I feel pretty smart right now. But no, I think public scrutiny is the only way that you’re going to get Amazon to come to the table and say, this is the percentage of accounts where we just keep the funds.

And these are our explanations for keeping the funds. We’re answering all of these sellers, they’re probably gonna show a lot of the messages that say nothing. You haven haven’t sent us sufficient information for us to disperse your funds.

[00:12:03] Leah: But it’s also one thing to not disperse funds because of like a confirmed counterfeit case, which I’m not fully on board with that either, but like that is one thing, right? But it’s another thing to accept proof of authenticity in advance and then suddenly change your mind on that proof and not give them money after they’ve already accepted it, before you sold it. Like those are two very different scenarios, right? 

[00:12:32] Chris: People are accused of counterfeit all the time on Amazon too. That word is starting to lose meaning because we work with private label brands who are accused of counterfeiting their own products and then their invoices get rejected for products that they have a manufacturer or a factory in China or wherever making for them, their invoices get rejected and their suppliers are are rejected as unverifiable too.

But brands, of course, are knocking off resellers constantly by making counterfeit complaints without test buys, which is the counterfeit without test buys even crazier in this context. And then Amazon says, Well, you’ve been accused of counterfeit and we see that you failed our authenticity review process, which we can’t tell you more about because that’s proprietary. 

[00:13:14] Leah: Right, but again, like you failed their authenticity review process after you passed their can you sell this product from the suppliers you have test. 

[00:13:23] Chris: And also they keep all funds. They don’t say we’re keeping funds for your sales of certain ASINs, not just the ASINs and those orders that we mentioned in your original suspension notification, which even if we’re willing to devil’s advocate, play along and say, Yeah, fine, keep some of the funds that should be restricted to the ASINs that they flagged as potentially infringing, potentially counterfeit.

 They keep all funds, they don’t disperse a nickel. So that’s even more of a favorable to Amazon process where they’re judging you. You know, but it’s not a democracy, right? They’re the judge, they’re the jury, they’re the executioner, right? So very confusing, very convoluted stuff from their side. No wonder sellers ask us so many questions about it. We know we took this conversation down a lot of. Interesting paths, but if you have any questions about this or if you’re going through any of this madness yourself, reach out to us because you’re probably at the point where you gotta come up with some creative thinking and some new strategies.

So we’re happy to help facilitate that. Thanks Leah. 

[00:14:35] Leah: Thanks Chris.

Hosts & Guests

Chris McCabe

Leah McHugh

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