New York Bill Could Give Amazon Sellers Two Weeks’ Notice Before Account Suspension

For many Amazon sellers, an account suspension can bring business operations to an abrupt halt. A seller may suddenly lose the ability to make sales, access inventory, or receive certain funds while trying to determine what went wrong and how to appeal. A proposed Amazon seller suspension law in New York could significantly change that process by requiring online marketplaces to provide third-party sellers with advance notice and an opportunity to address alleged violations before suspension.

New York Senate Bill S9546A and its Assembly counterpart, A10762A, would establish what the legislation calls a “fair and timely process” for suspending third-party sellers and seller profiles on online marketplaces. Most notably, the bills would generally require marketplaces to provide sellers with a two-week warning period before suspension.

You can follow the current status of the legislation on the New York State Senate website: S9546A and A10762A.

For Amazon sellers accustomed to navigating account health violations, appeals, and sudden deactivations, these proposed protections could be significant.

What Is New York's Proposed Amazon Seller Suspension Law?

New York Senate Bill S9546A and Assembly Bill A10762A would amend New York's General Business Law by creating a new Article 48 governing the suspension of third-party sellers and seller profiles by online marketplaces.

Although the legislation could have significant implications for Amazon, it is not limited to Amazon sellers.

The proposed law broadly defines an “online marketplace” as a consumer-directed electronic platform that allows third-party sellers or seller profiles to advertise, sell, receive payment for, store, ship, or deliver consumer products in New York. A third-party seller is generally defined as a person or entity independent of the marketplace that sells or offers consumer products through the platform.

The legislation also defines suspension broadly. A temporary or permanent loss of selling privileges could fall within the law when based on issues such as product quality or authenticity, intellectual property infringement, customer complaints, late shipments, cancellations, pricing or listing problems, account integrity issues, or customer service concerns.

These categories overlap considerably with the types of issues that can lead to enforcement actions against Amazon seller accounts.

Amazon Sellers Could Receive a Two-Week Warning Before Suspension

The centerpiece of the proposed Amazon seller suspension law is a two-week pre-suspension warning period.

Under the bills, an online marketplace generally could not suspend a covered third-party seller or seller profile without first providing this warning period. The two weeks would begin when the marketplace provides the seller with notice of the alleged violations.

During that period, the marketplace would have to provide reasonable documentation and details concerning the alleged violations being used to justify the suspension.

More importantly, the seller would have an opportunity to offer a defense or justification and to cure the alleged violations before the suspension occurs. The marketplace would also be required to provide a reasonable response to communications or outreach from the seller.

For third-party sellers, that could represent a substantial procedural change.

Instead of first learning the full consequences of an alleged violation after selling privileges have already been removed, a seller could have a defined period to investigate the issue, collect documents, correct problems, and respond to the marketplace.

The proposed legislation would even allow a marketplace to extend the warning period at its discretion when additional time could allow the seller to cure the violations and avoid suspension.

The Two-Week Warning Would Not Be Absolute

The proposed legislation does not prevent marketplaces from acting when they believe consumers face an imminent threat.

If an online marketplace reasonably believes that a seller is engaged in imminent illegal activity, fraud, deceit, misrepresentation, or similar deceptive practices with impending effects on consumers, the marketplace would be permitted to limit the seller's account capabilities during the two-week warning period.

This is an important distinction.

The bills would provide additional procedural protections to sellers, but they would not necessarily guarantee two weeks of unrestricted selling in every case. Marketplaces would retain the ability to restrict account capabilities when the circumstances described by the legislation are present.

Sellers Could Gain More Direct Communication With Marketplaces

Another potentially significant part of the proposed law concerns communication.

Under the bills, an online marketplace would have to designate a representative to work with a third-party seller or seller profile that is suspended or facing suspension. The representative would have to be within the marketplace's decision-making department for suspensions, and the seller would have to receive the representative's contact information.

The legislation further calls for that representative to maintain consistent, direct communication with the seller to work toward resolving the issue that led to the suspension.

For Amazon sellers, this provision could be particularly consequential.

Amazon currently directs sellers facing certain deactivations or policy violations to its Account Health system, where sellers may be required to submit an appeal, supporting documentation, acknowledgments, questionnaires, or other information depending on the violation. Amazon representatives have also directed sellers to Account Health Specialists for assistance with violations and appeals.

The New York proposal could establish additional legal requirements concerning how marketplaces communicate with sellers during the suspension process.

The Proposed Amazon Seller Suspension Law Would Create Appeal Protections

The legislation would also establish a right to appeal a marketplace suspension.

A suspended third-party seller or seller profile would be entitled to appeal the marketplace's determination in an effort to have the account reinstated. The bills state that the marketplace must acknowledge and reasonably respond to an appeal within one week of its submission.

If the marketplace ultimately decides to permanently suspend the seller, it would also have to provide documents and information concerning the alleged violations supporting that decision that had not previously been provided.

That documentation could subsequently be used in legal action or another dispute resolution process.

For sellers disputing the basis of a suspension, greater access to the evidence underlying a marketplace's decision could become an important part of evaluating their available options.

What Would Happen to a Seller's Inventory and Funds?

The proposed legislation goes beyond the suspension and appeal process.

S9546A and A10762A would prohibit an online marketplace from holding or seizing a suspended seller's consumer products when those products are unrelated to the violations that justified the suspension. Sellers would also have the right to recall products in the marketplace's possession that are unrelated to those alleged violations.

The bills contain a similar provision concerning seller funds.

An online marketplace would be prohibited from holding or seizing funds generated from sales of consumer products that are unrelated to the violations used to justify the suspension.

For marketplace businesses, these provisions could be just as important as the two-week warning requirement. Losing selling privileges is one problem. Losing access to inventory or revenue associated with otherwise unaffected products can create additional operational and cash-flow pressures for a suspended business.

Sellers Could Potentially Take Legal Action Against Marketplaces

The proposed law would also contain an enforcement mechanism.

A third-party seller or seller profile injured by a violation of the proposed Article 48 could bring an action against an online marketplace seeking to stop the unlawful practice, recover actual damages or $50—whichever is greater—or potentially pursue both forms of relief.

The consequences could increase for certain violations.

If a court determines that the marketplace willfully or knowingly violated the law, the court would have discretion to increase the damages award to as much as three times the seller's actual damages. A prevailing plaintiff could also potentially receive reasonable attorneys' fees.

If enacted, these provisions could give the proposed procedural requirements considerably more force than marketplace policies alone.

How Does This Compare With Existing Federal Marketplace Law?

The proposal also reflects a broader trend toward regulating the relationship between online marketplaces, third-party sellers, and consumers.

The federal INFORM Consumers Act, which took effect in 2023, already imposes certain requirements on online marketplaces involving high-volume third-party sellers. Among other things, covered marketplaces must collect and verify certain seller information and make certain seller information available to consumers.

The INFORM Consumers Act also contains its own notice requirement in certain circumstances. For example, a marketplace must notify a covered high-volume seller that fails to provide required information and give the seller 10 days to provide it before suspending future sales activity for that noncompliance.

The New York bills, however, address a different and potentially much broader issue: the procedures marketplaces use when suspending third-party sellers for alleged policy violations, performance issues, account integrity problems, intellectual property complaints, product authenticity issues, customer complaints, and other specified grounds.

Why This Could Be a Major Change for Amazon Sellers

For third-party sellers, an Amazon account is often much more than another sales channel. Inventory, advertising, fulfillment, customer relationships, and substantial amounts of revenue can depend on continued access to the marketplace.

That makes the timing of a suspension extremely important.

If enacted as currently written, New York's proposal could shift at least some suspension disputes from a primarily reactive process to a more preventative one. Instead of focusing exclusively on how to reinstate an account after selling privileges disappear, covered sellers could have a legally protected period to understand the accusations against them, gather supporting documentation, respond, and potentially cure the issue before suspension.

Consider an Amazon seller facing an authenticity complaint. Under the proposed framework, depending on the circumstances and application of the law, the seller could potentially receive documentation concerning the alleged violation and have an opportunity to produce invoices, supplier information, or other evidence before a suspension becomes effective.

Likewise, sellers facing customer complaints, listing problems, intellectual property allegations, or performance issues could potentially have an opportunity to address those problems before their entire selling account is suspended.

That does not mean every suspension could be prevented. It could, however, materially change when and how sellers are able to defend themselves.

Is the Two-Week Amazon Suspension Warning Law in Effect Yet?

No.

S9546A and A10762A are proposed legislation, and sellers should not currently assume that New York law guarantees them a two-week warning before an Amazon account suspension.

The bills themselves provide that, if enacted, the legislation would take effect on the 90th day after becoming law.

Until that happens, Amazon sellers should continue to monitor their Account Health, promptly address policy violations and complaints, maintain documentation concerning their products and supply chain, and respond carefully to requests for information from Amazon.

What Should Amazon Sellers Do Now?

Even though these protections are not yet law, the proposal highlights the importance of being prepared before an account problem develops.

Amazon sellers should regularly review their Account Health and promptly investigate new violations or complaints. Businesses should also maintain organized invoices, supplier records, authorization documents, testing records, product photographs, and other materials that may become relevant if Amazon questions product authenticity, condition, compliance, or sourcing.

A two-week warning period would provide sellers with more time, but that time would be considerably more useful if the seller already has the documents necessary to respond.

Sellers should also remember that marketplace suspensions can involve different legal and factual issues. An intellectual property complaint, authenticity allegation, performance violation, or suspected fraud issue may each require a different response.

A Potentially Significant Development for Marketplace Sellers

New York's proposed legislation could represent a meaningful change in the relationship between online marketplaces and the independent businesses that rely on them.

For Amazon sellers in particular, the possibility of receiving two weeks' notice, information about the allegations, an opportunity to cure problems, a more defined appeals process, direct communication with a marketplace representative, and protections for unrelated inventory and funds could fundamentally change how some account suspensions are handled.

The legislation has not yet become law, and its final language and application could change as it moves through the legislative process. Sellers should therefore continue following existing marketplace policies while monitoring the bills' progress.

For businesses whose operations depend heavily on Amazon or another online marketplace, however, S9546A and A10762A are legislation worth watching closely.

Stockman & Poropat, PLLC represents Amazon and e-commerce sellers in account suspensions, appeals, intellectual property disputes, and other marketplace-related matters. If your Amazon seller account has been suspended or you are facing an account health issue that could threaten your selling privileges, contact our firm to discuss your options.