Amazon Seller Arbitration | What Sellers Should Know

Hey current or aspiring Amazon sellers, did you know that when you start selling on Amazon you forfeit your right to sue the platform for any damages? That’s correct! You can’t file a lawsuit against Amazon if you’re a seller. What can you do? File an arbitration against Amazon. When filing arbitration against Amazon, you’ll have to do so with either Amazon’s Business Solutions Agreement (BSA) and/or the American Arbitration Association (AAA). Below, we will get into more detail about Amazon seller arbitration. 

The majority of Amazon arbitration claims center around: 

• Amazon seller account suspensions 
• Amazon withholding a seller’s funds
• Amazon Fulfillment lost a seller’s inventory 

Amazon permits sellers to settle legal disputes with Amazon itself. In doing so, one or more arbitrators will serve as judges and they will hear out the dispute. All parties will be able to submit evidence and provide arguments regarding the sought-after relief related to the legal dispute. What’s crucial to know is that any arbitration with Amazon is binding. To explain, binding arbitration refers to the agreement that any/all outcomes will be accepted and that going forward the parties can’t take further legal action!

Creating the Demand for Arbitration Document

When arbitrating a claim against Amazon, the company has to be notified of the dispute via the Demand for Arbitration. The nature of your dispute, as well as your belief of what the outcome ought to be, will be contained in that document. You’ll have to send a copy of the document to Amazon’s registered agent and file it with the AAA. The legal team at Amazon will review your claim and settle with you if they deem your demands reasonable. In the event that a settlement can’t be reached between a seller and Amazon’s legal team, it will be submitted to AAA arbitrators. Ultimately, if your legal dispute is heard by the AAA arbitrators, they’ll deliver a decision on the matter. The success of your dispute will largely depend on the way in which your Demand for Arbitration is drafted! 

Filing for arbitration with the AAA does come with certain costs and time commitments. For these reasons, AAA arbitration isn’t usually the first step Amazon sellers take. If a resolution can’t be achieved between a seller and Amazon’s legal team, an AAA arbitration may be required. 

Your Demand for Arbitration has to be filed with the AAA along with the required fee. The document should be as detailed and thorough as possible! The failure to include the precise details of your claim in the Demand for Arbitration could allow the arbitrator to deny the seller to address that claim later on. 

Did the Plan of Action Fail? How to Arbitrate Against Amazon

When drafting the Demand for Arbitration, sellers should work with an attorney on an analysis of the issue at hand. If you can, identify anything that Amazon blatantly did incorrectly, handled in an unfair manner, and/or determine any false accusations. 

Sometimes, sellers can address an account suspension with a Plan of Action, even before getting to the arbitration stage. It really depends on the particulars of your exact dispute/claim, but if you wish you can try and address the suspension with a Plan of Action, which you’ll send to Amazon’s Seller Performance. You can read all about the Amazon Plan of Action here!

Did you fail to resolve your dispute via a Plan of Action? Don’t throw that document away! Sellers can utilize their previously drafted Plan of Action as a foundation for creating the Demand for Arbitration. In essence, the necessity of arbitration is due to the failure of the Plan of Action. 

Where should you start? Begin with compiling the email correspondence you’ve had with Amazon. You may want to organize the correspondence according to date so as to establish a timeline to support your Demand for Arbitration. 

How Do Sellers Achieve Desired Outcomes When Arbitrating?

If the bulk of seller disputes lean on arbitration, how do you win when submitting an AAA arbitration against Amazon? As with many legal matters, you’ll benefit from retaining legal counsel, and working closely with your attorney to develop a legal strategy. Your lawyer can help draft the Demand for Arbitration, decide what arguments you’ll present to the AAA arbitrators, and more! 

The Cost of Filing for Arbitration | Enforcing/Challenging Decisions

What fees are associated with filing for arbitration with the AAA? The cost of the administrative fees are relative to the amount of the claim in question. The party who is bringing the claim (or counterclaim) will pay the administrative fees at the time of filing with the AAA. You can view the specifics of each fee schedule here. As a whole, there are two options available to Amazon sellers. 

• Standard Fee Schedule
  • This two-payment schedule has higher upfront filing fees, but lower costs for any case that leads to a hearing. 
• Flexible Fee Schedule
  • The AAA offers a three-payment schedule with lower filing fees and following payments that are paid as the arbitration continues. The total cost of the administrative fees with this schedule will be higher if the case goes to a hearing. 

Those sellers who do win their arbitration case have to ensure that Amazon complies with the decision of the arbitration. If Amazon doesn’t abide by the decision reached in the arbitration, you can have the award confirmed by a court in the correct jurisdiction. 

Sellers who wish to respond to the AAA arbitration by saying they disagree with the outcome can also challenge the decision in a court of law. A binding arbitration award may be challenged, on limited grounds, as permitted by the Federal Arbitration Act. But, prior to just going forth with legal action the seller who disagrees with the arbitration outcome can try to negotiate with Amazon’s legal team. Amazon may choose to engage in negotiation with a seller dissatisfied with the outcome instead of going to court. 

Still have questions about filing arbitration against Amazon? Contact our team at Stockman & Poropat, PLLC for a free consultation today!

Up next we will be discussing how Amazon Sued a Service Provider for Fraud and Trademark Infringement.