Using Consumer Arbitration with Amazon

Disclaimer:  Arbitration is not for everyone.  It is possible that Amazon may retaliate against those who file arbitration against them.  While easily identifiable retaliation will cause Amazon legal headaches, retaliation can come in more subtle ways that are hard/impossible to prove. For these reasons, arbitration against Amazon for active sellers may be a last case scenario (For example, someone who has been permanently suspended).

A bit of introduction: Alexender Bachuwa is a lawyer who has experience in consumer arbitration.  He writes a column for Frequent Miler called The Fine Print.  While Alex is a lawyer, the following is not legal advice.  Anyone who requires further information can contact Alex at his website.

Overview

As a points enthusiast and travel blogger, I am constantly seeking the most efficient strategies to accrue points. I learned about reselling from this and other blogs and was intrigued. That excitement quickly faded as I realized how much work it takes to be successful in this arena. As readers of this blog know, reselling is often a full-time job that can be both demanding and grueling. It is not for the lazy and it is not for those looking to get rich quick. On the other hand, those successful at mastering the art of reselling can earn a decent living. My appreciation for those engaged in reselling prompted my outrage when I learned of the number of complaints against Amazon, the reseller’s most used marketplace. 

Complaints

The typical complaints against Amazon include the following:

1) Items lost or damaged in shipment to Amazon.  Resellers send in 10 units but Amazon’s accounting only shows 5. Amazon reimburses the reseller only after the seller asks.

2) Items lost or damaged in Amazon fulfillment centers or damaged via carrier. Most of the time will not reimburse you until you ask. 

3) Reimbursements are less than it should be. Sometimes Amazon will give you something standardized for a category, like $25 for an Apple watch.  Other times it is just less than it should be based on current sales price and/or sales history. You usually will get a higher reimbursement if you appeal

4) Accepting returns that violate return policies. It is one thing when Amazon does this with its own money, but it is entirely another to do it when Amazon is taking away from the seller’s money.  For example, accepting returns after 30 days or when there is no UPC is a typical complaint.

Fighting Back

a.    Audit Companies: Many resellers have no choice but to hire audit companies to hold Amazon accountable for its actions. These companies charge steep monthly fees or a percentage of recovery to remedy problems that should not occur in the first place. For sellers facing significant losses, these fees are chalked up as a necessary business expense. It should not come as a surprise that Amazon is looking to ban resellers who employee the service of these firms.

b.    Consumer arbitration: For those that read The Fine Print on Frequent Miler, you know that I am a big proponent of consumer arbitration. Consumer arbitration was invented by powerful corporations in order to put an end to costly class-action lawsuits. For that reason, many consumers have doubts as to the efficacy of the process. Those doubts are misguided. I have successfully filed claims against Citi, Dell, eBay, among others (see Case Results) using consumer arbitration as the mechanism to seek relief.

The Amazon Consumer Arbitration Clause 

Amazon has a consumer arbitration provision that reads as follows:

Any dispute relating in any way to your use of this or any other Amazon Services will be resolved by binding arbitration as described in this “Disputes” section, rather than in court. An arbitrator can award on an individual basis the same damages and relief as a court (including injunctive and declaratory relief or statutory damages), and must follow the provisions of these Terms of Use as a court would. 

Payment of all filing, administration and arbitrator fees will be governed by the AAA's rules. We will reimburse those fees for claims totaling less than $10,000 unless the arbitrator determines the claims are frivolous. Likewise, Amazon will not seek attorneys' fees and costs from you in arbitration unless the arbitrator determines the claims are frivolous.

The key takeaways from this clause is that Amazon will cover the expenses of the process and that the consumer can seek the same relief as he or she would in court.

The Solution

If you are a consumer whose livelihood depends on your reselling business or if you are consumer who casually resells to earn points, you have a right to hold Amazon accountable. And the way to do so is by filing a complaint in consumer arbitration.