Amazon.com’s response to two former sellers complaining about tied-up payments can be summed up as: We’ll see you in arbitration.
Seattle-based Amazon, in a 28-page document filed Friday in U.S. District Court in Seattle, asks Judge Marsha Pechman to move the case to arbitration.
The two sellers claimed in a lawsuit filed in March that Amazon refused to pay them for more than 90 days after it shuttered their accounts. They want full restitution of “monies wrongfully obtained,” plus interest and other unspecified damages.
In its response, Amazon noted that when the plaintiffs signed up to sell products on its website they agreed to arbitrate any disputes.
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Amazon also argued it had good reason to close down their accounts and withhold payments, but it did not respond to claims that its payment practices violate both state law and its own contract.
The suit, which seeks class-action status, says Amazon routinely holds sellers’ money longer than allowed to rack up interest and “reap many tens of millions of dollars annually.”
Amazon claims one of the plaintiffs, a Kentucky woman who advertised hard-to-find DVDs on Amazon, was banned because she sold counterfeit products. The other plaintiff, a Texas man who sold aviation books, encouraged sellers to participate in price-fixing and used “inappropriate and abusive” language in emails to the company, according to its filing.
Amazon says that while it withheld payments from each plaintiff, it did so to “cover potential chargebacks, refunds or returns to dissatisfied consumers.” It goes on to say that its actions were “entirely consistent with the agreements both Plaintiffs accepted and consistent with Amazon’s overarching commitment to customer satisfaction.”
Third-party sellers account for 40 percent of all products sold on Amazon and generate about 10 percent of the company’s annual revenue, according to analyst estimates.
When customers buy from a third-party seller, Amazon collects their money, takes a cut of 8 to 15 percent and deposits the rest into the seller’s account.
Amazon’s “Participation Agreement” gives it sole discretion to withhold payments for up to 90 days, but it often makes sellers wait even longer, the suit states.
What’s more, Amazon is a “money transmitter” and must disburse payments within 10 business days under Washington state law, according to the suit.
Amazon counters that it has the contractual right to freeze payments for the 90-day period or ”altogether” if it determines a seller account was used for fraud or illegal activity.
Still, Amazon’s response is not so much a legal defense of its payment practices as an argument in favor of moving the case to arbitration.
Plaintiffs lawyer Britton Monts, of Austin, Texas, said Amazon hopes to keep the proceedings out of the public eye and avoid a class action. He said he’ll file a motion opposing arbitration by a June 3 deadline.
Monts also dismissed Amazon’s allegations against plaintiffs Jo Ellen Peters and Ken Lane, saying Peters’ products were not counterfeit and Lane did not collude to raise prices. He added that Lane’s profane comments came after many “polite” attempts to resolve problems with Amazon.
“They bashed our clients,” Monts said. “It’s a cheap shot that really has nothing to do with the issues.”
An Amazon spokeswoman declined to comment beyond Friday’s filing. Amazon is represented by Davis Wright Tremaine in Seattle.
The suit follows a Seattle Times report in November about Amazon sellers who complained of tied-up payments and sudden shutdowns of their accounts.
The Washington state Attorney General’s Office received about 120 complaints in three years from Amazon sellers who accused the company of arbitrarily withholding their payments, The Times found.
Amy Martinez: 206-464-2923 or email@example.com. On Twitter: @amyemartinez