Washington arbitrator awards Amazon third-party seller more than $220,000 plus interest, overturning Amazon’s controversial permanent withholding tax provision
“This is the sixth case this year and the third this month in which we have defeated Amazon’s unenforceable permanent withholding tax provision,”
Amazon Sellers Attorney, the attorney-supervised suspension appeals service, today announced that a Washington arbitrator and a New York arbitrator have again challenged the controversial permanent withholding in Section 2 of the Amazon Business Solutions Agreement (BSA). The tax provision, which allows Amazon to permanently withhold taxes on any funds from a seller if Amazon determines that the seller’s account has been used for illegal or fraudulent activity, or has repeatedly violated Amazon’s policies, was challenged.
“This is the sixth case this year and the third this month that we have won against Amazon’s unenforceable permanent withholding tax provision,” said Kenneth Eade, an attorney for the plaintiffs in the case.
The arbitrator ruled that Amazon failed to prove that the seller violated its policies; and that it did not act in good faith by suspending the seller’s account and retaining all funds in the account. He ruled that Amazon violated the contract by failing to notify sellers of specific policies that were allegedly violated and by withholding funds from sellers.
Like the other five arbitration awards Mr. Eade has obtained against Amazon this year, the arbitrator ruled that Section 2 of the BSA was an unenforceable penalty rather than a valid liquidated damages provision, noting that “there is no evidence that the parties believed that the balance in the seller’s account can serve as a reasonable prediction of losses from a seller’s breach of contract, but they are unreasonable to do so. A seller’s account balance changes based on sales volume and is independent of any damage to Amazon. Additionally, Amazon can increase the amount of damage caused to Amazon by setting the maximum balance in the account. issue suspension notices to manipulate sellers’ balances.”
Eade has won five other cases against Amazon this year, with Article 2 being ruled an unenforceable liquidated damages clause in all five cases. In two of the cases, arbitrators ruled that Amazon’s in-person verification (IPI) was not a condition for releasing seller funds. One of the cases ruled that Section 2 of the BSA was also unreasonable.
“The first such case I came across was in 2021, where an arbitrator overturned Amazon’s funds withholding clause. In that case, the arbitrator also held that the clause was unenforceable as a liquidated damages clause and was unreasonable. “Eade said. “Unfortunately, arbitration proceedings can lead to non-precedentary decisions because arbitral awards are private and rarely set aside by the courts,” he added.
About Amazon Seller Lawyers
AMZ Sellers Attorney® is an attorney-supervised appeals service of Amazon that serves third-party sellers around the world in resolving Amazon seller account suspensions and product deactivations through its website at www.amazonsellers.attorney. The company provides 24-hour customer service via live chat, phone and email, as well as free appeals consultation. Its current supervising attorney, Kenneth Eade, represented the sellers after they lost their appeals to have their Amazon seller accounts reinstated and their sales revenue restored.
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