The online retailer spent 18 months և $ 200,000 in legal fees Amazon fighting Amazon.com after ousting him from the shopping mall and seizing his inventory. In the end, he received half of the $ 1.4 million in compensation. But he got what few of his colleagues ever do. A confession that the world’s largest online retailer has treated him unfairly.
According to arbitration documents examined by Bloomberg, Amazon suspended the seller’s account after he suspected of selling counterfeit electronics. The company then confiscated $ 80,000 50 50,000 items stored in its warehouses.
The merchant, who provided the documents on condition of anonymity, asked for his money and goods back, but Amazon ignored him. He could not sue because, like all other Amazon sellers, he agreed to arbitration as a condition of sale on the platform.
After reviewing the contracts, interviewing witnesses and reading legal arguments, in November, broker Peter Brown awarded the seller $ 775,000. Brown ruled that Amazon had plenty of reason to suspect the merchant, and that it had jurisdiction to suspend its account. But he said the company went too far, ghosting the seller and holding back its products, including many who have no suspicion of being counterfeit.
“Given Amazon’s vast resources,” Brown wrote, “I hope that in the future it will direct the resources it needs to treat all its vendors in a respectful, proper manner.”
The case takes a rare look at an arbitration process that lawmakers and regulators say they prefer Amazon, discouraging sellers who do not have the money, time or energy to take over the company.
A report released last year by the House Judiciary Committee examining the power of large tech companies shows that from 2014 to 2019, only 163 million merchants on Amazon filed arbitration lawsuits against the company. A bill that would end forced arbitration has been plagued by the Senate since 2019, with advocates hoping that the testimony of Amazon merchants will give it new impetus.
Amazon declined to comment, citing its response to questions from members of the House Judiciary Committee in 2019. In that testimony, the company said that most of the sellers’ complaints were resolved amicably, that if the seller decides to initiate arbitration proceedings, “Amazon will continue to work with that seller to try to negotiate a mutually agreed resolution.”
The original purpose of the Federal Arbitration Act of 1926 was to provide a cheaper, quicker alternative to resolving business disputes than blocking public courts. Decades later, U.S. Supreme Court rulings allowed arbitration to be extended to day-to-day transactions.
Before consumers rent a car or receive a mobile service, they are often asked to enter into contracts in which they relinquish their right to sue and agree to settle any dispute through arbitration. Some companies are demanding that new employees agree not to appeal as a working condition, a practice that can allow sexual assailants to remain in wages until their victims take refuge or leave.
In a 2013 case involving the American Express և Oakland restaurant, the Supreme Court ruled that larger businesses could force smaller partners into expensive arbitration, even if few could afford it. “It never ceases to amaze me how much the courts want to prepare people for arbitration, even when it comes to large terrorist corporations against small business,” said Catherine Stone, a professor of law at the University of California, Los Angeles.
Stone says lawmakers are finally waking up to the antitrust implications of large companies that use arbitrage to gain an unfair advantage over smaller companies. “Arbitration is a way for Amazon to keep disputes under its control, the scales of which are largely skewed in its favor,” said a report by the House Judiciary Committee. “As such, Amazon can withhold payments from sellers, suspend their accounts for no apparent reason, and engage in other acts of violence without any legal action.”
Amazon has no incentive to change its approach, although they often do not interact with attorneys, retired judges, who advocate for mediation litigation. When merchants dominate, the arbitrator’s decision does not set a legal precedent, so Amazon can do the same thing over and over again, knowing that many merchants will not be challenged.
“It’s very expensive, time-consuming, and most small businesses have no money or time,” said Mario Simonyan, a Burbank attorney in California. He says most customers decide not to sue Amazon because they usually cost $ 80,000.
One of the potential solutions is the passage of a suspended Arbitrage Injustice Act, which will pave the way for Amazon sellers to file class-action lawsuits against the company. Jacob Weiss, a household goods trader who supports the legislation, testified before the House Committee in February. He told lawmakers that despite spending $ 50,000 on arbitration against Amazon, he was unable to recoup his losses. Weiss said the second case was delayed for nine months without a solution.
The anonymous merchant who won his case is not waiting for a new law. He paid off the debts with an arbitral award, hoping to start a new business “as much as I can find from Amazon”. His offer. “Publish the final judgments so that the other arbitrators can review them. Amazon will not lose the argument today; it will make the same argument tomorrow with another arbitrator.”