Third-Party Sellers Files Mass Arbitration Against Amazon with American Arbitration Association

In or around January 2024, nearly 200 third-party sellers filed mass arbitration against Amazon with American Arbitration Association (“AAA”). According to an article from Seattle Times, Amazon blocked over 55,000 third-party sellers’ accounts in 2021 per Section 3 of Amazon Services Business Solutions Agreement (“BSA”)  and seized the entire sales proceeds in the seller accounts per Section 2, totaling millions or even billions of dollars.

To increase the judicial costs and efforts to thwart these thousands of sellers’ access to judicial remedies, Amazon includes a class action waiver provision in Section 18 of Amazon’s BSA- a mandatory arbitration clause. Each seller has to adhere to Amazon’s BSA including the class-action waiver provision, when registering a seller account on Amazon.com to access the world’s largest online retail marketplace. Through the class-action waiver provision, Amazon compelled each of these thousands of sellers to file an arbitration with AAA on an individual case basis. In the past three years since the mass seller account blocking by Amazon in 2021,

Not only does Amazon include an unconscionable class action waiver provision in the mandatory arbitration clause, Section 18 of its BSA, but Amazon also includes unconscionable expedited procedure restriction provisions in its BSA to drive the judicial cost and effort higher, burdening the small sellers and the courts. AAA Commercial Rule E-2 allows any case with a claim amount below 100,000 dollars to be administered under AAA expedited procedure, under which the case can be concluded within six months at the arbitration cost of $3000 or so. In Section 18 of its BSA, Amazon violated the AAA rules, reducing the cap amount for the application of expedited procedure from $100,000 to $50,000.

These 200 sellers are some of these 55,000 sellers, which are compelled to file an arbitration demand against Amazon with AAA on an individual case basis, per the mandatory arbitration clause and class action waiver provision in Section 18 of Amazon’ s BSA.

Also, after nearly hundreds of small sellers capped their claim amount below $50,000 and filed individual arbitration a few months ago, Amazon filed a frivolous and baseless counterclaim against almost each seller case, requesting all the small seller cases to be administered under AAA regular procedure, which cost the small sellers over 12 months and $30,000 of arbitration cost to conclude the case; however, for many sellers, the claim amount is only $30,000 or less. These hundreds of sellers have no option, soon they have to file their case with the courts, seeking judicial intervention, which would further increase the small sellers’ litigation cost and also cause a huge caseload burden for the courts.

These sellers are represented by JS Law and one of the largest US law firm Winston. GESA is standing with both firms to support sellers to fight against Amazon for their right to access to judicial remedies.