Amazon BSA Again Stricken as Unenforceable in Three Cases of Chinese Sellers Against Amazon

Global E-commerce & Seller Alliance (“GESA”), together with seller attorney, JS Law, a New York law firm, announced that three arbitrators sitting in three different states in arbitrations against Amazon.com (AMZN) have stricken section 2 of Amazon’s Business Solutions Agreement, which allows Amazon to hold funds indefinitely if they suspect the third-party seller sold inauthentic products, holding that it is not enforceable and ordered Amazon to release the third-party seller’s funds.

In an arbitration against Amazon.com, an ex-judge sitting as an arbitrator in Florida ruled that section 2 of the BSA imposed a penalty and was an unenforceable liquidated damages clause. The judge also ruled that failure to submit to an in-person video verification interview by Amazon was not a condition to release of the seller’s sales proceeds being held by Amazon, and that the seller was entitled to its sales proceeds notwithstanding the fact that it breached the BSA by committing review manipulation, which is against Amazon’s policies. The judge awarded the seller almost half a milion dollars in damages.

“This case is a landmark achievement, as it clearly distinguishes other cases in which arbitrators ruled erroneously in favor of Amazon,” said Julie Guo, the leading seller attorney in this case. “I commend my team for an excellent job on this case.”

On March 15, 2023, in another case against Amazon by a Chinese seller, an arbitrator sitting in Tennessee ruled that section 2 of the BSA was an unenforceable penalty clause in another review manipulation case. The arbitrator also struck the clause as unconscionable, and held that the seller was entitled to its proceeds notwithstanding its breach of the BSA. The award was for over $300,000 with interest from the date of account deactivation.

In the largest of the three cases, an arbitrator in Texas ordered Amazon to disburse almost $800,000 to a Chinese seller, ruling that Amazon breached its duties under the BSA to distribute the seller’s proceeds, that the verification of the seller’s identity in an in-person video verification procedure was not a condition to the release of those funds, and that section 2 of the BSA was not a valid liquidated damages clause.