Handling Legal Issues on Amazon

Handling Legal Problems on Amazon

1. Actions by Amazon competitors
   1. Describe the problem
   2. Specific types of problems
      1. False infringement notices
      2. False re-categorization
      3. Hijacking listings
   3. How to handle them
      1. Demand letters
      2. Litigation
         1. Types of claims
            1. Abuse of the DMCA
            2. Tortious interference
            3. Unfair competition/deceptive trade practices
2. Actions involving Amazon
   1. Describe the problem
   2. Specific types of problems
      1. Suspensions
      2. Terminations
      3. IP infringement
   3. How to handle them
      1. Arbitration under BSA
      2. Litigation for IP claims

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Intro:

This is May It Please The Internet Podcast brought to you by Revision Legal, lawyers who represent businesses that make money online.

John:

Hi everyone. This is the May It Please The Internet Podcast. This is John Di Giacomo and I’m joined by Eric Misterovich. Eric, how are you?

Eric:

I’m doing great, John. How are you?

John:

I’m pretty good. And today we’re going to talk about handling legal problems on Amazon. Amazon is one of the biggest platforms in the world. A lot of our clients are selling on it. Legal problems are a continual issue on the platform and I’m excited to talk about this today. Now, let’s start Eric with Amazon attacks from competitors. So, I’ll set the scene. You’re a seller on Amazon. You’ve got that coveted buy box, you’ve got the best seller badge, and you’re just killing it on Amazon. And all of a sudden, a competitor decides that they’re going to submit a false claim of infringement or take some other nefarious action against you. What do you see Eric? And what do we do about it?

Eric:

First, you panic, start swearing and screaming, and trying to figure out what the hell to do. A lot of times that’s when we get the call of where shit has hit the fan and you’re trying to get something resolved as quick as possible. I think the real answer instead of what do you do right away is you try to figure out what the hell is going on. And unfortunately that is much more difficult than you would think. Many times these kinds of complaints are issued, enforcement action is taken, and you don’t really know why. There’s not a good explanation. There’s very vague or no details provided at all. And you are scouring your competitors trying to determine who is up to no good. And that’s usually the first step is taking inventory of what the heck is going on, who’s behind it, and trying to beat down Amazon’s door to get an answer.

John:

Yeah, it’s hard to overemphasize the chaos that comes with that first notice because for example, we had a client last week receive a notice of claimed infringement, a copyright notice. Our client was legitimately sourcing the goods and he had no idea where it came from. Low and behold, it was the producer of the goods and they just didn’t know that our client was an authorized seller or reseller of those products. And it’s three days of chaos like okay, number one, my listing’s down, I’m not making money. And for a lot of Amazon sellers that’s a huge problem because it’s a lot of money on a daily basis. And then two, Amazon Seller Central Help isn’t the greatest, so to say the least. So, you have this issue where you ask for more information and you get it six months later or the information that is provided is not always accurate, complete, or relevant to the notice that’s been provided.

Sometimes they will characterize a copyright notice as a trademark notice and sometimes the other way around. It is scary like you said and it is important to take a deep breath, reassess, determine the source of the issue, then proceed accordingly. And there are some common sources of false notices or specific types of problems that we see within the platform. One of which is false infringement notices. I kind of mentioned that Eric, but tell us more about when you see false infringement notices.

Eric:

Generally these are coming from overseas, from competitors that are out for blood, and they can submit false copyright, false trademark, false patent complaints to Amazon. Whatever Amazon’s algorithm is going to do with that, it’s going to do. And a lot of times these claims will have no merit whatsoever, but copyright is particularly difficult because even if Amazon was going to go check a database to confirm something, which they’re not, copyright’s difficult. Things are subject to copyright without registration. There’s not a really friendly database to search in order to find copyrights and who owns them and what they are. So, there’s a lot of room and wiggle room for bad actors to take advantage of. And they certainly do it by saying, I own this picture. They copied my text. This video is mine or getting into trademark and saying, they’re essentially selling a brand they’re not authorized to sell.

John:

Yeah, we’ve had some real bullshit copyright claims like claiming that they own the text surrounding a description of a product where they’re describing the color of the product or what it does. And unfortunately, because of the way that the service provider rules work, Amazon’s incentive is typically to remove the listing that is being complained of because if it doesn’t, it is itself subject to potentially a copyright infringement claim. So, it results in this horrific scenario where there is a non actionable or marginally actionable claim that results in the removal of listing when in reality it shouldn’t have. In some other areas-

Eric:

Yeah, I did find one new problem that came up recently, which it wasn’t an IP claim but it was this other kind of bad act where someone had created some kind of script to create hundreds of fake Amazon accounts and then place individual orders. So, the client called saying, well we had 5,000 more orders than we normally have and they went in and looked at it and everything was from a unique customer, but it all came within like five minutes of time. And half of the orders had already been fulfilled. And then you run into this huge problem of what do we do with the rest? Can we even stop them? Should we stop them? Seemingly the plan was to discredit the seller, hurt their rankings within Amazon, have a bunch of returns, and other kinds of complaints. And it was yeah, I guess I need to follow up and see how that all worked out because I only heard the initial panic, but it was an interesting one that I had not heard before.

John:

Yeah, that’s really interesting. So, the concern is that somebody’s buying too much because Amazon flags all kinds of things. I mean, they flag when you have a related account with a similar phone number or you’ve logged in from a similar IP address to multiple accounts. So, I could see a scenario where they’d suspend you because there are too many orders at one time. I’ve seen that in triage scenarios where they are… Is it triage? No, arbitrage. Triage. Arbitrage scenario, sorry, where somebody’s buying a product from another source but they’re selling on Amazon. And there’s a connection between the two sources. I wonder if that’s what’s going on but that is an interesting one and a new one. Another one that I’ve seen is a false re-categorization, where we had a client that had a product that looked marginally like a adult product. I’ll just leave it at that.

But it wasn’t, it was very clearly not an adult product and a competitor attempted to have it re-categorized as an adult product because there are additional conditions and things that apply to adult products on Amazon that would make it less of a valuable ASIN or less valuable of a listing. So, they were trying to push them off of the buy box that way and that’s interesting. And then hijacking listings. I mean, we’ve seen people get their listings hijacked, false products. We’ve seen counterfeit products going into bins, creating problems like you said because they can affect your review score. All these things are problems that we’ve seen in the past and that are going to be experienced with large volume selling. Now, how do we handle these issues, Eric? What are the steps that we take when we have been notified by a client that they’re experiencing one of these crazy issues on Amazon? How do we advise them? What do we tell them to do next?

Eric:

You want to go and attack all fronts possible. So, that first means be the squeaky wheel with Amazon, do not relent and keep on them. Not just to build a paper trail of what happened, pleading your case, and making it clear, like something is wrong here. And to put them on notice as much as you can and to try to get answers because we all know that’s difficult. But outside of Amazon blessing your dispute and resolving it, you’re left to deal with these third parties and sometimes you have to deal with them even in addition to Amazon because you need action. Now, anytime someone is doing something that you don’t agree with, you’re either going to put them on notice of it through some kind of demand letter where you say, Hey, stop doing X, Y, and Z or you’re going to sue them.

Oftentimes in these kinds of cases, you’re dealing with potentially overseas sellers. You’re dealing with people that they’re willing to take that risk of being sued because they may not have many US based assets. And sometimes it’s necessary to pull the trigger and to file that lawsuit against them because it’s really a last resort. I mean, we sue people, pretty busy litigation practice. Litigation’s not something that’s enjoyable for most clients. It’s not what you do on a normal basis. It’s expensive, long, it’s slow, but you can get really quick action in certain types of events. And this is one of them, but you do have to pull that trigger and go into court. And the interesting thing about how a lot of the work that we do is we get to work in this really unique environment of doing business online and all the variances that come with it. But then the legal claims, a lot of them end up being rather old school legal claims that you end up bringing.

John:

Yeah, absolutely. And in the case of the false copyright infringement claim, there is a section under the Digital Millennium Copyright Act that allows you to provide a counter notice. So, you provide a counter notification and if a lawsuit is not filed within 10 days, then the listing must be reinstated. But there’s also this remedy that allows you to complain to a court about the abuse of that process. So, if somebody files a terrible copyright claim, that notice of infringement for a terrible copyright claim, you have the ability to file under the section of the DMCA that deals with abuse of notices and seek damages, cost, and attorney’s fees. And so, we’ve done in the past where a Amazon seller had received a copyright claim that was not valid. We had to file a lawsuit and we used that cause of action as one of the many that we asserted in that case. Others are more traditional causes of action, like tortious interference, either with contractual relations or with business relations.

These are claims that are complaining about the third party’s interference in either your perspective business relations, so the relationship between you and those who would want to buy from you. Or those who have a contractual relationship with you, and in some cases it might be either Amazon’s contractual relationship with you under the BSA, the Business Selling Agreement or your contractual relationship with your individual consumers. So yeah, there’s more traditional claims that go into play here but they are tried and true and these are things that we’ve had to litigate on many occasions. And there are other types of issues that arise on Amazon outside of these third party attacks, they come from the platform itself. Eric, what are the problems that you see when dealing with Amazon? We talked a bit about how arbitrary the process is, at least it fuels arbitrary from our end in a lot of cases. But what are the things that you see that result in risk to sellers on the platform?

Eric:

A lot of it does follow into the same category of IP issues, certain texts for example, making health claims can really cause some problems within Amazon’s algorithm. They also have very technical roles about text and a main product image. Technically you’re not supposed to do that, although a lot of people do. The rules within Amazon and this is something that comes up all the time when we’re helping sell Amazon businesses is we have to help buyers and sellers understand what happened within a certain account and how many times have they been dinged or suspended or whatever. There’s all kinds of technical issues that can come up. There can be more substantive issues like they believe you’re faking reviews or there’s some kind of compensation for reviews, where Amazon’s going to take some action itself against you. And one of the main problems with this is again, a lot of times you’re kind of guessing at what did you do wrong?

And you’re expected to provide some sort of response or plan of action back to Amazon as to why you’re not going to make that mistake again, in which it seems to be the general consensus as you lay your heart on the floor, admit to everything that you think you did wrong, and hope that was enough, which is never really a great feeling to have to tell a client. This is where we’re at with your very valuable Amazon businesses. We’re kind of guessing at what they think you did wrong. A lot of times sellers have some sense of what it could be but these problems range, they can go from really technical to really blatant and then you’re left pleading your case with Amazon.

John:

Yeah, the plan of action reminds me of confession. We’re both Catholic school kids and the idea of forgive me, Jeff Bezos for I have sinned. It’s been six months since my last plan of action. It is very much a open your clothing and take your punishment, regardless of whether the merits exist.

Eric:

Yeah, explaining confession to non-Catholics is always a fun thing to do. It’s such a strange experience but yeah, that’s a really good comparison.

John:

And suspensions and terminations and all these things, they are slightly arbitrary. But the thing that I think most sellers don’t understand is that you exist at the will of Amazon. So, the idea of the confessional, the plan of action is really important because Amazon can terminate their relationship with you at any time and for any reason. And we have seen in attempting to remedy these issues, their willingness to do that. So, if they don’t want to do business with you, they will tell you and they will choose not to. And one of the remedies for a suspension or a termination or a suspension as a result of an IP infringement claim is to file an arbitration proceeding under the BSA. And the BSA is the seller agreement between you and Amazon. It has a very distinct arbitration provision in there that says that almost all claims arising out of your use of that account will be settled and resolved by arbitration, except for IP claims, which will be subject to litigation.

And we’ve gone through arbitration with a number of clients and unfortunately we’ve gotten to the end of arbitration and we have seen that Amazon, even though our client was successful and prevailed has chosen not to do business with them even after arbitration. So, as we look at these potential remedies for suspensions and terminations, there’s a real analysis and a real calculation that has to go into it as to whether or not it makes sense to file for arbitration because it really is a last resort because you are really operating at the joint pleasure of Amazon.

Eric:

No seller really wants to sue Amazon or get into arbitration with Amazon. It’s not a great result, but sometimes it’s necessary. You’re right it very well could spell the end of your relationship with Amazon. So, it’s not great but these internal problems that come with Amazon in my mind, they happen, certainly things can go wrong, but it’s those third party infringers that I think are playing by a different set of rules that I just want to get the message across that you’re not helpless. I think we’re kind of doom and gloom here a little bit that it’s really hard. They are playing by different rules. They don’t care. They’re willing to take risks and just outright lie and be these bad guys.

But the litigation things that we’ve talked about, they’re real and there are ways to shut these people down and to seize some of their money that’s held within Amazon. You’re not helpless with Amazon. If you’re really just violating their rules over and over again, and they’re not paying you out, now you have to arbitrate, it’s not a great position. But if you’re a successful store and you have these third parties that are messing with you, there really are options that can be successful to fight back. Yeah, I just want to make sure people understand that because Amazon is tough. It’s tough to deal with these overseas bad actors, but it’s possible.

John:

Yeah, that’s a great point. And even when dealing with Amazon directly, their attorneys aren’t saying we want to cut off every person from the marketplace and we don’t care whether we do business with you. It’s more a question of risk. Like you said, if you came into arbitration with unclean hands and you’d been selling years of IP infringing goods, you’re going to have a really hard time keeping your account open, even if you prevail in arbitration. But we’ve had clients who have been legitimate sellers who have lost substantial amounts of money. Amazon has sent their products to liquidation for some arbitrary reason and they’ve prevailed. And Amazon has said, look we’ve made a mistake. We’re going to reinstate you and the suspension that we had initiated is now terminated.

So yeah, I agree. I think that the takeaway should not be that there’s no options. There are certainly options, but that is something that you should be speaking with an attorney about to understand what those options are in light of the history that you have within your account. And there’s another thing that I wanted to talk about Eric, and that is these people who offer suspension lifts or we can have your Amazon account reinstated and all this stuff. What’s your take on these services, the non-attorney services that claim to be able to do this?

Eric:

Some of them, even are attorneys. I think they’re mainly selling forms that you’re not really getting a lot of one on one specific advice, that you are getting a mass produced product that certainly has no guarantee of promising probably what they’re saying it will deliver. And that oftentimes these services, you’re going to be disappointed with what you get. I mean, it comes down to in a similar kind of vein when we’re talking about trademarks and you’re going to these bottom of the barrel low cost services, you’re going to get what you pay for.

And anytime I talk about professional services, one thing I always say is a lot of times professional services should cost too much and you should probably not like what you hear from them. Those two things are true. You probably are dealing with someone who knows what they’re doing because if it costs nothing and they’re just saying, yes, yes, yes. I promise you at one point, they’re going to say, well, I didn’t promise and eventually it’s going to be no. You should pay money to get real frank advice and these kind of forms and templates that are just handed out to you off the shelf, I just can’t see how they’re going to really get the job done.

John:

Yeah, that’s great advice. And that’s much more diplomatic than I would’ve said it. And I think my answer is its complete bullshit. It is if you see a Filipino VA, not that Filipino VAs are bad. They’re great. But if somebody is running an Amazon Reinstatement Program and gets assigned a VA, a virtual assistant, run for the hills because this is not a game to be playing. Unless your account is worth $3,000, you should be taking this seriously and talking to somebody with experience in this space and that understands the options, not just from a form filling or a paper pushing standpoint, but from litigation and experience with Amazon’s outside council and in-house council and understanding of the platform.

The idea that somebody can promise you to lift a suspension is bullshit. It is fundamental bullshit. Do not believe it. And I want to make sure that consumers understand that because it’s just not the way that the game works. There are no free lunches in the world. It takes work. It takes good advice. And you should really be talking to somebody who isn’t trying to sell you a load of bullshit. Anything else you think we should cover here, Eric?

Eric:

No, that covers it. I think on Amazon, it’s tricky but if you have those bad actors that are consistently coming after you or you’re just consistently seeing shady actions, fake reviews that are full of health dangers on your products, and then you’re watching other people who have every review they have has a picture or a video in it, which is completely unlikely, things start to add up. We like taking on these kinds of cases. There can be some real big successes for the right set of facts. So, fight the good fight. Don’t give up and don’t let these as bad guys win.

John:

Absolutely. We do love these cases and feel free to give us a call. If you’ve got one of them, we love to talk through them and we’re here for you. Well thanks, Eric. This has been very helpful. And again, this is the Revision Legal, May It Please The Internet Podcast and we will see you next time.