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Tuesday, May 28, 2024 | Back issues
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Class claims Amazon has sticky fingers

SEATTLE (CN) — Amazon.com reaps huge unjust profits by withholding payments due to online sellers longer than allowed by its own contract or by Washington law, a class action claims in Federal Court.
Lead plaintiffs Jo Ellen Peters and Ken Lane sued Amazon Services LLC.
Amazon makes sellers sign an agreement that payment will be made within 14 days, but "Amazon routinely holds funds beyond the contractual period, often well in excess of 90 days," the complaint states.
"Despite being a fiduciary and/or agent holding funds in trust in regard to the collection of payments from 'buyers,' defendant routinely holds payments for longer than permitted by its own Participation Agreement, and for longer than permitted by Washington law, before remitting the seller's portion of funds to the seller. In fact, the Participation Agreement, which Amazon holds out as providing the terms for payment, states a date for the transmission of payments that exceeds the time limit established by Washington law."
Amazon acts as a "money transmitter" for the plaintiff sellers and is required to transmit payments within 10 business days under the Washington Uniform Money Services Act (UMSA), the complaint states.
"The amounts of money Amazon holds in excess of the time allowed by law range from a few dollars to thousands of dollars. All the while, Amazon keeps the interest and other gains generated by the funds owed to plaintiffs and the Class and utilizes the available cash in its business. The scale of Amazon's practice makes it lucrative. Amazon.com, Inc. reportedly generated over $20 billion in third-party sales on its website in the fourth quarter of 2012 alone. On information and belief, the annual volume of third-party sales in 2012 equaled or exceeded Amazon.com, Inc.'s own sales of over $60 billion, which averages out to over $160 million in third-party sales per day, every day. By holding on to this daily cash flow for only a few days or weeks, Amazon is able to invest this money in money market funds, marketable securities and other investments, and utilize the cash as working capital in the operation of its business. On information and belief, Amazon has reaped and continues to reap many tens of millions of dollars annually from this practice."
The named plaintiffs claim their seller accounts were canceled and Amazon failed to remit money owed for more than 90 days.
Jo Ellen Peters sold DVDs on Amazon and her account was canceled less than a month after her first sale, she say in the complaint. She claims Amazon failed to timely transmit funds from her sales within 14 days, but when her account was suspended, Amazon held on to the money even longer.
"On November 7, 2012, Amazon notified plaintiff Peters by email that it had suspended her seller account. At that time, plaintiff Peters had already shipped several items sold on the Amazon.com website, and Amazon was in possession of the money received from the sales. Plaintiff Peters followed Amazon's policy and filed a written appeal of the suspension by email on November 8, 2012. Just one day later, on November 9, 2012, Amazon notified plaintiff Peters by email that Amazon had completed its review and investigation of the suspended account, and that its decision to close the account permanently was final. Contrary to the terms of the Participation Agreement, and in violation of the UMSA, Amazon continued to retain plaintiff Peters' money for 98 days from the date the account was first suspended," the complaint states.
Plaintiff Ken Lane began selling flight training materials on Amazon in 2010.
"After items were sold and shipped, Amazon routinely held Lane's money longer than the 14 days specified in the Participation Agreement and failed to transmit to him his money within 10 business days as required by the UMSA," according to the complaint.
Lane says his account was suspended on May 29, 2012 after he had shipped several items and Amazon had received money from the buyers. At the time the complaint was filed, Amazon still had Lane's money, he says.
The class consists of seller account holders who have shipped at least one item to at least one buyer on the Amazon website since March 15, 2009.
They seek specific performance, rescission, an injunction and accounting and damages for breach of contract and breach of fiduciary duty and violation of the Washington Consumer Protection Act.
They are represented by Beth Terrell with Terrell Marshall Daudt & Willie.

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