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Chinese E-Commerce Sellers Sue Amazon and Amazon Payment Processors for Alleged Unfair Competition and Unlawful Conduct

by | Oct 1, 2021 | Greater China Practice, Litigation & Dispute Resolution

Chinese e-commerce sellers file class-action lawsuit accusing defendants of refusing to remit funds from seller accounts for incentivized reviews activity

LOS ANGELES – YK Law LLP has filed a class action lawsuit against Amazon and its various payment processor entities on behalf of Chinese e-commerce plaintiffs following the company’s recent ban and delisting of an estimated 50,000+ Amazon Marketplace seller accounts.

The lawsuit, titled Shenzhen Shileziyou Technologies Co. Ltd. et al. v., Inc. et al. Case No. 5:21-cv-07083-VKD, was filed in the U.S. District Court for the Northern District of California after Amazon suspended and terminated the plaintiffs’ seller accounts upon allegations that the plaintiffs had engaged in prohibited incentivized reviews activity.

The lawsuit alleges that Amazon routinely holds payments for longer than permitted by its own “Amazon Services Business Solutions Agreement” in violation of state laws and withholds funds without offering any reasonable justification and without any reasonable business purpose. The monies being withheld by Amazon range from several hundred dollars to hundreds of thousands of dollars. Amazon unconscionably retains “sole discretion” to determine whether or not any funds that are rightfully owed to Plaintiffs and members of the Proposed Class will be remitted.

“Amazon touts a “zero-tolerance” policy against incentivized reviews and punishes third-party sellers for engaging in such activity, yet Amazon hypocritically reaps enormous benefits and profits from this activity,” said Ed Chen, litigation partner of YK Law LLP’s Los Angeles office and attorney representing the plaintiffs and proposed class of e-retailers.  “Amazon now refuses to remit funds that are legally and rightfully owed and due to Plaintiffs and the proposed class members.”

According to the Shenzhen Cross-Border E-Commerce Association, at least 50,000 Chinese merchant accounts have been affected by Amazon’s actions since May 2021, estimating that Chinese cross-border e-commerce companies had suffered losses of more than 100 billion yuan ($15.4 billion), as reported by the Global Times.

Following Amazon’s decision, Shenzhen Municipal Bureau of Commerce convened an emergency meeting with 10 leading cross-border e-commerce enterprises to discuss the impact of Amazon’s suspension on local cross-border e-commerce, according to China’s Security Times.

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