Amazon suspends sellers for inauthentic, sells their “fake” goods to the public

Does Amazon really believe 3P sellers offered bad products, or is it trying to make a quick buck?

Is Amazon liquidation safe? Unsuspecting members of the public are buying goods Amazon labeled as “inauthentic” or in violation of a brand’s intellectual property (IP). In similar fashion, third-party sellers who purchase liquidation lots from Amazon’s warehouses are buying stock fraught with authenticity and IP problems.

This shocking strategy reasonably upsets veteran Amazon 3P sellers. In essence, Amazon either suspends their products (ASINs) or even their selling accounts. Then, the company refuses to return inventory if it has been characterized as counterfeit, an intellectual property violation, or inauthentic.

But what happens to the goods then?

To dispose or not dispose

In cases of counterfeit (or accused counterfeit) goods, Amazon destroys the goods. This is a legal requirement that is likely followed to the letter.

But then there are the rest of the goods. Imagine a third-party seller is listing perfume for sale. A buyer says that the perfume doesn’t “smell like she remembered this brand smelling” and complains that the item must be inauthentic. Amazon suspends the seller’s ASIN and asks for proof that the products are authentic – in the form of invoices.

The seller submits the invoices – real ones – to Amazon. For whatever reason, Amazon will no accept the invoices. They tell the seller no dice, you cannot sell that ASIN again, and we are going to dispose of it.

But then, Amazon does not dispose of the item. Rather, they put it up for sale on their Amazon Warehouse Deals account.

Shocking? Absolutely. After all, Amazon’s own in-house risk management team decided the goods could not be confirmed as authentic. Yet Amazon seizes them and sells them on its own 3P account. At what point does this become both theft from the seller and/or fraudulent behavior on the part of Amazon? It certainly shows cognitive dissonance and corporate schizophrenia.

Here’s a great example from one of our own clients. He was accused of an IP violation on his own trademarked, private-label item. The seller came to us for help, and we helped win the appeal. Unfortunately, by the time he hired Riverbend, Amazon had already seized $180,000 worth of his ASIN. What happened after the client won his appeal? Amazon claimed it had destroyed the inventory. And then, it popped up as an Amazon Warehouse Deal.

Liquidation spreads the problem far and wide

If Amazon Warehouse Deals doesn’t want the “fake” inventory, it most often goes into liquidation lots sold out of the Amazon warehouses. Amazon allows several companies – including its wholly owned subsidiary Woot! – to piece together lots of inventory. These goods have been “disposed of” by third-party sellers, or by Amazon at the direction of Seller Performance and Vendor Performance.

This allegedly law-breaking inventory that is inauthentic or an IP violation goes from the liquidation companies to all manner of purchasers. They then sell it on secondary and tertiary markets. 

And guess who makes up a significant percentage of purchasers of liquidation lots? You guessed it. Amazon third-party sellers. These unsuspecting sellers believe (or are told) that if the inventory was liquidated out of an Amazon warehouse, it must be safe for sale on Amazon again.

Unfortunately, nothing could be further from the truth, and the cycle continues. Through it all, the only one getting rich is Amazon.