Rebates are Risky – and often against Amazon Terms of Service

 

Whether you’re manually providing rebates via PayPal or using a rebate service, Amazon has the technology to find what you’re doing – and deactivate your account.

When private-label sellers launch new products, they look for any way to get an edge. For many years, rebates have been a popular option in the seller community. But now, two factors are coming together to make this incredibly risky. First, services have launched to offer rebates in a hands-off manner. Secondly, at the same time, Amazon has become increasingly aggressive about finding and suspending accounts using this technique.

What’s a rebate?
Typically, sellers initiate rebates so they can improve their best seller rank or gain product reviews:

1. Using Facebook groups, ads or mailing lists, they ask for a purchase of their product. When the purchase has been made, the buyer sends an email asking for the rebate, along with proof of purchase. They are paid via PayPal.
2. Sellers create an account with an online rebate service, specifying the product they need pushed and fully funding a specific number of rebates. Buyers purchase the products listed on the service and then apply for their rebate, which is paid out by the third party.

In recent months, we’ve heard repeatedly that these services have “spoken to legal” at Amazon, and that they are operating within Terms of Service.

Sorry, folks. These services – as well as direct PayPal rebates – are almost always a blatant violation of Amazon’s rules for sellers. The written regulations say:

Misuse of sales rank:
The best seller rank feature allows buyers to evaluate the popularity of a product. Any attempt to manipulate sales rank is prohibited. You cannot solicit or knowingly accept fake or fraudulent orders, including placing orders for your own products. You cannot provide compensation to buyers for purchasing your products or provide claim codes to buyers for the purpose of inflating sales rank.

Not convinced? Check out this language under “Inappropriate product reviews”:

The following are examples of prohibited activities. This is not an all-inclusive list.

• A seller offers a third party a financial reward, discount, or other compensation in exchange for a review on their product or their competitor’s product. This includes services that sell customer reviews and websites or social media groups with implicit or explicit agreements or expectations that an incentive is contingent on customers leaving a review.
• A seller offers to provide a refund or reimbursement after the buyer writes a review (including reimbursement via a non-Amazon payment method).

Some proponents of rebate services argue that there is no request for a product review on their web sites. If they are offering rebates themselves via PayPal, they can point out that their emails never even mention the word “review.”

This is still problematic, in two ways:

1. With the wording above, Amazon can easily argue that there is an implicit request for a review based on this financial incentive.
2. Amazon is now aggressively enforcing against accounts for misuse of Search and Browse. This includes “Artificially simulating customer traffic (through Internet bots, paying for clicks on organic search results, etc.).” Obviously, giving people free products is an artificial stimulation of customer traffic.

Wrong again.
Proponents of rebates who are not convinced by the policy language above then typically argue that Amazon can’t detect this particular policy violation. Wrong again. Amazon can uncover data patterns among buyers. In other words, the same set of buyers are seeking out rebate deals across multiple products, and it becomes obvious that their purchases are not organic. In addition, Amazon has managed to track buyers in Facebook groups, who also share a common purchase history.

Are there times that rebates can be considered kosher? Maybe. If you’re a brand owner, rebates could be used as a normal part of doing business, if and only if:

1. The rebate amounts are 25% of the product’s value or less.
2. There is absolutely no request – explicit or implied – for a review or feedback.

Our best recommendation? Just don’t do it. Using rebates is fraught with peril. Our clients who were suspended for this activity typically only received a limited number of purchases and a handful of reviews. The risk definitely isn’t worth the minor reward. Instead, rely on PPC and coupons. Both work well to drive traffic, without the risk.

Still not convinced? Know this. Amazon has adopted a two-strikes-you’re-out policy for platform manipulation. Do it once, and you can get reactivated. Do it twice, and your time on the platform is over – permanently. Private-label sellers simply cannot afford to lose their branded accounts.

Finally…
If you’re currently using a review service, visit their web site. Notice that there are no familiar names of people on the site – even though the owners of these businesses are well-known in the seller community. There is no readily available contact information. There’s a good reason for that. We’ll discuss it further in our next blog.