The False Promises of the Toothless “California Sellers Bill”

 

If you were looking for a legislative rebuke of Seller Performance…keep looking.

The Amazon Seller Community rejoiced this week when a California state senate committee approved a bill designed to give more power to third-party sellers. Also known as the “California Sellers Bill.” Celebratory Facebook posts and blogs shouted that Amazon would finally be forced to treat sellers fairly.

But a careful reading of the “California Sellers Bill” reveals that under the new law, little to nothing would actually change. Let me repeat that “Almost nothing would change”

Why? Contrary to online claims, the bill does not make sellers a “class” or a “protected class.” But more importantly, Amazon already follows most of the provisions in the law. They can also fend off the more ridiculous requirements that would gut its risk management strategies.

 

Here is a Point-by-Point Explanation…

The text of the proposed law:
Every marketplace shall ensure that their terms and conditions regarding commercial relationships with marketplace sellers meet all of the following requirements:
(1) Are drafted in plain and intelligible language.

Reality:
Amazon sellers should refer to the Business Solutions Agreement. While there are some sections that could be written in more accessible verbiage, for the most part the agreement is in plain English. What makes this provision absurd, however, is that it is completely open to interpretation. Who defines “plain and intelligible”? This is vague and unenforceable. In addition, “terms and conditions” are a legal and binding contract. Of course they will include some lawyerly language. That is the entire point, and it is unavoidable.

The text of the proposed law:
(2) Are easily available online for marketplace sellers at all stages of their commercial relationship with the marketplace, including, but not limited to, during the stage prior to the formation of a contract.

Reality:
Amazon sellers have instant access to the Business Solutions Agreement (BSA). The plain fact is, most sellers never bother to read it. That is a much more pressing problem than its accessibility. I could not, however, easily find a copy without logging into Seller Central. The law would require Amazon to have a publicly available page with the text, or to provide it during the registration process. At best, this is a minor administrative change and has no real impact on sellers.

The text of the proposed law:
(3) Set out the grounds for decisions to retain, or refuse to disburse, funds in its possession belonging to a marketplace seller pending investigation or resolution of a dispute between the marketplace and the marketplace seller and the objective grounds for suspending or terminating a marketplace seller from participating in the marketplace.

Reality:
Amazon already explains this in the BSA and the “Policies and Agreements” section of Seller Central.

For example:
“We may establish a reserve on your account based on our assessment of risks to Amazon or third parties posed by your actions or performance, and we may modify the amount of the reserve from time to time at our sole discretion.”

“Violating the Code of Conduct or any other Amazon policies may result in actions against your account, such as cancellation of listings, suspension or forfeiture of payments, and removal of selling privileges.”

“When we identify a violation of our policies, we take appropriate action, which may include suspending or terminating Amazon privileges.”

You can log-in to find the BSA here

You can log-in to find the Policies and Agreements here

Here is another reality that the average seller may not understand. There are endless ways to lose your account, as well as an increasing number of ways to have your funds permanently held. Amazon cannot and will not lay out every possible seller indiscretion in black and white. For one thing, they cannot keep up with the black hat folks. And they also cannot – and should not – provide a blueprint to the bad guys on how to break the rules and/or get away with it.

The text of the proposed law:
If a marketplace decides to suspend or terminate, in whole or in part, a marketplace seller, the marketplace shall provide the marketplace seller, without undue delay, with a written statement of reasons for that decision. The written statement of reasons shall refer to the specific facts and circumstances that led to the decision and the terms or conditions that permit the suspension or termination.

Reality:
Amazon already does this. Seller Performance provides a written statement that explains why an account was suspended or terminated. For example, Amazon will say that a seller violated the code of conduct, sold counterfeit products, or manipulated the platform. That is as specific as Amazon will ever be. Why? Because risk management matters to Amazon. What’s more, it should matter to sellers, and it certainly matters to consumers. More on that later.

The text of the proposed law:
A marketplace shall not destroy products in its possession that are the property of a marketplace seller without offering the marketplace seller a reasonable opportunity to retrieve the marketplace seller’s property.

Reality:
Amazon already does this. If inventory is not deemed counterfeit, Amazon provides 60 days for sellers to remove it. If inventory is counterfeit, Amazon holds or destroys it. Amazon cannot and will not be a party to trafficking counterfeit goods. I’ve had several clients complain that their items were destroyed without adequate notice. In almost every case, investigation showed that this was simply not true. They received notice from Amazon and ignored it.

The text of the proposed law:
A marketplace shall require marketplace sellers to purchase and maintain liability insurance to cover claims by customers related to the services or tangible personal property sold by the marketplace seller through the marketplace. A marketplace shall disclose the requirement in its terms and conditions … and shall establish reasonable and effective policies and practices to ensure that the requirement remains in effect.

Reality:
Amazon already requires liability insurance for professional sellers. Establishing a process for sellers to prove this is a minor detail that really only hurts sellers – not Amazon. In fact, this creates a disadvantage for online sellers over brick-and-mortar retailers, who are not held to a similar insurance requirement under California law. (That being said, I definitely recommend liability insurance for all sellers.)

Now that we have reviewed the bill’s provisions, it’s important to talk a little about risk management. Sellers who think Amazon should provide a point-by-point dissertation on the reason for account suspension may not realize how this violation of traditional risk management principles puts the entire platform – and all 3P sellers – at risk.