Do you have money being held by Amazon without any idea on when or if it will be disbursed back to you? In this Episode, Chris & Leah discuss the murky & concerning world of mystery reserves holding Amazon seller's money for undisclosed lengths of time & what you should do if you find yourself in this unpleasant situation.
[00:00:07] Chris: Hey, everybody. Welcome back to Seller Performance Solutions. I'm your favorite Amazon community host Chris McCabe, and I'm here with Leah McHugh.
[00:00:14] Leah: Oh, what am I? You're the favorite? And I'm just here. Thanks.
[00:00:18] Chris: Co-host I should have said my bad, my mistake. Forgive me. I'm a little rattled from some of the crazy things we've seen lately where Amazon keeps people's money.
It could be an active seller, mostly suspended sellers, contact us and we'll get into that in a bit. But I thought I would start with some of the mystery reserves that some active sellers, sometimes sellers who have sold for years and years, that doesn't seem to count for anything anymore, but they just don't get the full disbursement.
There's a reserved amount. We're familiar with concepts of temporary reserves, reserves pending reviews of particular ASIN sales or policy warnings. We've seen that off and on over the last couple of years, but this failure to disperse funds without explaining why has become rather widespread. Wouldn't you say?
[00:01:09] Leah: Yeah, I think we started seeing it what, two years ago. But we're certainly seeing it more lately than we have say in the last six months.
[00:01:17] Chris: And we're talking about chunks of money that are visible in your account, they just don't get sent. Sometimes this goes on for weeks. Sometimes it goes on for months, emails that some of our seller contacts, some of our clients have sent, were met with messages back that just said, oh, we're reviewing this.
Thanks for your note, we'll get back to you. Nothing happens. The money's never sent, if you bug them again via disbursement appeals queue or other methods sometimes as well. They'll just send the same message saying we're still reviewing this meanwhile weeks or months go by. They have your money, you don't have your money. It's a problem across a couple of levels, right? One is you don't have that money to do with, as you see fit to get more inventory, to invest in marketing, to fund your business. But also sellers are concerned, you know, does this mean something's wrong with my account health that they haven't adequately explained to me?
The account health dashboard, they're kind of monkeying with it. It's still kind of unclear like what your real status is. They mentioned this account health rating. There really hasn't been much pop behind that story since it came out, right?
[00:02:26] Leah: I've actually yet to see it rolled out on any account. The new and improved account health dashboard, it all looks the same to me as it has for the last few years so far. They made the announcement maybe a little earlier than they should have on that one. But I think the biggest difference that I'm seeing with these is that, you know, two years ago during COVID, we were seeing these sorts of funds holds on those like higher risk, extremely high volume products during COVID so things like masks and hand sanitizers and cleansing wipes and things like that. Now it seems to be across any product category, it doesn't really seem to be a pattern as to what accounts they're holding these funds on. And I think that's confusing and concerning.
[00:03:11] Chris: That's true. We initially saw it. I don't know if they were just getting their feet wet in this process to see who barked back or struggled to get their money again. Right now we're just exclusively talking about active accounts and live ASINs where people are making orders.
Sometimes these numbers are really climbing. I mean, we hear from some high volume sellers and we're not talking about thousands or tens of thousands of dollars anymore. We're talking about six figure sums.
[00:03:37] Leah: Sometimes we had a few like multimillion dollar sums.
[00:03:41] Chris: Yes. some seven figure sums.
[00:03:44] Leah: That's a lot of money to maybe get at some point in time in the future.
[00:03:49] Chris: And I remember there were some sellers who were suspended, but they were reinstated. They worked with us, we got them reinstated and you're supposed to get all your money that whatever was frozen or held by Amazon until the suspension was resolved, you are entitled to all of it.
[00:04:03] Leah: Right.
[00:04:03] Chris: And they would disperse the entire amount. So some of those sellers just didn't see a dime of that money for whatever reason. Technical glitch. Somebody didn't do their job. Somebody forgot to do something, but it would take weeks for them to acknowledge it so that all of that money could be in your pocket.
It's in somebody else's pocket, it's working, you know, whether it's in an interest bearing account or not, it's working it's magic for them, not for you. And all of those sellers eventually got their money, but some of them had been struggling to get it for weeks or months before they even came to us. Right. So just imagine. The pain points created by a system where disbursements are kinda, maybe, sorta of sent to you when it's supposed to be?
[00:04:46] Leah: Yeah. I feel like there's like a bunch of economic majors inside of Amazon who are like future value of money. We gotta get the money as fast as we can and keep it as long as we can.
[00:04:55] Chris: Keep it as long as possible, right? It's not like it's indicated anywhere that they're keeping it in escrow for you.
[00:05:01] Leah: No, of course not.
[00:05:03] Chris: Or that you get a chunk of the interest generated by that cash that sits within their accounts all summer. None of that's explained none of that is visible.
[00:05:11] Leah: Right.
[00:05:12] Chris: And then as you know, we've got clients right now who are active in selling and happy in other ways, but they're just not getting the full disbursement. So it's something that's unfolding still. We've seen different permutations of it, we're concerned about it. We definitely want to hear your stories if you're listening to us talk about it today, because now we're starting to hear that people are going to arbitration just to get paid funds that they could have gotten just in the normal course of disbursements and of course we know suspended sellers that don't even wanna sell, their so frustrated, so fed up with Amazon, they're like, just pay me my money. I don't need the account back. Sometimes they've tried to appeal it. They tell us they've sent numerous appeals. They don't want the account anymore. They don't wanna appeal anymore. They're they're giving up, but they expect to get their funds at the 90 day mark and they don't receive it.
And I hasten to add, this is not just people accused of selling counterfeit, like in the old days. It's not just people accused of violations of the code of conduct policy but as you and I have spoken offline and on. The code of conduct policy is ever widening to include more behaviors.
[00:06:18] Leah: Yep.
[00:06:19] Chris: And I don't think we're conspiratorial or conspiracy theorists saying that there seems to be a benefit, a financial benefit to Amazon to make that code of conduct policy as wide as possible, because that means they can keep more funds permanently for people who are accused of potentially what, how do they phrase it? Illicit fraudulent or deceptive behavior?
[00:06:42] Leah: Yeah. Well, that's the thing. If they're not suspended, they don't even get that verbiage, it's just being held.
[00:06:47] Chris: I know you don't even get that message.
[00:06:49] Leah: Right.
[00:06:49] Chris: You don't even get the pleasure of being accused of something if you're not suspended.
[00:06:54] Leah: I think I've said this in a podcast before, but I'm still curious how this money is accounted for in Amazon's books. Because we see so much of this happening that this has to be millions, if not billions of dollars that's being held at any given time.
[00:07:12] Chris: Right.
[00:07:13] Leah: What is the line item in their books for these? I'm so curious about this. Any forensic accountants hit me up.
[00:07:20] Chris: Creative accounting that must rival the WeWork IPO that failed a couple years ago because we've, for the duration of this podcast, which is, I believe 18 months, we've been talking about this off and on. So that's 18 months, I would say it's two, two and a half years stretching back into maybe 2019 end of. So that's a number that's in the hundreds of millions easily. Probably over a billion at this point which I suppose if you spread it out over enough quarters, but I don't know how it's accounted for.
[00:07:53] Leah: I mean, honestly, it's probably something really boring that just says like holding or something, but I'm just very curious how this is in as a line item in their books because at this point it's so widespread that it has to be a significant number on their spreadsheets.
[00:08:11] Chris: Right.. And I can clarify, we're talking about some of these funds are ultimately dispersed weeks or months later, to active sellers, the suspended sellers, often the money is permanently held, so it's a mixture of funds.
[00:08:24] Leah: Unless they get the account reinstated.
[00:08:25] Chris: Unless they get reinstated, then they should get all of it. But so murky and so bereft of accountability, such a hard topic to talk about, because so much of this is unseen but we've seen the results, which is people saying I never got my cash, right? So there's like a straightforward piece, which is like, well, you guys owe me 50 grand and you're never sending it.
They've created this independent disbursement appeals process. A lot of people go through that once they're deciding not to appeal for reinstatement anymore, they just appeal for the funds. A lot of those dead end, the same way account suspension appeals do where they stop answering you, or they take forever to answer you.
The silence means they keep your money, so you either continue to escalate that and push for your money or at least an explanation beyond copy and paste, generic messaging, or you go into arbitration, right? We've talked to a couple attorneys working with sellers who are just trying to get the funds who are struggling. I think the attorneys who do arbitration cases probably pretty consistently, we don't do arbitration, we're not attorneys, but they're baffled by this. Like how can you just justify keeping the money just because you're saying, Hey, you violated our terms of service. You agreed to let us keep your money if we decided you were suspension worthy. Is that really the end of the story? You know, is there some other way that aside from going to arbitration that you can just get paid.
[00:09:52] Leah: Well, and even if it is the case of counterfeit goods. Sure, you're not supposed to get profits from selling counterfeit goods, but I'm pretty sure that money is supposed to go back to the customers and/or the brand that was counterfeited. I don't think it was just intended to like, oh, well the marketplace just keeps that. That doesn't make any sense.
[00:10:11] Chris: I guess that's an FTC question-- I don't know. Is that an FTC question?
[00:10:14] Leah: Actually I don't know who what would be a question too, someone in the commerce division?
[00:10:19] Chris: Right, commerce version of the government. The sellers that told us they had contacted the FTC, I think some of them might have gotten dispersed if they took their FTC complaint ID and took it back to Amazon to show them that they were doing something else to try to get their money back and maybe if it's just not worth the hassle or if it's a lower, lower than threshold amount of money, maybe Amazon just disperses at that point to get rid of it. I'm not sure.
[00:10:45] Leah: Well, that's a thing. Surely it must be cheaper for them to just give you your money than to keep going to arbitration over and over again?
[00:10:52] Chris: Well, my theory on that is that they must know somebody's run some numbers, did some data analysis, they must know a certain amount of sellers just don't go to arbitration.
[00:11:02] Leah: That's fair. Yeah. Kind of like with insurance companies, they figured out the minimum amount that they can give you for you to probably just leave it alone.
[00:11:09] Chris: Right. Or just don't come back for their money. Maybe they were like, well, Amazon said I was guilty and I guess I didn't follow the policies. You know, maybe the sellers start, in a stockholm syndrome style, begin agreeing with Amazon. Like, yep, you're right. You get to keep my money. Most people want their cash because if they're not doing Amazon, they wanna move on with another business or just try to recoup whatever funds they can to sustain themselves financially and pay their employees. But I've been surprised over the last couple of years, we've heard from a lot of people who just said, well, they kept my 60,000 and I had another business going that was off Amazon.
A lot of people have off Amazon sales that they do.
[00:11:48] Leah: Right.
[00:11:48] Chris: And they just focus their energies there and they just give up. So Amazon must be expecting sellers to have thin skins or to accept being pushed around and to just give up.
[00:12:01] Leah: Yeah, I mean, I have heard from many sellers who stopped selling, who were like I have never slept as well as I slept after I stopped selling it on Amazon.
[00:12:09] Chris: Right.
[00:12:10] Leah: They're like no waking up with anxiety of what I'm gonna see when I open my email.
[00:12:15] Chris: We talked to a client who said that many times, and then they were reinstated and then all of a sudden they were like, oh, we're back on Amazon, we're back doing everything we were doing before, not what they were suspended for, but back doing high level of sales within their categories.
We can kind of wrap this up with just conclusion amazement on my part, conclusive amazement of some of these brands are big, some of them have been around for a long time, and I don't understand why Amazon just expects these people to roll over and say, yeah, go ahead and keep 25 grand out of every disbursement for as long as you want, I'm gonna keep selling as much, expanding, launching new SKUs. Like why doesn't Amazon understand that they're killing the motivation of a brand to sell more on their platform and potentially to sell way more than the amount they're holding. Right?
[00:13:10] Leah: Well, and in some ways, so it's almost worse to have them hold your money while you're actively selling than while you're suspended because you still have to keep everything going. You still have to purchase inventory, you still have to pay people. You still have to focus all of your resources on those sales on Amazon.
But meanwhile, you're not getting any of the cash flow from those sales on Amazon. So in some ways, I mean, obviously it's terrible if you're suspended and you're also not getting your money, but in some ways it's harder if you're actively selling and your funds are being held, because how are you supposed to keep everything going if you don't have the cash flow?
[00:13:44] Chris: Yeah, some of the smaller brands we work with, their cash flow is severely impacted, but also just--
[00:13:48] Leah: Cash flow is tough in eCommerce, just in general.
[00:13:50] Chris: I know. Supply chain issues, importing product from overseas, all the different things that can go wrong, that you need to reserve financial resources for, but also larger brands, even for selfish reasons, you'd think Amazon would believe this is a large brand, they're not gonna give up. They're going to hire an attorney to take us to arbitration, which is going to cost us administratively, financially, whatever it's going to be. Another headache on top of everything else. And also we are losing sales from that brand because they're not going to sell as much as they could, because they're afraid that at any moment we could swoop in and take their money and not explain why.
So the payments guys and the brand expansion, marketplace development people who probably don't talk at all, anyway, need to get on the same page, are clearly not on the same page because it's tough to have a category manager, expanding revenue within their product range or category if payments people are just sort of arbitrarily saying, Hey, this came to us from S team level executives or came down from on high and they want us to hold money longer. And we don't a hundred percent know why?
[00:14:56] Leah: Unfortunately, the category managers, at least in my experience, don't really take into account how this impacts their growing of the category.
They tend to focus more on let's add more products and let's get you to spend more on ads. And don't really like to talk about the actual practical sides of how to grow a brand on Amazon. If Amazon is holding your money.
[00:15:18] Chris: Well, we've talked to some, we've been on some calls with category managers at Amazon and clients and the category managers definitely understand when your top selling listing is down.
[00:15:27] Leah: Well, they just don't have any like way of helping you.
[00:15:32] Chris: Yeah. I mean, they might try to say that they're going to communicate with internal teams, they might try to create a ticket. They might say, Hey, look, I'm gonna try to move this along for you with an internal escalation, but it's very occasional, I would say.
So in any event, if you're having trouble with this stuff, we're still kind of amazed by it all. It's concerning. So if you have a large amount that's being held, you're not sure when you're going to get it, it's definitely something you don't wanna sit back and wait and continually read these messages that they're reviewing and reviewing and reviewing, especially when they don't really say what they're reviewing or why it's taking so long.
Leah, I'm sure we'll talk about this topic again.
[00:16:11] Leah: Yep.
[00:16:13] Chris: Thanks.