I had this conversation with an Amazon PR person — whose name is withheld for their privacy — as part of my reporting on the company for Inc. I’m publishing the transcript here so that readers will have access to a fuller picture of Amazon’s perspective. The “dear so-and-so” bits have been cut, but otherwise this is copy-pasted verbatim from the email exchange (except for one redacted bit, which is noted, and prettified links).
Sonya: Do you guys ever work with law enforcement when you crack down on counterfeit or fraudulent sellers?
Amazon: Hi Sonya, Thanks for reaching out. Happy to share details. Can you tell me the context behind your question? Are you working on a story?
Sonya: That’s more of a general question, but yeah, I’m working on a story. A lot of sellers reached out to me after I wrote about No Starch Press having problems. This is the scam I’m writing about specifically, right now:
Someone signs up for an Amazon seller account using fake information and puts up a bunch of fake listings. (Sometimes they build up a couple of months of legitimate activity first.) People buy from the fake listings, and are told that the product will be shipped in a couple of weeks. By the time they realize that the product isn’t coming, the fake seller has made off with the money, and Amazon ends up eating the refund cost.
I’m also curious about what Amazon does to mitigate this problem, and how much it ends up costing you. I looked through a couple of your SEC docs and a relevant number didn’t jump out at me.
Thanks for being so responsive!
Amazon: Glad we’re connecting on this question. I want to help correct a potential misperception. The scenario you’re describing has been speculated but is not factually accurate.
Here is why. We want customers to buy with confidence anytime they make a purchase on Amazon. With the A-to-z Guarantee, customers are always protected whether they make a purchase from Amazon or a seller. If ever the product doesn’t arrive or isn’t as advertised, customers can contact customer support for a full refund of their order. Additionally, Amazon has zero tolerance for fraud. We withhold payment to sellers until we are confident that our customers have received the products and services they ordered. In the event that sellers do not comply with the terms and conditions they’ve agreed to, we work quickly to take action on behalf of customers. There have always been bad actors in the world; however, as fraudsters get smarter so do we.
To preserve trust, Amazon is investing heavily in protecting the integrity of the Amazon marketplace for consumers, sellers, and manufacturers. Amazon is also working closely with rights owners to strengthen protections for their brands on Amazon. We remove suspicious listings and items as soon as we become aware of them, and we suspend or block bad actors suspected of engaging in illegal behavior or infringing others’ intellectual property rights. We have taken independent legal action against bad actors, and will continue to do so. And we work with law enforcement who present us with valid legal process.
As part of our investment in brand protection, we are building powerful tools tailored to the needs of rights owners. In order to detect bad actors, we employ dedicated teams of software engineers, research scientists, program managers, and investigators to operate and continually refine our program. When a business registers to sell products through Amazon’s Marketplace, Amazon’s automated systems scan information for signals that the business might be a bad actor, and Amazon blocks those bad actors during registration before they can offer any products for sale. On an ongoing basis, Amazon’s systems also automatically and continuously scan numerous variables related to sellers, products, and offers. Amazon is also investing in innovative machine learning to improve our automated systems in order to anticipate and stay ahead of bad actors. We take this fight very seriously and we look forward to partnering with even more stakeholders to eliminate bad actors from our marketplace.
A public resource that outlines our procedure of not paying sellers until a customer has received a purchased item can be found here — [link]
Hope this helps. Happy to discuss further.
Sonya: Thanks for getting back to me. Can you clarify:
By the time they realize that the product isn’t coming, the fake seller has made off with the money, and Amazon ends up eating the refund cost.
Are you saying that this literally never happens? Or just that it’s uncommon? If the latter, can you quantify the impact for me?
Amazon: Happy to clarify, Sonya.
To preserve seller and customer trust, a seller does not get the funds for an item sale until the item is delivered to the customer. I think the confusion might stem from misconceptions about our disbursement cycle of funds to Sellers. While we disburse funds to sellers every two weeks, the process does not include providing the funds for every item sold in the two week timeframe. Once an item is delivered to the customer, only then are the funds from that item sale released to the seller for their next disbursement date.
Does that help? Thanks
Sonya: I don’t think that’s quite accurate. A couple of your FAQ pages say that shipping confirmation is the main thing that’s required.
After you ship your order, you confirm shipment. Confirming shipment is required. You tell us that you have sent the order, including the date sent, the carrier used, and any tracking information about the package. As soon as you confirm shipment, we charge the customer. If you do not confirm shipment, then you are not be paid for the order. After 30 calendar days have elapsed after an order was placed, and shipment is not confirmed, we automatically cancel it.
After a sale occurs and you have sent Amazon confirmation that the order has been shipped, Amazon Payments processes the payment from the buyer and credits the net proceeds from the sale to your seller account. Keep in mind that refunds to buyers, selling fees, and other transactions are debited against amounts credited to your account from sales.
The funds in your seller account will be automatically transferred to your bank account every 14 days. You may also request more frequent transfers of funds, up to once every 24 hours. Transfer of funds will be initiated once Amazon Payments concludes that it is no longer necessary to hold funds to cover chargebacks, refunds, A-to-z Guarantee claims, or other claims against your sales transaction.
So what stops someone from giving the customer a shipping estimate of three weeks and absconding with the money before you catch them? And if you are successfully preventing these people from getting money, why are they still flooding the platform?
Also, how is it that seller accounts that are “Just Launched” but have thousands of products aren’t getting caught preemptively? Examples: [redacted]
Amazon: The guidance provided is accurate. The public facing message for Prohibited seller activities including permanently holding funds is here [link], and clearly states:
We do not pay sellers until we are confident our customers have received the products they ordered, and if we determine that a seller account has been used to engage in fraud or other illegal activity, remittances and payments may be withheld or forfeited.
The help page you reference is not relevant for third-party sellers selling on Amazon. The payment page below is for Amazon Pay (e.g. our Payment product on other websites, not Selling on Amazon) and is in no way related to our payment policies for customers buying from third-party sellers on Amazon. Also, per your other reference, the below mentions charging customers at the time of purchase but not disbursing funds to sellers — “As soon as you confirm shipment, we charge the customer.”
The story angle you are pushing is not factually accurate and our posted policies and help pages are clear that we withhold payment to sellers until we are confident that our customers have received the products.
What facts and evidence do you have that bad actors are getting paid before delivering items to customers?
Sonya: Okay. So I want to be super clear and make sure we’re totally on the same page. Are you saying that Amazon categorically never eats the refund cost for fraudulent sellers, that you never disburse funds to fraudulent sellers?
Sonya: Quick followup on my last question: I get that your job is protect Amazon’s reputation. I also get that the company needs to to maintain a certain amount of security through obscurity. It seems totally plausible to me that fraud is way less common than the posters on the Amazon Seller Forums say it is. But I don’t think you can say categorically that no fraud happens on Amazon.com — I’d be highly skeptical of that claim. And if your position is that fraud is highly uncommon, you have to explain why Amazon still needs to play whackamole with “just launched” accounts listing thousands of products. If there’s no way for them to profit, why are they consistently showing up and getting taken down and showing up again?
Amazon: We can’t speculate on the motivations of bad actors. There have always been bad actors in the world; however, as fraudsters get smarter so do we. A fact and our posted policy is we withhold payment to sellers until we are confident that our customers have received the products and services they ordered. In the event that sellers do not comply with the terms and conditions they’ve agreed to, we work quickly to take action on behalf of customers.
Have a great weekend. Thanks
Aaand that’s a wrap! Feel free to draw your own conclusions.