Amazon.com Inc. (AMZN) Sued by Third-party Sellers Over Withholdings

Amazon.com Inc. (NASDAQ:AMZN) – which has become a favorite stock play among equity hedge funds that we track – has been under scrutiny for some of its business practices in recent months, facing some legal scrutiny over competition (or lack of competition) based  on some alleged competition-suppression efforts. But Amazon has been a very popular platform for small sellers to have a wide audience to sell their wares. But is Amazon actually holding third-party sellers’ profits hostage?

Amazon.com Inc. (NASDAQ:AMZN) is facing a class-action lawsuit from a number of small third-party sellers, who claim that the e-commerce market leader violates terms of its own seller agreement by holding funds longer than stipulated in the agreement, and the sellers are seeking interest and damages on top of the base amount they feel they are owed. The suit, filed this week in U.S. District Court in Seattle, cites that Amazon.com had “wrongfully obtained” and held payments longer than the 90 days that Amazon.com claimed it had the “discretion” to determine as per agreement.

Amazon.com, Inc. (NASDAQ:AMZN)One such seller claimed that after it had sold goods on the Amazon.com Inc. (NASDAQ:AMZN) platform, it did not receive its net proceeds (Amazon.com took about 6-25 percent off the top) for 98 days, and another seller claimed more than 100 days before receiving its payments. This lawsuit follows in the wake of an analysis by a Seattle-area newspaper which revealed that withholding payments was the most-common complaint by third-party sellers, with many of those complaints being filed with the Washington state attorney general’s office due to the withholding causing harm to the sellers.

The lawsuit claims that Amazon.com Inc. (NASDAQ:AMZN) makes “many tens of millions of dollars” by withholding the payments. In the suit, the claimant’s attorneys wrote, “By holding on to this daily cash flow for only a few days or weeks, Amazon is able to invest this money in money market funds, marketable securities and other investments, and utilize the cash as working capital in the operation of its business.”

What do you think of this lawsuit? Is Amazon.com Inc. (NASDAQ:AMZN) in violation of its agreement by delaying these payments? Give us your thoughts int he comments section below.

DISCLOSURE: I own no positions in any stock mentioned.

Please see these related AMZN articles:

Amazon E-book Lawsuit Gets Fast-tracked by Judge

Amazon Gets Aggressive

Will Amazon Dominate Video vs. Netflix?

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!