Amazon Logo on Fulfillment Warehouse

The Online Merchants Guild (OMG), a trade association for ecommerce businesses published an Open Letter to State Attorneys General, criticizing states for failing to hold Amazon accountable for price gouging, when it was legally Amazon’s responsibility to prevent price gouging, and otherwise unconstitutional for states to be pursuing their merchants.

The letter describes how States’ Attorneys are working side-by-side with Amazon to hunt-down Amazon’s merchants, and how states are sending the merchants civil and criminal subpoenas, with some states relying on Amazon to help them draft their inquiries.

However, the letter goes on to explain how the laws are actually being misapplied, since only Amazon can, and should, be held liable for price-gouging under the various states’ gouging laws.

As OMG’s Executive Director, attorney and adjunct law professor at Pace University in New York, Paul Rafelson, explained:

Despite what Amazon claims to avoid liability, Amazon is a national store, and its merchants are its suppliers.

Amazon is the only party to the transaction that can control prices on a state by state basis, taking into account each state’s price gouging law, and imposing the appropriate price ceilings, so it’s Amazon’s responsibility as the world’s largest ecommerce store to ensure the laws are being followed, not to earn 15%-30% from each high-priced sale, cause panic in the marketplace, claim willful blindness, and turn their sellers into scapegoats.

Amazon even admitted under oath to a House Antitrust Subcommittee last year, it’s their store, it’s not a marketplace, so it makes sense they should be held accountable as the store, and The Supreme Court made quick work of marketplaces like Amazon claiming otherwise in the 2019 case Apple v. Pepper.

Amazon Profited From Price Gouging

But, not only is it Amazon’s store, it’s also the biggest most influential online store in the world, and Amazon allowed $700 toilet paper proliferate their site, causing a national panic, and profiting from it.

But, once again, state officials have shown their true colors, demonstrating how tightly Amazon has them in their tentacle grip, as this is just like the tens of billions in uncollected sales tax Amazon currently owes across the collective states.

Yet only one state, South Carolina, is willing to hold Amazon accountable for those taxes, while other states like Amazon’s home state of Washington and California (home to over 20,000 Amazon Jobs), are buying into Amazon’s scapegoat-ification of their sellers, persecuting its merchants for the back taxes that Amazon legally owes, in order to mitigate their losses. 

Some of The Irresponsible Behavior OMG Addresses Include

  • Failure to take swift action to prevent panic pricing by shutting off Application Protocol Interface (“API”) access for automatic repricing tools.
  • Entrapping of merchants with a match lowest price feature.
  • Failing to proactively prevent high prices by imposing emergency price ceilings by product category.
  • Failure to adhere to their usual practice of deactivating unusually high-priced listings (known as pricing errors).
  • Suspending sellers knowing they would say anything to get reinstated, including apologizing for “price gouging,” and advising states to subpoena it as admissible evidence as a way of insulating themselves.   (Note:  This is not addressed in the letter, as it was recently discovered).

Why Are States’ Attorneys Going After Small Sellers?

The letter questions the motivations of States’ Attorneys going after a single mom for civil and criminal violations, because they listed Purell for $15 that they bought for $5, instead of investigating what’s become Amazon’s modus operandi of disclaiming liability through its claims that it’s just a marketplace not a store.

“The crazy part is that in most cases Amazon earned more from masks and hand sanitizer with their fees/markup than most of their merchants did. Yet it’s the merchants who are being unduly burdened as the target of an unconstitutional investigation, not Amazon. States are so afraid to do anything negative towards Amazon because they are afraid their disloyalty might result in their getting passed over for Amazon’s next distribution center or HQ 3 through 50!

If Target was caught selling $700 toilet paper in their store, and argued as a defense that it re-labeled its toilet paper suppliers as “sellers,” earning a commission instead of a markup, while also claiming the toilet paper company suggested the $700 retail price, do you think they would get away with it?  Of course not!  So why is Amazon!”  Rafelson exclaimed.

READ MORE: Amazon Extends Returns Window on Sales During Coronavirus Crisis

Connect With Us And Other Small Business Owners

Please head over to our Facebook Group for Small Business Sellers and interact with other small business owners.

Follow us on FacebookTwitter, and LinkedIn to stay up to date with relevant news and business insights for your online business.

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *