The government has raised inquiries with Amazon following a recent policy revision that has left numerous sellers unable to access their funds. Kevin Hollinrake, the small business minister, has urged Amazon to clarify how it intends to address the negative impact on sellers caused by the policy alteration.
The alteration entails withholding a portion of sellers’ funds in anticipation of potential refund requests from buyers. Consequently, sellers are unable to access their earnings for roughly two weeks, causing financial strain for many businesses.
UK minister demands explanation from Amazon for temporarily withholding sellers’ funds
The government of the United Kingdon has quizzed Amazon over its recent amended policy that holds back some money from sellers in case buyers demand a refund, implying hundreds of sellers won’t have access to their takings for around two weeks. In a letter quoted by the BBC, small business minister Kevin Hollinrake asks the tech giant to clarify how it intends to mitigate the impact on sellers.
Several sellers, including Daniel Moore, who specializes in selling ink cartridges, have voiced their frustrations. Moore revealed that he has £263,000 locked up, preventing him from paying his VAT bill.
While Amazon maintains that only a small number of sellers have been affected by the change, various businesses have reported difficulties in restocking inventory or covering operational costs.
The policy shift, initiated on August 3 for sellers registered before August 2016 in the UK and EU, was not effectively communicated to many sellers, with emails about the change often ending up in junk folders.
Sellers have criticized the lack of clarity in the communication, particularly regarding the suspension of their daily withdrawal practices. This withholding of funds has pushed some businesses to the brink of collapse.
In his letter to John Boumphrey, Amazon UK’s country manager, Hollinrake emphasized the need to address the concerns of struggling small businesses.
He requested an explanation of Amazon’s strategy to alleviate the consequences of the policy change, given the challenges faced by businesses grappling with cash flow issues.
Marios Katz, a seller of CDs and vinyl on Amazon, expressed skepticism that Amazon would respond meaningfully to the minister’s letter.
He described feeling “shaken and panicked” due to the lack of access to his earnings. Katz’s concern extended to his ability to provide for his family, as he is accustomed to withdrawing funds promptly.
The government’s intervention in this matter highlights the growing need to update consumer protection laws to address the evolving landscape of online retail.
Some experts, including online retail specialist Martyn James, have called for a single regulator overseeing the entire retail industry and the establishment of a free ombudsman service to handle disputes.
Amazon has indicated that it is engaging with sellers affected by the cash flow disruption and is receptive to their concerns.
However, the situation has drawn parallels to challenges faced by sellers on other platforms, like Etsy, which implemented similar fund withholding policies that adversely impacted sellers’ businesses.