UK government demands answers from Amazon over policy change impacting sellers’ funds

UK government demands answers from Amazon over policy change impacting sellers’ funds

12 Aug    Finance News, News

The UK government has demanded answers from Amazon following recent policy changes that have left hundreds of sellers unable to access their funds.

Small business minister Kevin Hollinrake has written a letter to the tech giant seeking clarification on how it plans to mitigate the impact on sellers. The policy change, which withholds money from sellers in case of refund requests, means that sellers are unable to access their earnings for around two weeks. This has caused significant financial strain for many small businesses, with some on the brink of collapse. In response to the concerns raised, Amazon has stated that the policy change only affects a small number of sellers.

Policy Change Leaves Sellers in Financial Limbo

The recent policy change by Amazon involves holding back a portion of sellers’ funds to cover potential refunds. While this measure is intended to protect buyers, it has left many sellers unable to restock inventory or pay their staff and bills. The policy was implemented on 3 August for sellers registered before August 2016 in the UK and EU. However, several sellers claim that they did not receive clear communication about the change, with emails from Amazon often ending up in their junk folders.

Sellers have expressed frustration with Amazon’s approach, stating that the temporary withholding of funds is pushing their businesses to the brink of collapse. Many sellers heavily rely on their daily earnings to cover expenses and maintain cash flow. The sudden disruption to their access to funds has caused significant distress and uncertainty.

Government Intervention and Seller Concerns

Small business minister Kevin Hollinrake has taken up the issue and sent a letter to John Boumphrey, the country manager for Amazon UK, expressing his concerns. Hollinrake has requested that Amazon explain how it intends to help sellers mitigate the impact of the policy change, particularly during these challenging times when many small businesses are already struggling with cash flow issues.

Sellers have welcomed the government’s intervention, hoping that it will lead to a resolution and alleviate their financial burdens. However, some remain skeptical about Amazon’s response and its commitment to addressing their concerns. Marios Katz, a seller of CDs and vinyl on Amazon, expressed his doubts about whether Amazon truly understands the gravity of the situation faced by sellers.

Financial Toll on Sellers

The withholding of funds has had severe consequences for many sellers. Daniel Moore, who runs Ink Jungle and sells ink cartridges, has been unable to access £263,000 of his earnings and is now unable to pay his VAT bill. According to Moore, the amount Amazon is withholding is disproportionately high compared to the potential refunds from customer returns or non-delivery. This has put his business at risk and has led to immense financial strain.

Other sellers have also voiced their concerns about the impact of the policy change. A Cheltenham-based business that sells pet products on Amazon revealed that the company is unable to access £16,000 of its earnings. The owner of the business, who wished to remain anonymous, expressed gratitude for the government’s intervention and is eagerly awaiting Amazon’s response.

Calls for Consumer Law Updates

Online retail expert Martyn James believes that Amazon’s policy change highlights the need for consumer law to evolve and be updated. He argues that such changes can have dramatic impacts on people’s lives without proper consultation. While the UK has strong laws to protect both buyers and sellers, James emphasizes that these laws only apply to direct transactions. He proposes the establishment of a single regulator for the entire retail industry and the introduction of a free ombudsman service to address grievances.

Sellers Unaware and Left in the Dark

Many sellers have expressed frustration with the lack of clarity and communication from Amazon regarding the policy change. Libby Pearson, a nutritional supplement seller on Amazon since 2009, shares her experience of having £700 locked by Amazon without clear information about when the funds will be released. This disruption has affected her ability to pay her VAT bill on time, leading to additional stress and uncertainty.

According to an Amazon spokesperson, the policy change only affects a small number of sellers. The company claims to be listening to sellers’ concerns and is in contact with those who have experienced disruptions to their cash flow. However, sellers are looking for concrete solutions and support during this challenging time.

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