Can Amazon Permanently Keep Your Funds? Arbitration and District Court Cases Create More Confusion For Sellers
In two recent arbitrations against Amazon, sellers were awarded damages as arbitrators held that Section 2 was unenforceable in the context of both sellers. Both sellers petitioned the Southern District of New York, seeking confirmation and modification of their awards, where the courts separately denied the majority of seller petitions. This included not commenting on the enforceability of Section 2; meaning that sellers still should be concerned that funds may be permanently held. Despite this, Amazon still paid the awards originally granted by each arbitrator.
These rulings will specifically impact sellers who are suspended for major violations of the BSA, and are facing withheld funds. In this blog, we walk sellers through the rulings in these cases, the status of Section 2 as an enforceable clause of the Business Solutions Agreement, and discuss how arbitration is a key tool for recovering withheld funds.
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Amazon Seller Indefinitely Withheld Funds
Section 2 of the Business Solutions Agreement (BSA) states the following:
If we determine that your actions or performance may result in returns, chargebacks, claims, disputes, violations of our terms or policies, violations of law or other risks to Amazon or third parties, then we may in our sole discretion withhold any payments to you for as long as we determine any related risks to Amazon or third parties persist. For any amounts that we determine you owe us, we may (a) charge Your Credit Card or any other payment instrument you provide to us; (b) offset any amounts that are payable by you to us (in reimbursement or otherwise) against any payments we may make to you or amounts we may owe you; (c) invoice you for amounts due to us, in which case you will pay the invoiced amounts upon receipt; (d) reverse any credits to Your Bank Account; or (e) collect payment or reimbursement from you by any other lawful means. BSA US G1791.
Additionally, “[Amazon] may in our sole discretion permanently withhold any payments to you,” BSA US G1791, which was the part of the BSA specifically targeted by arbitrators in the present cases. Both petitioners, Shenzhen Yingfan E-Commerce Co., Ltd. v. Amazon.com Services LLC, 26-cv-00023 (LJL), 2026 S.D.N.Y.; Huizhou Kailangde Technology Co., Ltd. v. Amazon.com Services LLC, 1:26-cv-00882 (ALC), 2026 S.D.N.Y., were impacted by this clause, causing Amazon to freeze their funds indefinitely after suspension.
Arbitration Against Amazon
Because of another clause of the BSA G1791 (Section 20), most disputes with Amazon must be resolved through private arbitration. This is a private proceeding that functions similar to a traditional court setting; however, an independent arbitrator hands out a legally binding decision rather than a judge or jury.
Arbitration is Amazon’s preferred method of handling disputes as they are able to form long-term relationships with arbitrators, and the process generally takes less time than a public complaint. Filing for arbitration is done through the American Arbitration Association, who then assigns arbitrators and begins the process.
In the cases above, both plaintiffs filed for arbitration and reached the hearing. For many sellers, settling the case after filing for arbitration is an option that will actually get you more money. By saving on the fees of an extensive legal battle, a lower initial settlement amount may result in more of your money recovered. For these plaintiffs, they used the hearing to fully argue their respective cases, leading the arbitrator to issue awards of ~$250,000 and ~$120,000 respectively.
Both arbitrators found that Section 2 of the BSA was not enforceable for these sellers, leading to the award that released much of the withheld funds. However, Section 2 remains in effect for sellers, as arbitrator decisions do not create law that courts must follow. No changes have been made to the wording of Section 20, which means Amazon will likely continue to hold funds indefinitely unless ordered to release them by an arbitrator.
Lawsuit Against Amazon – Appeal Results
Though both sellers won their respective arbitrations against Amazon, each believed that the award they were granted was not adequate for various reasons. This matters to you because both cases were taken to federal court in the Southern District of New York. Here, courts were tasked with assessing whether or not the awards issued had reason to be modified and/or confirmed. This is key, because the courts were not asked to rule on if Section 2 was enforceable, meaning it is legally still in the BSA.
For both sellers, the courts held that modifying the awards was not appropriate as the claim would require an injury had been suffered. Because Amazon had already paid the awards, there was no standing for a complaint to modify the awards.
When is Filing For Arbitration the Right Move
The important takeaway from these recent cases is that Amazon will likely continue to indefinitely hold seller funds when they issue major punishment decisions (e.g. Section 3 suspensions). This means that arbitration may continue to play a major role in helping sellers recover funds withheld by Amazon. In this next section, we briefly break down the various ways that arbitration can help sellers in the process of navigating suspensions.
If Amazon alerts a seller to a major suspension against their products or accounts, the first steps will likely involve traditional routes of appeals, using Plan of Actions, seeking retractions, or otherwise looking to verify the integrity of your practices. Arbitration is a serious elevation tactic that should be reserved only for cases where you have exhausted other options and you have evaluated your claim with an experienced legal team.
Amazon Account Suspension Appeal
Next, informing Amazon of your intent to file for arbitration often helps resolve more minor disputes. Because arbitration is a legal process, it can cost Amazon thousands of dollars to litigate, often meaning it is not worth it for them to fight your claim. This does not mean that filing for arbitration will automatically lead to fund release or account reinstatement, but it may support your case for getting your account back.
Finally is the arbitration process itself, initially filed with the American Arbitration Association (AAA), who will then assign an independent arbitrator. Throughout the process, you may have multiple opportunities to settle, which ends the dispute quickly, but often requires both sides to make a sacrifice. As in the cases from this blog, your arbitration may also reach the hearing stage, where the independent arbitrator hears arguments from both sides and issues a legally binding judgement.
Contact Amazon Sellers Lawyer Today!
At Amazon Sellers Lawyer, we have been helping clients resolve account suspensions and secure withheld funds for over a decade. Our team includes former Amazon employees, who know the ins and outs of the suspension process, as well as experienced litigation attorneys who can help guide you through the legal process. Give our team a call today at 212-256-1109, or fill out our online contact form.
About the Author
CJ Rosenbaum, Esq.
CJ Rosenbaum is the founding partner of Amazon Sellers Lawyer. He’s been practicing law since 1995, and since 2016 his firm has focused exclusively on helping Amazon sellers deal with issues like suspensions, intellectual property disputes, and withheld funds.
CJ has written seven books on Amazon seller legal issues including the Amazon Sellers’ Guide to Copyright Law. He has spoken at major industry events like the Prosper Show, Global Sources Summit, Retail Global. CJ also works with the Amazon Sellers Lawyer team to provide free content for Amazon sellers. This is available through their online blog and YouTube channel, frequently covering major Amazon updates and important topics relevant to the seller space.
Through BrandProtectionAmazon.com, the firm also supports brands in protecting their products. This gives the team the unique opportunity to learn from case wins on both sides of the fence, strengthening protection for both the sellers and brands that Rosenbaum & Segall P.C. represents.