Amazon sellers are initiating legal action against the US e-commerce giant

Amazon sellers are preparing to take legal action against the US e-commerce giant, claiming it has unlawfully frozen tens of millions in their sales revenue. Legal action will aim to obtain compensation for affected sellers and force Amazon to unblock their funds.

City-based company Rosenblatt is calling on other sellers whose funds have been frozen by Amazon to join its class legal action.

A company spokesperson said: “Hundreds of people have taken to Amazon Seller Central’s social media chat and forums to complain that Amazon has wrongly frozen their funds.

“Frozen money is the sales proceeds received by sellers from selling their products. Proceeds from sales are necessary to provide cash flow and are necessary to continue operations. “Sellers believe that funds are often frozen for unfounded and incorrect reasons, such as the need to update VAT information.”

The spokesman added that some sellers had almost £300,000 frozen by Amazon. The total amount of seller funds wrongly frozen by Amazon is expected to be in the tens of millions of pounds, the company says.

A spokesman said: “Too often, sellers were offered very little information after such action was taken against them, even though they acted in good faith by providing letters, evidence and sometimes hundreds of emails.”

In February this year, the then business minister, Kevin Hollinrake, MP, wrote to Amazon expressing concern that the company had frozen the accounts of some small business sellers pending a VAT compliance audit.

Rosenblatt, however, maintains that sellers continue to unlawfully withhold funds.

Dean Nicholls, a partner at Rosenblatt who represents affected sellers, said: “Amazon’s agreement with sellers has very clear rules about what it can and cannot do. We believe that the way Amazon treats so many of its sellers is a clear violation of this agreement. We encourage all sole traders and businesses selling goods on Amazon in the UK to consider joining our legal action to fight for compensation if their funds remain unlawfully frozen.”