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This is Part 4 of a series on the High Court route for UK Amazon sellers whose accounts have been deactivated and whose funds have been withheld. Part 1 set out the case for a coordinated claim. Part 2 looked at the two-contracts, two-companies structure Amazon has built around its sellers, and at the standard defence Amazon has been running before the Financial Ombudsman Service. Part 3 turned to the jurisdictional question — whether the Luxembourg side of the Amazon structure can be brought into English proceedings alongside Amazon Payments UK Limited. In this part we move from framework to substance: the three primary claims a UK Amazon seller has against APUK.
From framework to substance
Until this part, the series has been about the architecture of the case — which company is which, which contract is which, where they can be sued, and why the standard defence is weaker than it looks. That work matters. But it is the scaffolding, not the building. The building is the causes of action: the specific legal claims a UK An Amazon seller has against APUK arising from the prolonged retention of trading funds without substantive justification.
Three claims sit at the centre of the case. They are not alternatives. They are complementary, each approaching the same wrong from a different doctrinal direction, each producing relief on a different measure. Pleaded together, they create a much more difficult problem for Amazon to defend than any of them in isolation. We take them in order.
Claim 1: Breach of contract
The most direct claim against APUK is the contractual claim. The Payments Agreement permits APUK to restrict access to a seller’s account balance “for such time as we reasonably deem necessary to protect us or other users”. We discussed in Part 2 why that wording does less work for Amazon than Amazon’s conduct suggests it thinks it does. The breach of contract claim is the engine through which that point is put before the court.
The structure of the claim is straightforward. The Payments Agreement is binding on APUK and the seller. The clause permits restriction only where APUK can show, on objective and reasonable grounds, that restriction is necessary in the amount and for the time imposed. APUK has restricted the seller’s account for months or years. APUK has not, on the documentary record available, identified or evidenced any financial risk to itself that justified the duration of the restriction. ASE’s underlying concern, even taken at face value, is ASE’s concern, not APUK’s risk. And the “any dispute exists” trigger in the clause is qualified by the further requirement that the period of restriction is one APUK reasonably deems necessary – a temporal limit that the courts will not, in our view, allow to be stretched indefinitely on the assertion alone that a dispute exists somewhere in the Amazon corporate structure.
The remedy for the contractual claim is the release of the withheld funds, interest, and — where it can be properly evidenced — consequential losses. The Financial Ombudsman has consistently awarded eight per cent simple interest from the date the funds should have been released, and that is a useful starting point for what the court is likely to do, although the court is not bound by it.
Claim 2: Unjust enrichment
The second claim is in unjust enrichment. It approaches the same retention of funds from a different doctrinal direction, and it has features that make it valuable in its own right and not merely as a back-up to the contract claim.
APUK has been enriched. It has held the seller’s funds — funds which, under its safeguarding arrangements pursuant to regulation 23 of the Payment Services Regulations 2017, are held for the benefit of the seller — and has had the use of those funds during the period of retention. The enrichment is at the seller’s expense, both directly (the seller is deprived of the use of the money) and indirectly (the seller has paid for payment-processing services that have, during the retention period, not been delivered).
The unjust factor will vary with the case. In some claims it is failure of consideration: the seller has paid for a service which, in the relevant period, has been withheld. In others it is absence of basis: the contractual right to retain has been exceeded, so the legal foundation for APUK’s continued holding of the money has fallen away. In yet others, particularly where the retention has continued long after any internal investigation should have concluded, the unjust factor is closer to mistaken retention.
The natural defence to the unjust enrichment claim is that the retention was contractually authorised — that APUK was entitled, under the Payments Agreement, to hold the funds. Where the contractual claim succeeds, that defence falls away. Where the contractual claim is harder to make out on the particular facts, the unjust enrichment claim provides a separate doctrinal route to the same recovery.
The Financial Ombudsman has already touched the edges of this analysis. In one of the upheld decisions we have reviewed, the Ombudsman held that APUK’s exclusion clause did not allow it to retain fees taken for services that were never provided. The logic of that decision is unjust-enrichment logic, even though FOS does not frame it that way. The High Court would be entitled to take the same approach and to extend it — with greater force — to the retention of the principal sum itself.
Claim 3: Breach of statutory duty under the Payment Services Regulations 2017
The third claim is the one that, in our view, makes this litigation more than an ordinary commercial contract dispute. It is also the claim on which there is, so far as we are aware, no decided English authority. It is a genuine test-case point.
APUK is authorised under the Payment Services Regulations 2017 as a payment institution. It is subject to the safeguarding requirements in regulation 23, which require an authorised payment institution to safeguard “relevant funds” — broadly, sums received from or for the benefit of payment service users in respect of payment transactions — by holding them in a separate account with an authorised credit institution, or by other equivalent means, and by not commingling them with the institution’s own funds. The purpose of safeguarding is to protect the user of the payment service in the event of the institution’s insolvency or failure.
The seller’s funds held by APUK are, by definition, relevant funds within the meaning of regulation 23. APUK’s regulatory obligation is to safeguard them for the benefit of the seller. The question we raise, on which we are not aware of any decided authority, is whether prolonged retention of those funds at the instruction of an unregulated affiliate is consistent with that statutory obligation.
There are two strands to the argument.
The first is structural. Safeguarding under the regulations is for the benefit of the payment service user, not against them. A regulated payment institution holds relevant funds on a footing closer to a trust than to ordinary commercial possession; the funds are not the institution’s, they are the user’s, and the institution’s job is to keep them safe and deliver them when due. Retention for years on the instruction of an unregulated affiliate, where the affiliate has no regulatory standing to make safeguarding decisions and where the institution has not itself articulated a regulatory or contractual basis for retention, is in serious tension with the statutory scheme.
The second strand draws on the conduct of business provisions of the Regulations — the transparency, information and timing requirements that apply to authorised payment institutions in their dealings with users. Where an authorised institution departs from the contractual timetable for disbursement without giving substantive reasons, the user is left without the regulatory protections the regulations were designed to provide. Whether that constitutes a breach of statutory duty actionable by the user is, again, an open question.
This is a serious point. It is novel. It has not been adjudicated. It is exactly the kind of question on which a coordinated claim brought by a meaningful cohort of sellers, properly funded, is well placed to obtain a determination that benefits not only the immediate claimants but also the wider universe of UK Amazon sellers — and indeed users of other UK-authorised payment institutions whose conduct mirrors APUK’s.
Why all three matter
Each of the three claims produces recovery on a different basis. The contractual claim is the most familiar and the most direct and is calibrated to the loss the seller has actually suffered. The unjust enrichment claim is calibrated to the benefit APUK has obtained — principally the time value of money it should not have been holding — and produces relief even where consequential losses are difficult to evidence. The statutory claim opens a doctrinal question that has not been answered and carries with it the prospect of a precedent that materially reshapes the position of UK Amazon sellers — and, more broadly, of users of UK-authorised payment institutions — for the future.
The Unfair Contract Terms Act 1977 point we discussed in Part 2 — the challenge to APUK’s broad exclusion of liability — runs across all three claims and is most acute in respect of the exclusion clause’s purported application to losses arising from suspension. We will not repeat it here, but it travels with the case at every stage.
Where the series is going next
Part 5 will turn to the claims that lie against ASE, the Luxembourg side of the Amazon structure – both the direct contractual claim under the Business Solutions Agreement and the tort claim for inducing a breach of APUK’s contract with the seller. These claims are doctrinally available, but they sit within the jurisdictional question we explored in Part 3 and have to be considered with that question in mind. After that we will turn to limitation: how long a seller has to bring a claim under the Limitation Act 1980, why it is not as long as sellers usually assume, and why the cohort we are assembling needs to hear from affected sellers now.
If your account has been deactivated
If you are a UK-established Amazon seller, your selling account has been deactivated, and APUK is continuing to hold funds that have not been released to you, we would like to hear from you. Time matters—the limitation under the Limitation Act 1980 cuts off the oldest claims, and the earlier we see the documentation, the better placed we are to assess where your case sits on that timeline and whether it fits within the cohort we are assembling.
michael.coyle@lawdit.co.uk
