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Part 1
I am asked, with growing frequency, to advise UK-established Amazon sellers whose accounts have been deactivated and whose trading funds have been withheld by Amazon Payments UK Limited (“APUK”) for periods extending well beyond the 90-day window contemplated in APUK’s standard terms. In most cases the seller has been given no substantive explanation for the retention beyond a generic reference to a review, an instruction said to have come from Amazon Services Europe Sàrl (“ASE”), and reliance on the broadly drafted suspension and restriction clauses in the Selling on Amazon Payments User Agreement.
Lawdit is assembling a group of affected sellers to file a coordinated High Court claim against APUK and, where appropriate, ASE, due to the consistent pattern and large sums involved. This note explains, in outline, the basis of that claim and why we consider it to have real prospects.
The contractual position
APUK habitually relies on two clauses in the User Agreement: the suspension clause (historically section 5.3, allowing APUK to suspend the service and block access to the account where, among other things, the customer has provided incomplete or inaccurate information) and the restriction clause (historically section 2.7, allowing APUK to limit access to the merchant account balance for such time as it reasonably deems necessary). These clauses are broad, but they are not unlimited.
A seller has three options:
Reasonableness. The restriction clause is qualified by what is “reasonably deemed necessary”. That is an objective standard, not a licence for indefinite retention. Where APUK has held funds for one, two or three years without ever articulating the concern that justifies it, the reasonableness requirement is not satisfied on any sensible reading.
Good faith. faith. In a long-term commercial relationship of this character — a regulated payment service provider holding a merchant’s trading proceeds — the implied duty of good faith recognised in case law is, in my view, properly engaged. Retaining funds without explanation and declining to engage substantively with the customer’s correspondence both sit uneasily with that duty.
The ASE/APUK split: APUK’s defence is that the operational decision to suspend was made by ASE, a Luxembourg entity that is outside the Financial Conduct Authority’s perimeter, and therefore APUK is not responsible. The Financial Ombudsman Service has now rejected that argument repeatedly in decisions issued by five different ombudsmen. APUK is the FCA-authorised payment institution that holds the funds; it cannot disclaim responsibility for the consequences of doing so by pointing to a corporate affiliate. We expect a court to take a similar view.
Unjust enrichment
Where money is held by APUK for an extended period with no lawful or contractual justification, the seller has a respectable claim to unjust enrichment for the time value of those funds. The contractual exclusion clauses on which APUK relies — directed at consequential losses such as lost sales — do not comfortably defeat a restitutionary claim of this kind. The Ombudsman’s standard remedy of 8% simple interest from the date the funds should have been released provides a useful benchmark for the measure of recovery, although a court is not bound by it.
The Payment Services Regulations 2017
APUK is authorised under the Payment Services Regulations 2017 and is subject to the safeguarding obligations in regulation 23. The interaction between those statutory duties and APUK’s asserted contractual right to retain customer funds, on the say-so of an unregulated affiliate and without explanation, is — so far as we are aware — not yet the subject of any reported judgement. It is exactly the kind of point on which a High Court determination would be valuable, not only for the immediate claimants but also for the wider community of UK Amazon sellers.
Jurisdiction over ASE
ASE is incorporated in Luxembourg, and its own user agreement contains a Luxembourg jurisdiction clause. We do not pretend that joining ASE’s English proceedings is straightforward. There is, however, a properly arguable route under CPR Practice Direction 6B, paragraph 3.1(3), where ASE is a necessary or proper party to a claim properly anchored against APUK in England. The point would need to be argued and may be argued as a preliminary issue, but it is not a barrier to the claim against APUK proceeding in this jurisdiction.
https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part06/pd_part06b
Why a coordinated claim
A single-claimant action against Amazon is, candidly, an unattractive proposition. The costs are heavy, the defendant’s resources are effectively unlimited, and the disclosure burden falls disproportionately on the claimant. A coordinated claim brought by a meaningful cohort of sellers — chosen so that the lead claimants between them cover the principal fact patterns we see (VAT establishment, authenticity and counterfeit allegations, KYC documentation disputes, and verification interview failures) — is materially stronger. It spreads cost, it improves the prospects of a global settlement, and it puts the central legal questions in front of the court in a form that produces precedent useful to every affected seller.
The claim is, in our view, plausibly fundable on conventional third-party litigation funding terms, subject to after-the-event insurance and a settled costs budget. We are in early discussions with funders.
Risks
Candour requires us to flag them. Jurisdiction over ASE will be contested. The contractual clauses are real, although not as wide as APUK would have them. Limitation under the Limitation Act 1980 will cut off the oldest claims. APUK may produce confidential evidence to the court — as it has to the Ombudsman — that affects the positions of individual claimants. And the cost asymmetry between a seller cohort and the Amazon group is significant. None of these are reasons not to bring the claim; all of them are reasons to bring it carefully, in a structured cohort, with proper funding behind it.
If your account has been deactivated
If you are a UK-established Amazon seller whose selling account has been deactivated and whose trading funds are being held by APUK and have not been released to you, we would like to hear from you. The earlier you make contact, the better placed we are to assess limitations, gather the documentary record, and consider whether your case fits within the cohort we are assembling.
Please contact Michael Coyle at michael.coyle@lawdit.co.uk or via the Lawdit contact form at lawdit.co.uk.
This article is a general commentary on a developing area of dispute and is not legal advice. Every case turns on its facts. The merits of any individual claim and the prospects of recovery can only be assessed after a proper review of the seller’s documentation and correspondence with Amazon. Lawdit Solicitors is authorised and regulated by the Solicitors Regulation Authority.
