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Commentary on the Financial Ombudsman Service’s published decisions against Amazon Payments UK Limited
Whilst watching the footie from this year’s World Cup, I have spent some time analysing the published decisions of the Financial Ombudsman Service concerning Amazon sellers whose funds have been frozen. I read, for my sins, thirty-five decisions in total: six upheld and twenty-nine rejected. The pattern, in simple terms, seems to be this. First, Amazon will tell you to engage with the relevant support team via Seller Central, usually through an automated system. Then, after months of automated replies, you will be told to complain to the Financial Ombudsman Service. Amazon won’t budge. So you complain to the Ombudsman. Then, after a further wait, you will be told that the Ombudsman cannot help you, because the part of Amazon that froze your money is not the same part of Amazon that is regulated.
For a while, that argument did not work for Amazon. Between 2022 and early 2024, sellers were winning at the Ombudsman with surprising regularity. Ombudsmen were ordering Amazon Payments UK Limited (APUK) to release funds and to pay 8% interest, sometimes running back years. The reasoning was direct: APUK is the entity authorised by the Financial Conduct Authority, APUK is the entity that physically holds the money, and APUK cannot point at a sister company in Luxembourg and disclaim responsibility.
Read the decisions issued from late 2025 onwards, however, and you will see something very different. The same argument that used to lose for Amazon is now winning, consistently and across many decisions. Sellers are losing on facts that would have produced a clear award of interest two years ago. Anyone heading to the Ombudsman today needs to understand what has changed, why it has changed, and whether the Ombudsman is still the right place to be heading. This is what caught my interest — especially as the Egypt v Australia game was so boring.
Two contracts, two companies, one workflow
To understand what is happening, you have to understand the architecture. When you open a UK Amazon seller account, you are signing up to two contracts at once, with two different Amazon companies, even though it looks like you are just clicking through a single workflow.
The first contract is with Amazon EU S.à r.l. (AEU) — referred to in some older paperwork and earlier Ombudsman decisions as Amazon Services Europe, or ASE. AEU is a Luxembourg-incorporated company that operates the marketplace itself: the listings, the fulfilment, the reviews, the “A-to-z” claims, the storage, and the suspension of selling privileges if AEU decides, for example, that you are selling counterfeit goods. AEU is not authorised by the Financial Conduct Authority. The Financial Ombudsman Service has no power to look at what AEU does.
The second contract is with Amazon Payments UK Limited. APUK is a UK company authorised by the Financial Conduct Authority as a payment institution. Its job is narrow: it receives the money that buyers pay for your goods, holds it, and pays it on to your bank account. APUK is regulated. APUK is within the Ombudsman’s jurisdiction.
The trouble — and it really is the central trouble of the whole story — is that the money lives in APUK, while the decisions live in AEU. AEU decides you have failed a Know Your Customer review, or that you cannot prove you are established in the UK for VAT purposes, or that your supply chain documents are unsatisfactory, or that an in-person verification interview did not go to its liking. AEU then tells APUK to keep hold of your money. APUK does so. If you complain, AEU will direct you back to APUK. APUK will direct you back to AEU. Each will tell you that the other is responsible. You are a hot potato.
When that complaint reaches the Ombudsman, you are asking it to find APUK at fault for a decision that, on the face of it, AEU made. Whether that argument succeeds depends on a question the Ombudsmen used to answer one way and now answer the other.
The years the sellers were winning
Between 2022 and roughly the spring of 2024, a recognisable line of decisions ran in sellers’ favour. The reasoning was usually some variant of the following. APUK is the entity authorised by the FCA to provide payment services. APUK is the entity that holds the funds. The fact that another Amazon company in the group instructed APUK to hold the funds does not relieve APUK of responsibility for what it actually does. If APUK cannot explain to the Ombudsman why funds are being held for years, or why a review that should have taken 90 days is still running 24 months later, then the Ombudsman is entitled to find that APUK has not acted fairly.
What linked these wins was not that APUK had done anything outrageously bad. It was that APUK could not produce, when pressed, an evidenced explanation of why the funds were still being held. The Ombudsman repeatedly accepted that APUK was entitled to review accounts and to hold funds during a review. What the Ombudsman would not accept was that APUK could outsource its responsibility for what happened next to a Luxembourg sister company outside the Ombudsman’s jurisdiction.
What the recent decisions say
Reading through the published decisions from late 2025 into 2026, a different pattern emerges — and the change is not subtle. The same argument that used to lose for APUK, namely that the decision really came from AEU and APUK is just executing instructions, is now winning almost as a matter of course.
The reasoning, repeated across decision after decision, runs roughly like this. APUK’s user agreement — specifically section 2.7 of the Selling on Amazon Payments User Agreement — gives APUK broad discretion to restrict access to a seller’s account balance where “any dispute exists involving your Account or transactions conducted in connection therewith”, and to maintain that restriction “for the time that it takes for us to complete any pending investigation or resolve a pending dispute”. AEU has told APUK that a dispute is unresolved. APUK is entitled to rely on that information. APUK is not required to conduct its own independent investigation of the underlying dispute. The Ombudsman has no jurisdiction over AEU. Therefore, APUK has not acted unfairly.
Sellers — often through able representatives — have thrown a great deal at that reasoning. They have argued that, under the Payment Services Regulations 2017, APUK, as an authorised payment institution, must bear compliance responsibility for any functions it has outsourced, and that on any sensible view APUK has outsourced verification decisions to AEU. They have argued that the chargeback window has passed, that no refund risk remains, and that there is therefore no financial risk to APUK that could justify continued retention. They have argued that AEU is not authorised to hold client money in the UK, so APUK must be the entity actually making the decision to freeze. They have argued that the whole arrangement is structured to escape FCA regulation and Ombudsman jurisdiction. They have argued that where AEU has applied a penalty charge to a seller account, that closes the underlying investigation and ends APUK’s right to continue withholding. They have pointed to the older line of Ombudsman decisions in their favour.
Each of these arguments is now being rejected in terms that have become almost templated. The Ombudsman repeats that Ombudsman decisions are not precedents. The Ombudsman repeats that the Financial Ombudsman Service is not a regulator and has no regulatory powers. The Ombudsman repeats that it cannot assess the fairness of AEU’s underlying decision, because AEU’s activities fall outside the statutory scope of the service. And the Ombudsman repeats that APUK can rely on the information AEU has given it.
The practical effect is that the principal merits argument that worked for sellers in 2023 — the structural responsibility argument — has largely stopped working in 2026.
Why the change?
In the older cases, where APUK was losing, a recurring feature was that APUK simply refused to engage evidentially with the Ombudsman. APUK would say it was relying on AEU. AEU was outside jurisdiction. End of submission. The Ombudsmen, faced with an absence of evidence justifying the retention of substantial sums for long periods, drew the inference against APUK that fairness required.
That approach has been abandoned. In several recent rejected cases, APUK has provided the Ombudsman with confidential evidence — material the Ombudsman is permitted to consider but not permitted to disclose to the seller. The Ombudsman then writes that, having reviewed the evidence in confidence, it is satisfied APUK has acted reasonably, but cannot explain why. The seller never sees the case being run against it. The seller never gets to respond to it. And the seller loses.
That confidential evidence route was, ironically, available to APUK throughout. The earlier upheld cases turn substantially on the fact that APUK did not use it. It now does. In one of the few recent cases where a seller obtained any traction at all — a partial provisional uphold covering a period during which APUK could not explain a fourteen-month hold — the outcome was reversed in the final decision precisely because APUK produced further confidential evidence in response to the provisional view.
Where APUK is still structurally weak
None of this means APUK now wins every complaint. There remain situations in which sellers continue to obtain awards, or in which APUK is structurally vulnerable, and they are worth identifying because they tell you what a viable complaint looks like today.
Pure delay. The first is unexplained delay, where APUK has no evidenced explanation for the length of time taken. In one case, the Ombudsman accepted that the initial block was fair, that AEU’s eventual demand for a verification interview was outside the Ombudsman’s scope, and that APUK was entitled to hold funds during the review — and nevertheless awarded interest, because APUK could not explain why KYC documents resubmitted in January were not assessed until September. Eight months of dead air, with no confidential evidence to fill the gap, was enough.
Fees for services never provided. Where APUK has applied charges to an account that was never operational and never processed a single payment, the older cases hold — and there is no reason to think the newer decisions would depart from this — that the exclusion-of-liability clauses in the user agreement do not allow APUK to retain those fees. This is unjust enrichment territory, not loss-of-profits territory, and APUK cannot argue around it.
Independently authenticated documents. The third is the fully verified seller whose documents have been independently confirmed. In one of the older cases, the Ombudsman’s investigator contacted the seller’s bank directly and confirmed that the statement APUK had rejected was genuine. APUK had no answer. The Ombudsman held that further doubt on APUK’s part was unreasonable and ordered the funds released with 8% interest from the date of the block. This is rare in practice, but it shows what evidential clarity can achieve.
Tightly evidenced consequential loss over a defined period. Where a seller can show, using verified historic Amazon data, what its average daily sales were during the twelve months before a block, and where the Ombudsman can identify a specific period during which APUK should have lifted the block but did not, the Ombudsman has been willing to award the lost sales for that defined period — together with interest, storage fees actually incurred during the block, and a modest inconvenience payment to the corporate complainant. The same case is instructive in the opposite direction: a further claim that escalated from approximately £10,000 to over £45,000, including reputational damage and projected turnover loss, was firmly rejected for lack of causation evidence. The lesson is that consequential loss claims at the Ombudsman work only when they are narrow, evidenced, and short.
Indefensible process failures. The fifth, less reliable but worth knowing about, covers failures of process that even APUK cannot defend: misrouted communications, broken verification links that the seller has tried repeatedly to use, system faults at APUK’s end during a KYC review, and repeated rejection of the same identity documents that APUK has previously accepted. These do not get the underlying funds back faster, but they have produced inconvenience awards and small interest awards, and they can move APUK to settle before the decision lands.
What is striking, set against the older line of authority, is how narrow that list now is. The structural responsibility argument — the foundation of the early wins — has effectively been written out.
What this means for sellers right now
If you are an Amazon seller and your funds are currently frozen, the question of where you take that fight matters more than it used to.
- The Ombudsman is no longer reliably useful for VAT establishment disputes. A run of recent decisions, all involving sellers whose accounts were frozen after AEU was not satisfied with their documentation regarding UK establishment for VAT purposes, has gone against the seller. The Ombudsman’s repeated position is that whether you really are UK-established is a matter for AEU, that AEU is outside jurisdiction, and that APUK’s reliance on AEU’s determination cannot itself be impugned.
- The Ombudsman is no longer reliably useful for authenticity or counterfeit disputes. Where AEU has decided that your products may be inauthentic or your supply chain documentation inadequate, the Ombudsman will not second-guess that conclusion, and will treat APUK’s freeze of the funds as proportionate while the dispute remains unresolved.
- The Ombudsman is no longer reliably useful for verification interview disputes, particularly where the seller has missed an interview — no matter how many times the seller may have tried to reschedule. The Ombudsman treats the in-person interview process as AEU’s territory.
- The Ombudsman is no longer reliably useful for trading status disputes. Sole trader / limited company misclassifications, and disputes about whether your trading volume requires registration as a business, are now being decided in APUK’s favour.
What does that leave? The narrow categories already identified: unexplained delay, fees for services not provided, fully authenticated documents that APUK persists in rejecting, and tightly evidenced lost sales for a defined period.
For sellers whose dispute does not fit one of those categories — and the rejected decisions cover many millions of pounds of frozen seller funds across a great variety of underlying factual situations — the Ombudsman is increasingly not the answer. The more important question is: what is?
The alternatives now worth taking seriously
The first thing to say about the alternatives is that they are not free, and they are not easy, and they need to be approached with the same realism that should now be applied to the Ombudsman.
Civil litigation. Amazon’s user agreements contain choice-of-law and dispute-resolution clauses that need to be read carefully, but the courts of England and Wales are open to claims by UK-established companies against APUK as a UK-incorporated entity, and to claims against AEU in appropriate cases — including for breach of contract, unjust enrichment in relation to retained fees and, depending on the facts, for damages flowing from the prolonged retention of funds. The court is not bound by the Ombudsman’s interpretation of section 2.7 of the user agreement. The court is not constrained by jurisdictional limits that prevent it from looking at AEU. The court can order the release of funds and can grant interim injunctive relief in genuinely urgent cases. For sums above the Ombudsman’s £430,000 award limit, or where consequential losses are central, litigation is often the only realistic route.
FCA complaint. The Financial Conduct Authority is a regulator. It does not resolve individual disputes — that is precisely what the Ombudsman keeps reminding sellers of — but it does take complaints about the conduct of authorised firms, and the question of whether APUK’s reliance on AEU constitutes an outsourcing arrangement governed by the Payment Services Regulations 2017 is exactly the kind of question a regulator can examine. An FCA complaint will not get your money back this month. But where a credible pattern of behaviour can be evidenced across many sellers, regulatory pressure is one of the few things capable of changing it.
Group litigation and collective claims. Where many sellers have been affected by essentially the same conduct, the economics of pursuing individual claims start to favour collective action. The English courts have well-developed procedures for group litigation orders and representative actions. For sellers with smaller individual sums frozen — cases where the cost of solo litigation would dwarf the recovery — collective action is increasingly the most realistic route to any recovery at all.
Pre-action letters and settlement. A properly drafted letter before claim, setting out the legal basis of the claim and the consequences of court proceedings, sometimes prompts a commercial response that years of customer-service ping-pong have not. This is particularly true where the underlying merits are strong and the litigation risk to APUK is real.
Tax and accounting steps. Where AEU has made a VAT establishment determination that you believe to be wrong, the answer may not lie in the contract dispute with Amazon at all. It may lie in obtaining a binding clarification from HMRC, which is determinative as against AEU’s view of the same issue and which removes the foundation of AEU’s withholding instruction. This is not a quick fix, but for VAT cases it is sometimes the only fix.
By the way, Egypt won on penalties. Go Salah!
Michael Coyle
