July 10, 2020

Amazon Will Display Seller Identifying Information On Seller Profile Pages – What Does It Really Mean For Brands Trying To Stop Unauthorized Sales?

Flashlight Reveal

Amazon announced that it will display third-party seller names and addresses on its U.S. online marketplace beginning September 1, 2020, following a similar approach it has taken in Europe, Japan and Mexico. Amazon presumably refrained from displaying this information on the U.S. marketplace to date because, unlike other jurisdictions, U.S. laws do not require the disclosures. Manufacturers, brands and disgruntled consumers have been frustrated by seller anonymity on Amazon.com ever since.

While social media platforms were quickly flooded with comments predicting the demise of unauthorized sales and a new, more brand-friendly marketplace era, we do not share the sentiment. This will not be the panacea many are suggesting. Rather, like with Brand Registry and other Amazon policies and programs before it, we expect this shift in practice will, at most, provide some potentially useful tools and information. Remember, the vast majority of consumer purchases are and will continue to be driven by buy box placement, and without significant consumer effort made to investigate details on seller pages prior to purchase. Thus, we focus here on the impact of this change on brands combatting unauthorized selling. As detailed below, our view is that this newly provided information does nothing to fundamentally change the approach brands must take to control sales in the Amazon era. Indeed, we urge caution on the part of manufacturers and brands to refrain from using this information for enforcement purposes without first having a valid legal basis for doing so.

A. The available identifying information will likely be of limited value.

To state the obvious, the identifying information provided will only be useful if it is true and complete. Our experience is that sellers often give Amazon fake information when creating their accounts. Our view is that this practice is likely to continue and even increase in light of this policy change.

In addition, sellers regularly use private mailboxes, P.O. boxes, and shell entity names to avoid revealing their actual identities and addresses. It is often necessary to leverage law enforcement-level databases and the legal subpoena power to unmask the true identities of sellers employing these tactics. It is reasonable to expect that sellers will only increase their efforts to avoid detection in the face of this new approach. We anticipate that sellers will resort to various tactics, any one of which will continue to harm brands, including shifting sales to other platforms, creating multiple storefronts across multiple platforms, and simply lying about their true identities when creating their accounts – all of which will drastically limit the value of this information for enforcement purposes.

B. Obtaining Seller Identities Is Not Even Half The Battle – Brands Still Need The Appropriate Legal Foundation To Stop Unauthorized Sellers.

Importantly, while Amazon may provide seller information, it will not assist brands in removing unauthorized sellers or their listings from the platform. It is imperative for brands to understand that simply buying and reselling products is typically protected under the law – this is often referred to as the first sale doctrine. In most instances, there are specific exceptions to the first sale doctrine that manufacturers and brands must establish to legally overcome this protection and have a viable basis on which to effectively enforce against unauthorized sellers. We have detailed this requisite foundation in numerous prior pieces, examples of which can be accessed here. Thus, simply having a “target” in the form of an identified seller does not mean that the brand has any basis to remove that seller. Indeed, the majority of professional Amazon sellers are well-versed in this reality and will simply ignore baseless enforcement threats (like the kind sent by many monitoring companies or other enforcement vendors asserting that sellers are “unauthorized” and must remove their listing). This is why some of the most sophisticated and most disruptive Amazon sellers have never done much to hide themselves and confidently discard baseless enforcement threats.

C. Brands Must Take Care To Ensure That Their Enforcement Activities Are Legally Supportable And Do Not Inadvertently Expose Them To Risk.

Further to the above, while many “enforcement” vendors and internal brand protection teams are cheering this news and eager to receive a whole host of new “targets” vis-a-vis the newly disclosed identity information, brands must be wary. We have seen numerous instances where brands (or “enforcement” vendors acting on their behalf) have engaged in enforcement tactics against resellers without an appropriate legal basis and have drawn lawsuits from sellers in response asserting myriad claims for declaratory judgment, unfair competition and tortious interference. Moreover, brands asserting baseless enforcement actions – either themselves or through vendors – may find themselves unable to rely on certain defenses in subsequent legal proceedings like the Noerr-Pennington doctrine, among others. Such matters can be difficult and expensive to defend and are best avoided entirely by ensuring that there is legal justification for enforcement against a particular seller prior to taking action.

D. Brands Seeking To Avoid Whack-A-Mole And Stop Their Unauthorized Sales Issues Must Address Their Sources And Root Causes Of Diversion.

Finally, many unauthorized Amazon sellers – even once identified – are unknown to brands. That is, they cannot be linked to an authorized account and simply cut off. Rather, as is common in brands with two-step distribution or that are susceptible to arbitrage, sellers are often simply buying anonymously from distributors or in brick-and-mortar locations on promotion. Brands lack contractual relationships with these sellers, and likewise have no direct recourse against them under MAP policy enforcement mechanisms. Simply knowing seller identities in these instances will not, in and of itself, do much towards stopping the harms these sellers cause. And even with the requisite legal foundation and robust legal enforcement, brands can find themselves plagued by hordes of new sellers as quickly as they can remove existing sellers.

The reality is that brands frequently must go beyond merely identifying and enforcing against sellers to actually overcome their unauthorized sales challenges. Brands must work diligently towards uncovering diversion sources to make headway in cutting off unauthorized sales on the front end. Brands must then endeavor to address the root causes of that diversion activity (i.e., distribution incentives, liquidation practices, promotional activities, international arbitrage and the like) so as to avoid the necessity of indefinite mass-scale enforcement. Vorys eControl has a dedicated Diversion Diagnostics and Root Cause Team dedicated to uncovering diversion sources and working with brands to identify the root causes underlying their issues. We explain more about the importance of diversion diagnostics and root cause analysis in our whitepaper found here.

Who We Are

Vorys eControl is Vorys’ globally recognized practice dedicated to supporting brands by controlling their online sales. Vorys began offering its eControl services in 2013, when we realized the need for brands to control their online sales to protect and grow brand value in the eCommerce age.

Our end-to-end eControl services combine monitoring data and analytics, investigations, reseller policies, gray market legal foundations, diversion diagnostics, corrective action consulting, and comprehensive legally backed enforcement tactics. We do not play “whack-a-mole,” we do not rely on any takedown “tricks,” and we do not tout meaningless metrics. Rather, we define, implement and execute the comprehensive eControl solutions that help companies control online sales in a manner that facilitates optimized revenues and margins in today’s market.

We have worked with more than 400 brands – many of them multi-billion-dollar, global companies – to create and implement effective and cost-efficient eControl programs. Our team includes more than 40 attorneys across our firm’s seven offices, as well as a chief strategy and client success officer (with more than 20 years of channel management experience); a business strategy officer (who worked as a CPG brand executive and guided her company through a successful eControl process); and a director of analytics and insights (who is dedicated to analyzing data to help better serve our clients). When necessary, Vorys eControl calls upon other professionals at Vorys, which includes nearly 375 attorneys representing diverse and varied practice areas, such as antitrust, intellectual property, online advertising, privacy, tax and technology contracts, among many others.

We are winners of a Global Innovation Award from the College of Law Practice Management for our approach to integrating technology, investigation, law and business strategy to create these comprehensive eControl solutions.

We welcome the opportunity to further discuss these services and how they can support both your eCommerce and brick-and-mortar channels.