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Thu Oct 7 2021 21:38:19

Small Sellers Getting Sucked into Amazon Insurance Mandate

By: Ina Steiner

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Small sellers say Amazon is warning them they must purchase product liability insurance despite being significantly under the threshold for the newly revised mandate. 

As previously reported in EcommerceBytes, Amazon is requiring sellers to take out a liability insurance policy once they reach $10,000 in sales in one month on Amazon.com. Previously, the requirement had applied only to sellers who met that threshold for three consecutive months. But it now appears Amazon is enforcing the policy more broadly.

A seller of specialty collectibles wrote to EcommerceBytes today after getting an email notification with the subject line, "Action Required: Provide proof of liability insurance coverage."

"We are a small family owned business that has never, I repeat never, come even remotely close to selling $10,000 a month on Amazon," he said. "Wish we did, and we don't sell any products that are hazardous, we sell mostly paper collectibles."

Thinking it was a mistake, he called Amazon. "Even though they say the threshold is $10,000 in sales, in the same breath they say that they are now starting to require all merchants to provide the expensive liability coverage."

In the email Amazon sent the seller this morning, it included the following FAQ:

Why did I receive this message?
You are required to provide proof of liability insurance, and our records show you have not done so.  As of September 1, 2021, Section 9 of the Business Solutions Agreement (https://sellercentral.amazon.com/gp/help/G1791) requires you to obtain and maintain at least $1 million of commercial general, umbrella, or excess liability insurance, within 30 days after exceeding $10,000 in gross proceeds in sales in one month on Amazon.com or if otherwise requested by Amazon.

The last phrase - "or if otherwise requested by Amazon" - leaves the door open for Amazon to require any and all to obtain insurance.

Other sellers posted on various threads on the Amazon discussion boards, reporting they also received a notice despite being under the threshold.

One seller said they would probably only reach $9,000 in sales for the entire year, "So not sure why the mandate for insurance!"

Another seller who reported they have sold new and used books on Amazon for 10 years may be a victim of their early success. They said in the early years of selling they brought in 6-digit sales on Amazon, but only grossed $45,000 last year and were expecting under $25,000 this year.

"Amazon is requiring I carry $1,000,000 of liability insurance to continue selling books. When I call seller support I have a person speaking very poor english telling me I must buy the insurance or Amazon will close my selling account in 30 days, if they feel like it. (Random, unknown factor)."

The seller said they took it as a request from Amazon to bow out gracefully and sought advice from others

The EcommerceBytes reader said, "If Amazon no longer wants small merchants and only wants the big guys, they need to just tell everyone the truth."



Comments (11) | Permalink

Readers Comments

Perminate Link for Small Sellers Getting Sucked into Amazon Insurance Mandate   Small Sellers Getting Sucked into Amazon Insurance Mandate

by: COVID-19 This user has validated their user name.

Fri Oct 8 02:50:35 2021

"When I call seller support I have a person speaking very poor english"

Eh heh heh heh heh. It's always that, isn't it? Same deal with eBay. Cheap out because that's what makes stockholders happy!

Perminate Link for Small Sellers Getting Sucked into Amazon Insurance Mandate   Small Sellers Getting Sucked into Amazon Insurance Mandate

by: AddyUp This user has validated their user name.

Sat Oct 9 12:07:15 2021

"or if otherwise requested by Amazon"

They're all the same like Paypal and the seller "protection" on chargebacks. No matter what they say, no matter what evidence you have, their bottom line of we make the final decision is all that counts.

Perminate Link for Small Sellers Getting Sucked into Amazon Insurance Mandate   Small Sellers Getting Sucked into Amazon Insurance Mandate

by: Opalie This user has validated their user name.

Sun Oct 10 00:54:39 2021

Say what you will about PayPal, their seller protection for chargebacks far outshone the abysmal practices sellers are forced to endure under MisManaged Payments.

Paypal never 'held' my funds forever and a day if I fit the criteria for seller protection plus you actually had a chance to offer evidence to dispute the claim.

Perminate Link for Small Sellers Getting Sucked into Amazon Insurance Mandate   Small Sellers Getting Sucked into Amazon Insurance Mandate

by: mjr55 This user has validated their user name.

Sun Oct 10 01:00:20 2021

Insurance for these sellers would be like $300 year. If you can't afford that, you aren't really a seller in the first place. Amazon is for professionals, not part-timers.

Perminate Link for Small Sellers Getting Sucked into Amazon Insurance Mandate   Small Sellers Getting Sucked into Amazon Insurance Mandate

This user has validated their user name. by: Marie

Mon Oct 11 02:21:49 2021

@mjr55

That simply is not true at all about Amazon.  There are many sellers on Amazon that ship there own products and are well under the policy on Product Liability Insurance.  

Because someone sells part time does NOT mean they are not a "professional".  That is just simply insulting.  Amazon has sellers of all sizes and all walks of life.  There is no requirement that they must sell any certain amount of dollars to be taken seriously as a seller.  

Perminate Link for Small Sellers Getting Sucked into Amazon Insurance Mandate   Small Sellers Getting Sucked into Amazon Insurance Mandate

by: Chicago48 This user has validated their user name.

Mon Oct 11 05:48:14 2021

Amazon is requiring sellers to take out a liability insurance policy once they reach $10,000 in sales in one month on Amazon.com.
^^
A lot of "little" sellers will have to quit Amazon, including the Chinese. The Youtube influencers and IG influences should be online blasting this move.  That will get AMZ attention.

Perminate Link for Small Sellers Getting Sucked into Amazon Insurance Mandate   Small Sellers Getting Sucked into Amazon Insurance Mandate

by: Paul W This user has validated their user name.

Mon Oct 11 13:06:10 2021

Good luck to those disgruntled (for whatever reason) eBay sellers who imagine greener pastures at Amazon.  You think eBay is too controlling?  Heh.

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This user has validated their user name. by: Marie

Mon Oct 11 13:46:17 2021

@Chicago

I think if a seller is selling 10K per month or 120K per year that the insurance would not be a financial burden to them, or it shouldn't be.  But for sellers that do far less than that it most certainly would be.

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by: mjr55 This user has validated their user name.

Tue Oct 12 00:32:13 2021

@Marie

OK, I should re-word. Any person who owns a business and does not have liability insurance might still be professional still. What I should have said is any person who owns a business and does not have liability insurance is a moron.  

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by: mjr55 This user has validated their user name.

Tue Oct 12 00:34:36 2021

And the OP could sell $7k per month.....which is not remotely close to $10k, and $300 should not be a burden to them.

I don't like the policy any more than anyone else....but this is the USA. People can sue for ANYTHING and do. Your paper products made me sick from the fumes....something dumb. They could still sue you.

Perminate Link for Small Sellers Getting Sucked into Amazon Insurance Mandate   Small Sellers Getting Sucked into Amazon Insurance Mandate

This user has validated their user name. by: Marie

Tue Oct 12 01:38:11 2021

@mjr55

I'd say that isn't any better than your first post, but then I'm confident you know that.  Why people think they are the ultimate expert on EVERYONE else's businesses is simply beyond silly.  And the need to call others that see things differently than you or don't have the same outlook as you do names just further shows who you really are.



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