Hello Fellow Sellers,
I’ve been actively following the forums recently and have noticed a heartbreakingly common theme: sellers, both new and old, are facing deactivation, fund confiscation, and immense frustration. Many are losing thousands of dollars and don't understand why.
This post is an attempt to share a crucial lesson that many are learning the hard way.
The "Get Rich Quick on Amazon" Myth vs. The Reality:
Many people come to the US market thinking Amazon is an easy way to make a lot of money. The reality is that Amazon is a serious business, not a side hustle. It has strict rules and legal obligations. The "gurus" on YouTube and TikTok promoting Retail Arbitrage (RA) or Online Arbitrage (OA) often fail to mention the immense risks involved.
The #1 Reason for Deactivation: A Broken Supply Chain
The most common reason for deactivation, especially for "Counterfeit" or "IP Violation" claims, is not having a valid supply chain.
Let's be crystal clear:
- Receipts from Walmart, Sam's Club, Target, or any other retail store are NOT proof of authenticity for Amazon.
- Buying from one online marketplace to sell on Amazon is NOT a valid business model.
Under US Federal Law and Amazon's Anti-Counterfeiting Policy, if you cannot prove your product's journey from the original brand to you, your items can be considered "inauthentic" or "counterfeit," even if they are genuine.
What Does Amazon Consider "Proof"? The Invoice & LOA Checklist :
You need two things: Invoices and, for many brands, a Letter of Authorization (LOA).
1. The Anatomy of a Valid Invoice
An invoice is NOT a retail receipt. It's a legal B2B (Business-to-Business) document. Here is what Amazon requires on your invoice:
Supplier Information:
- Must be from the brand itself or a brand-authorized wholesale distributor (not a retail store or a random pallet seller).
- Must include the supplier's full name, address, phone number, and email/website. Amazon may contact them to verify.
Your Information:
Must show your full business name and address, exactly as it appears in your Seller Central account.
Product & Transaction Details:
- Must be a single, completed document showing the order was shipped.
- Must be dated within the last 365 days.
- Must include a detailed list of products with quantities (at least 10 units per item is a good rule of thumb).
- Must list product identifiers like UPC, Model Number, or Product Name that match the Amazon listing exactly and can be verified online.
- The quantities on your invoices should reflect your sales volume over the last 365 days.
- Must show payment terms (e.g., Net 30, Cash, Credit Card).
Should NOT show any sales tax collected (as it's a wholesale transaction).
The Chain of Custody: Your documents must be able to trace your products all the way back to the original manufacturer.
2. The Letter of Authorization (LOA)
This is a legal document from the brand owner giving YOU permission to sell their products on Amazon. A simple reseller agreement is often not enough.
An acceptable LOA must be on the brand's official letterhead and include these five key terms:
- Licensor: The brand owner giving the permission.
- Licensee: Your company/business receiving the permission.
- Grant: A clear description of what products you are allowed to sell.
- Geographic Scope: The territories where you are allowed to sell (e.g., USA, Worldwide).
- Term: The duration of the agreement (e.g., one year, perpetual).
The Harsh Consequences of a Broken Supply Chain
- If you cannot provide these documents:
- Your account will be deactivated (often under Section 3).
- Amazon will likely confiscate your inventory.
- Under Federal Law, Amazon cannot release any funds they believe are from the sale of inauthentic goods. Your money will be lost.
- Appealing becomes nearly impossible, and hiring agencies often just takes your money without results because the core problem (your sourcing) cannot be fixed.
A Smarter Path for New Sellers:
Before you invest a single dollar, please do this:
- Educate Yourself First (4-5 Months): Spend time in Seller University and read these Amazon Forums daily. Understand the rules before you play the game.
- Start Small: Don't jump straight into FBA with thousands of dollars. Start with a small, test batch from a legitimate, authorized source.
- Stay Updated: Amazon's policies change. What worked last year might get you suspended today. The rules are the same for everyone, new or old.
Selling on Amazon can be a great business, but only if you treat it like one. Build it on a solid foundation of legitimate sourcing and deep policy knowledge.
Finally, if you want to learn from the best and see how experienced sellers think, I highly recommend you follow and read the posts from members like @Seller_rI7BZIczK8iAC , @Seller_kIukTwdhvntAp , and @Seller_4zBzdtgCyS9EI
I hope this helps someone avoid the painful situations we see here every day.