Amazon Seller Faces a Sudden $181,000 Billing Glitch

Imagine the feeling when you're suddenly informed you owe $91,000 in marketplace fees, but it's a mistake. And then after a month of trying to get it fixed, your bill climbs to $181,000, and you realize it will keep going up by $91,000 each month, with no end in sight.

Amazon seller Zu Adams wrote about the dilemma she faced in August when that happened to her. On her blog, she called the incident a "surreal nightmare come to life."

Zu had participated in an invitation-only program called FBA Onsite several years ago that turned areas of sellers’ warehouses into Amazon FBA fulfillment centers - basically "deputizing" the space, so that when orders came in for inventory stored in that area of the seller's warehouse, the orders would be fulfilled using Amazon’s software and transportation network.

The program gave sellers the same advantages of Seller Fulfilled Prime, but with more cost savings - imagine not having to deal with the hassle of shipping inventory to FBA warehouses. Right now, that probably sounds especially appealing to FBA sellers who are facing restock limitations.

Amazon notified participants in August 2020 that it would be closing the FBA Onsite program, which it did in February 2021.

Adams explained in her blog post that she stopped participating in FBA Onsite in 2019 and turned it off. Here's how she described what happened after getting the surprise bill 2 years later: 

"I submitted a case stating that we have no inventory at an Amazon warehouse because we used to participate in FBA Onsite. As a result, we shouldn't be getting charged for ANY storage fees. Since all FBA Onsite inventory was stored by us, and not Amazon, we were assured at the beginning of the Onsite program that no storage fees would apply to us."

Given the scale and suddenness of the problem and the inability of the seller to get the problem resolved, we suspected customer service reps today might not even be familiar with the now inactive FBA Onsite program. We also wondered if other sellers were having the same issue.

We reached out to Amazon's public relations department, and ultimately, they were able to dig into the issue and provided us with the following statement:

"We strive to provide sellers with the best possible selling experience, including tools, services and support to help them succeed. This seller experienced an isolated technical glitch that resulted in erroneous fees charged to their account. We have since resolved the issue, reimbursed the seller, and reached out to them directly to address the situation."

It seems the glitch impacted a very small number of sellers, and none to the degree Adams had experienced. 

Amazon said it had provided the seller with a way to reach out by phone, though we're uncertain whether she would have had the success the PR department had, given the isolated nature of the glitch impacting a now defunct program.

In a follow up post on her blog, Adams said while she's grateful the glitch was resolved, it had a serious impact on her sales.

"Our storefront was shut down for almost five weeks. We lost all of our ranking in a very competitive category. This has greatly affected us. We've received 33 orders since last Thursday. We would normally have well over that number of order in one day. I'm not sure what Amazon can do about this, but speaking to someone about the effects of their "isolated technical glitch" would be helpful to me."

The implications of the incident are sobering. Amazon could only see that its system showed the seller's inventory in FBA - and if Amazon's system says the inventory is in its FBA fulfillment center, then it must be so. Sure, it seems like a fluke that didn't impact many people, but if you are one of the people it did impact, how do you find a resolution?

We give credit to Amazon for investigating the issue after our intervention. But the incident is an example of why sellers must document everything and retain those records lest they find themselves in a surreal nightmare like the one Adams faced.

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