Amazon Marketplace Fair Pricing Policy – How to Prevent Price Gouging Suspensions During COVID-19

The COVID-19 pandemic is affecting billions of people worldwide, disrupting lives in an unprecedented manner, creating a frenzy of mass-panic-buying, and resulting in the hoarding of crucial supplies. Unfortunately, many Amazon sellers have reacted to these uncertain times by inflating prices for face masks, toilet paper, anti-bacterial wipes/gels, diapers, and other essential goods.

Sellers are currently receiving notices from Amazon stating “We are contacting you because you have engaged in price gouging in violation of the Amazon Marketplace Fair Pricing Policy (https://sellercentral.amazon.com/gp/help/G5TUVJKZHUVMN77V). We expect sellers to treat our customers fairly and not take advantage of events like the global health crisis arising from the COVID-19 coronavirus… As a result, your selling account has been suspended, and your listings have been removed from our site”. 

We often see fair pricing violations occur after natural disasters (earthquakes, hurricanes, etc.), and now they’re increasing during COVID-19. Due to the severity of the COVID-19 pandemic, Amazon is also taking additional measures which haven’t been applied before. Amazon is sharing information with state attorneys and federal regulators regarding seller activities. VP of Amazon Public Policy Brian Huseman wrote that the company is “working with multiple state attorneys general to prosecute the worst offenders.” Amazon will have zero tolerance for sellers who take advantage of buyers during this crisis. 

It’s extremely important that sellers understand Amazon Marketplace Fair Pricing Policy in order to prevent suspension. The following article explains how Amazon defines their Marketplace Fair Pricing Policy, outlines additional violations that can result in Marketplace Fair Pricing Policy suspensions, and includes tips on how to prevent Marketplace Fair Pricing Policy suspensions. 

How Does Amazon Define “Marketplace Fair Pricing Policy”?

According to Amazon, Marketplace Fair Pricing Policy is any pricing practice that harms customer trust within the following designated guidelines:

• Setting a reference price on a product or service that misleads customers
• Setting a price on a product or service that is significantly higher than recent prices offered on or off Amazon.
• Selling multiple units of a product for more per unit than that of a single unit of the same product.
• Setting a shipping fee on a product that is excessive. Amazon considers current public carrier rates, reasonable handling charges, as well as buyer perception when determining whether a shipping price violated our fair pricing policy. 

What Other Violations Can Result in Marketplace Fair Pricing Policy Suspensions?

Amazon fair pricing guidelines assume that sellers have intentionally set pricing or shipping fees above a reasonable amount, but many sellers unknowingly violate Amazon policy regarding pricing. There are many other violations that can trigger a suspension which aren’t outlined in Amazon Marketplace Fair Pricing Policy guidelines. Since many sellers aren’t aware of these violations, they can easily get suspended without intending to violate Amazon Terms of Service (TOS). 

We are providing additional violations below which are also considered harming customer trust if they result in price inflation:

• Failing to identify pricing errors for inventory in the following “essential” categories: Grocery products, health & household products, baby products, industrial and scientific products, pet supplies, and beauty & personal care products.
• Failing to continuously monitor prices: Amazon robots (bots) constantly examine multiple parameters within seller accounts. Unless prices are checked daily, an Amazon bot may catch a price increase on a product before the seller is aware of the violation. Once a bot identifies a pricing error, an automated suspension may be applied. 
• Failing to remove problematic inactive inventory: There are two types of inventory, active and inactive. Active inventory is available for sale on the marketplace and inactive inventory is unavailable for sale on the marketplace but remains in the account listings. Sellers typically assume that inactive inventory doesn’t get monitored by Amazon, because it’s not listed on the marketplace. What sellers don’t realize is that Amazon considers all inventory (active & inactive) as part of a sellers’ current inventory. Inactive items that violate Amazon policy will also trigger a suspension. 
• Failing to monitor software settings: Many sellers use pricing software to manage their products, so they don’t have to manually enter prices for multiple listings. Sellers commonly assume that adequate price settings are automatically applied to their products within the software. If pricing settings aren’t properly configured, the software will default to raising prices on a product to compete with other sellers’ increased pricing for that product.    
• Providing account access to virtual assistants and third-party companies without proper vetting: With respect to pricing guidelines, many virtual assistants and third-party companies are unaware of Amazon policies. Due to this, they may use pricing practices which result in violations. Managers are expected to carefully monitor all personnel (in house employees, virtual assistants, and third-party companies’) activity, to ensure that all practices are Amazon TOS compliant. 

Prevention Tips for Amazon Marketplace Fair Pricing Policy Suspensions

Generally, Amazon Marketplace Fair Pricing Policy suspensions are difficult to resolve, but they are manageable once an effective appeal has been submitted. During COVID-19, once an account is suspended for price gouging, the reinstatement process will take significant time, and will mean an extended loss of income for suspended sellers. Due to this, sellers need to apply prevention methods daily in order to reduce the chance of violating Amazon TOS. 

We are providing tips below which will help prevent suspension for Amazon Marketplace Fair Pricing Policy violations:

• Don’t set unfair prices for essential products: This should be a no-brainer, but often sellers see emergencies as an opportunity to cash in. Ultimately, elevated short-term earnings aren’t worth account suspension, lost income, potential permanent loss of a seller account, and in this case possible prosecution. 
• Spend extra time reviewing pricing for essential products: Run a daily pricing report to identify any problem products. Aim to be the lowest priced seller, below the price set prior to the pandemic, and below the MSRP.  
• Verify proficiency in Amazon TOS for virtual assistants and third-party companies: Unless sellers are 100% certain that the individual(s)/third party companies are adequately trained, disable user permissions. 
• Carefully monitor pricing software (if applicable): Verify software settings for each product and confirm that all items have a max limit put on pricing. This will ensure that the items don’t exceed a certain amount when other sellers are raising prices.
• If unsure about software settings, temporarily disable pricing software: If there are any questions about settings or if the software algorithm is unclear, disable the software and manually set up pricing until all concerns are resolved.
• Check inactive inventory daily: Delete any item which isn’t in stock, and monitor pricing on the remaining inactive inventory against current prices on the marketplace.
• Review all bulk-item listings: Check the pricing to ensure that the total price doesn’t exceed the price per item within the bundle. 
• Review all shipping fees: Set a fixed price for shipping fees. Monitor current carrier rates to ensure that rates stay in line with current pricing. 

Start Monitoring Prices Today

Amazon has already taken actions which include restrictions on listing certain products, limits to the type of categories accepted at FBA facilities, and immediate suspensions for any seller that has a pricing violation. 

Take time today to start applying the prevention tips listed above, and check items daily moving forward. Rule of thumb is that it’s best to remove products, software access, and third-party access until each “essential goods” product is confirmed to be compliant with Amazon TOS, software has been properly updated, and adequate training has been provided to all parties managing pricing on the account. 

If you have any questions related to Amazon Marketplace Fair Pricing Policy, or any other performance or suspension related matters, contact Sellercare.

Pro Tip: It is the best to consult a professional such as Sellercare once your account is suspended. In most cases, significant changes need to be made to seller account logistics, inventory, and business practices before the appeal is prepared.

Amazon business owners have their work cut out for them. Not only do they need to worry about maintaining a high level of customer service and ensuring that their products are up to par, but they also face the risk of suspension from Amazon at any time. This makes it all the more important for Amazon businesses to have access to adequate capital so that they can continue growing their businesses even in the face of these challenges. If you’re an Amazon business owner looking for ecommerce funding, we may be able to help. Contact us today to learn more about our services and how we can help you take your business to the next level.