One Connecticut business owner is learning an entrepreneurial lesson the hard way—look before you leap.
Susan Occhino signed up for a Pro Merchant account with Amazon.com, and said the decision has cost her $10,000, as the retail giant is withholding payment for items she sold using the service.
Known online as The Dutch Bulb Lady, Occhino has been selling flowers via the Internet since 2007, and started to sell on eBay six months ago -- with great success, she said. She is a registered business owner in Waterbury, Conn., and operates with a small budget of about $1,000 a month. She said she uses the profits from each sale as working capital to purchase more flowers and supplies to fill orders.
In November, she began selling on Amazon.com via the retailer's Pro Merchant account, which charges a monthly $39.99 fee and touts its ability to help retailers "list more easily and at less expense." She admits she didn't read the contract before agreeing to it.
She said at first she was selling quickly and being paid nearly every week in small amounts of $165, $205 and more. On February 7, Occhino said after selling 259 bouquets -- thanks to a Valentine's Day Special she offered -- she learned her account had been blocked by the site.
"They said I didn’t have any feedback or reviews," she said. "They are withholding payment from me. They can withhold the money for up to 90 days."
Within five days, Occhino said she had made $10,000 from her Amazon sales, but hasn't seen any of the money, causing her business to backfire. She had items for her bouquets shipped to her house, COD, and couldn't pay them.
"Amazon told me that whatever orders I couldn't fill, to just cancel," she said. "But if you cancel orders with Amazon, they see you as a bad seller and can block your account. I am actually baffled and at a loss for words that a big company is doing this to little people."
Now, Occhino said she has strictly negative feedback on her Amazon page because of the orders she had to cancel, right around Valentine's Day. Her account can still take orders, but Occhino said she can't fill them because Amazon is withholding her payment.
"If a person has a very small budget, if they lose even $1,000, your world is upside down," she said. "For the first time in my life I didn't pay taxes on my house this month. I don't have working capital anymore, so how can I sell?"
Unfortunately for Occhino, Amazon didn't violate its contract. They reserve the right to withhold payment for up to 90 days, and can freeze your account for not having feedback or for selling too much too fast, she said.
Amazon declined to comment for this story, as it does not speak about individual merchant accounts, a spokesperson said.
New York City-based attorney Marshall Isaacs said Occhino made a fatal, but common mistake in agreeing to a contract without reading it first.
"This happens all the time. What you have here is this poor woman trying to keep her business alive, being bullied by Amazon," Isaacs said. "She should have had an attorney from the get-go. Even in the case of an Amazon contract, where it's just a button you click, that still needs to be reviewed by an attorney."
No matter how long-winded or confusing such an agreement may be, this is crucial for protecting your business, he said. Isaacs said under case law, once you are operating as a business owner, you lose consumer protection rights.
"You are deemed to understand what you have gotten yourself into," he said. "You don't have leverage when you are playing at the whim of a larger company."
As for Occhino, she is exhausted and waiting on payment from Amazon, but unable to continue to sell.
"No offense but who reads the fine print? There are so many loopholes," she said. "If I would have known what I know right now about all these loopholes from Amazon, I would have never done this, ever."