Amazon Indemnity Clause - the Seller is Always Responsible

There's a great 60 minutes interview of Jeff Bezos in the 1990s - Mr. Bezos worked in a room with a stained carpet and wobbly table because everything about Amazon was for the buyer experience.  It is.  Something seems strange if I don't have a package on the way from Amazon.  That being said, I'd have to think very, very, very hard before ever selling on Amazon given all the 'horror' stories I can tell.

Just read the bold words in their indemnity clause:

6.1 Your indemnification obligations. You will defend, indemnify, and hold harmless Amazon, and our officers, directors, employees, and agents, against any third-party claim, loss, damage, settlement, cost, expense, or other liability (including, without limitation, attorneys’ fees) (each, a “Claim”) arising from or related to (a) your non-compliance with applicable Laws; (b) Your Products, including the offer, sale, fulfillment (except to the extent attributable to the FBA service), refund, cancellation, return, or adjustments thereof, Your Materials, any actual or alleged infringement of any Intellectual Property Rights by any of the foregoing, and any personal injury, death (to the extent the injury or death is not caused by Amazon), or property damage related thereto; (c) Your Taxes and duties or the collection, payment, or failure to collect or pay Your Taxes or duties, or the failure to meet tax registration obligations or duties; or (d) actual or alleged breach of any representations you have made.

Indemnification classically comes in two forms: 1) You pay for insurance and the insurance company pays for damages that you caused; 2) You sell a product and if that product causes damage, you pay the purchaser.

In the case of Amazon you are the insurance company and Amazon sets the terms.  It's the worst of both worlds.  The fault can be 100% with Amazon and 100% due to their active harm.  Too bad!  Jeff Bezos went around knocking people out with the yo-yo that you sold on Amazon ... you pay, not him!  What's that?  You sold one yo-yo on Amazon ten years ago and the version he used was purchased at a thrift shop?  Too bad!  Not even your product - it was a cheap knockoff of your product?  Well, that's "related to" your product - so too bad!  You are liable!

Your innocence will do you no good so save your tears - just don't sell them on Amazon or the next time someone cries Amazon can sue you.

Here's an example - the facts are changed though the embellishment, not much - you innocently sold a bent paperclip on Amazon that you found on the ground.  That was 10 years ago.  Now Amazon finds that someone else copied the bends and sold $1 million worth.  Problem:this bent paperclip infringed upon someone's patent and the seller knew it!  Amazon now comes after you for millions in damages!

Here's another example: you sell paperclips and Amazon says, "hey, we suggest also buying this bow".  You had no control over Amazon saying buy that bow ... in fact, they often tell people to buy Amazon's own products.  So now Amazon gets hit with a patent lawsuit because they're telling others to infringe a hair bow with paper clip in it.  Guess whose fault it is?  Yours!

Here's yet another scenario - Amazon says "sell us $1 million in widgets".  You do.  Amazon gets a cease and desist letter from someone in China who filed a design patent for your product - it's total fraud.  Amazon charges you everything they had paid you as well as new stocking fees, shipping fees to send the products back to you, and on and on.  Imagine you're selling $300,000 of products on an Amazon a year and Amazon tells you that your account balance with them is negative $1 million ... you're not seeing money from your sales for years.

Before you sell on Amazon read the indemnity clause and make sure you have someone to indemnify you when Amazon turns on you.