Lawsuit Targets Amazon Over Sales to American Liquidation Company

Amazon.com is facing a lawsuit from a prominent U.S. retail liquidation company, which alleges it was overcharged for purchasing bulk products

By Sheenu Gupta On Dec 20, 2024 Share with new partner:

Amazon.com is facing a new lawsuit filed by Xcess Ltd, a major U.S. retail liquidation company, which accuses the e-commerce giant of overcharging for bulk purchases of products from its warehouses across the country. The Ohio-based firm filed the lawsuit in a federal court in Akron on Wednesday, claiming that Amazon violated the terms of their liquidation agreement. Additionally, Xcess alleges that Amazon’s business practices breached Washington state’s consumer protection laws.

Xcess, along with other liquidation companies, typically purchases slow-moving or unsold inventory in large quantities at discounted prices from major retailers like Amazon. These products are then resold to consumers or distributed to other outlets. The lawsuit brings attention to Amazon’s dealings with liquidation firms, raising concerns about its pricing practices and adherence to contractual obligations.

According to the lawsuit, Amazon was aware that some of the items it sold to Xcess Ltd had artificially inflated prices. Xcess pointed to specific examples, such as smartphone cases that Amazon sellers had listed for hundreds of dollars and basic solar eclipse glasses priced at $40—significantly above their typical market value.

The lawsuit further claims that certain product sellers intentionally raised their retail prices because they knew Amazon would pass these inflated costs on to liquidation companies like Xcess. In addition to overcharging, Amazon allegedly invoiced Xcess for items that were unsellable. These included products that were either past their expiration dates or subject to recalls, rendering them unsuitable for resale.

These allegations highlight concerns over Amazon’s oversight of its marketplace pricing and the fairness of its business practices in its dealings with liquidation firms.

Neither Amazon nor Xcess Ltd immediately responded to requests for comment regarding the lawsuit. According to the complaint, tensions between the two companies have escalated in recent months due to Amazon’s claims that Xcess failed to meet certain obligations under their liquidation agreement.

Xcess stated in the lawsuit that it initially entered into a liquidation services agreement with Amazon in 2016. Over the years, the partnership expanded significantly, and by 2022, the contract encompassed 60 of Amazon’s product fulfillment centers across the United States. This wide-ranging agreement allowed Xcess to purchase bulk quantities of Amazon’s slow-moving or unsold inventory for resale, a process now at the center of the legal dispute.

The lawsuit claims that Amazon occasionally informed Xcess that some invoices contained inflated prices and offered a way for Xcess to identify these overcharges in order to receive credit. However, Xcess argued that the process was extremely difficult and burdensome. The overcharges were often buried within invoices that included millions of individual line items, making it nearly impossible to efficiently detect the excessive charges. This, according to Xcess, placed an unfair administrative burden on them.

Additionally, the lawsuit alleges that Amazon unlawfully interfered with Xcess’ business dealings involving another company, Liquidity Services (LQDT.O). Liquidity Services had secured a significant contract with Amazon in June, which, according to Xcess, disrupted its own business plans and operations. This alleged interference has further intensified the conflict between Xcess and Amazon, adding another layer to the ongoing legal dispute.

The lawsuit filed by Xcess Ltd seeks unspecified monetary damages from Amazon and requests a legal declaration affirming that Xcess does not owe any outstanding payments to the company.

The case, titled Xcess Limited v. Amazon.com Services LLC, was filed in the U.S. District Court for the Northern District of Ohio and is identified under case number 5:24-cv-02205-JRA. This legal action aims to resolve the ongoing disputes between the two parties regarding their liquidation agreement and alleged overcharging practices.