Ombudsman asks Amazon for unfair contract compliance

Wednesday, 20 September, 2017

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Amazon has been asked to ensure that it complies with Australia’s unfair contract terms legislation.

The Australian Small Business and Family Enterprise Ombudsman has written to the company, reminding it of its obligation to treat small business fairly in accordance with Australian law.

“Some businesses are concerned about the threat of competition while others are excited to embrace the opportunity that Amazon offers,” said Ombudsman Kate Carnell.

“I’m interested to see how Australian small businesses can accelerate sales and broaden their customer base though the Amazon platform.”

Analysis of the Amazon Marketplace contract terms in the United States suggested they would have to be changed in Australia to comply with federal legislation.

“From 12 November 2016, changes to the Australian Consumer Law protect small business from unfair terms in standard-form contracts,” Carnell said.

A standard-form contract is one that has been prepared by one party and where the other party has little or no opportunity to negotiate the terms. Meanwhile, an unfair term is one that causes a significant imbalance in the parties’ rights and obligations, and causes detriment to a small business if it were applied or relied upon.

In Amazon’s United States terms and conditions, the company reserves the right to refuse service, terminate accounts, terminate rights to use Amazon services, remove or edit content, or cancel orders at its sole discretion.

“This may be considered unfair as action can be taken by one party, Amazon, but not the other party, the vendor, to terminate the contract,” Carnell said.

“I’ve requested that Amazon review the terms and conditions in use for standard form contracts in its Australian operations to ensure they comply with the unfair contracts terms legislation.”

In response, an Amazon spokesperson told Technology Decisions, “We look forward to launching Amazon Marketplace in Australia and providing thousands of small businesses and entrepreneurs with tools and services that help them to reach millions of customers and to expand their businesses both here and abroad. We will, of course, adhere to all local laws in relation to our agreements with Marketplace sellers.”

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