Sellers on Amazon are preparing to take legal action against the US e-commerce giant, claiming it has unlawfully frozen tens of millions of their sales proceeds. The legal action will seek compensation for affected sellers and force Amazon to unfreeze their funds.

City firm Rosenblatt is calling on other sellers whose funds remain frozen by Amazon to join its group legal action.

A spokesperson for the firm said: ‘Hundreds have taken to Amazon’s Seller Central chatroom and social media forums complaining that Amazon wrongly froze their funds.

‘The frozen money is the sale proceeds that sellers have earned from selling their products. The sale proceeds are essential to cash flow, and are required to continue the running of their businesses. Sellers believe that funds are frequently frozen on baseless and incorrect grounds, such as needing to update their VAT information.'

Some sellers have had nearly £300,000 frozen by Amazon, the spokesperson added. The combined amount of sellers’ funds wrongly frozen by Amazon is expected to be in the tens of millions of pounds, the firm claims.

The spokesperson said: ‘All too often, sellers have been offered very little information after these actions were taken against them, despite engaging in good faith by providing letters, evidence, and sometimes hundreds of emails.’

In February this year, then-minister for Enterprise Kevin Hollinrake MP wrote to Amazon to express concern that the company had frozen the accounts of some of their small business sellers pending VAT compliance checks.   

But Rosenblatt alleges the sellers continue to have money withheld unlawfully.

Dean Nicholls, partner at Rosenblatt representing affected sellers, said: ‘Amazon’s agreement with its sellers has very clear rules for what it can and cannot do. We believe that Amazon’s treatment of so many of its sellers is a clear breach of that agreement. We encourage all sole traders and businesses that sell goods on Amazon in the UK to consider joining our legal action to fight for compensation if their funds remain unlawfully frozen.’