Amazon / Ebay Arbitrage May Not Be Legal?

13 years ago

For more information on the legal issues involved in retail arbitrage, see Chris Green's book Retail Arbitrage, or the book: The eBay Seller's Tax and Legal Answer Book.

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KingArthur 13 years ago

When 'Retail Arbitrage' Isn't Legal by Cliff Ennico on Creators.com - A Syndicate Of Talent

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Also, look at this:

http://www.logicblock.com/logicblock...ge-a-good-idea

"Just this year, the Supreme Court got involved and informed manufacturers they cannot sue online sellers who engage in retail arbitrage. However, don't expect this to be the end of the argument. Many resellers buy stuff in bulk to sell online but these transactions may come with stricter guidelines and contracts.

However, the case did prove it's not illegal for you to resell items in this way unless you're breaking some specific contract. For example, unless you have a contract with Nike to sell their shoes, you may get into some hot water as they require contracts for authorized distribution."

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http://www.creators.com/lifestylefea...arbitrage.html

From the URL above: "So my personal prediction is that the Kirtsaeng case, while extremely favorable for online retailers, does not resolve once and for all the legality of retail arbitrage. It merely shifts the legal arena from the field of trademark and copyright law — where the manufacturers' positions were weak anyway — to the field of antitrust and trade regulation law. A Supreme Court sympathetic to big business — especially if it can be shown that retail arbitrage activities are costing jobs and putting U.S. manufacturers at a disadvantage to foreign competitors — might be more sympathetic to big companies that want to keep their merchandise off of eBay and Amazon."
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BKenn01

13 years ago

The information in that article is just not the case. Once you have "legally" purchased it from an "Authorized" distributor you can resell it. It is called the "First Sale Doctrine". Yes a Manufacturer can refuse to sell to you but they cannot legally stop you from reselling "Authentic" merchandise.

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Lipipaliwal

Banned 11 years ago

Originally Posted by BKenn01

The information in that article is just not the case. Once you have "legally" purchased it from an "Authorized" distributor you can resell it. It is called the "First Sale Doctrine". Yes a Manufacturer can refuse to sell to you but they cannot legally stop you from reselling "Authentic" merchandise.

Yes, you are right. I am completely in favor of you. As well mentioned here, if you purchase any thing product from a right and authorized firm of person, the you can again resell it, but make sure, you have a billing details what you have purchase as what you are selling.

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Importexport 11 years ago

@jlb148, thanks for your excellent treatment of this practice.

You have brought to light the unfair consequences imposed upon the original Amazon vendor. Sadly most of the opportunist types who want to make a few quick bucks couldn't care less.

Amazon/eBay arbitrage is a risky way of making very poor profit margins.
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jacktackett

13 years ago

First-sale doctrine - Wikipedia, the free encyclopedia

IANAL - the link above gives some more info on the first sale doctrine.

These topics are not simple or cut and dried-that's why court cases end up at the Supreme Court.

Jack

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lastreporter

13 years ago

[DELETED]

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Unity96387

13 years ago

Originally Posted by lastreporter

This method is not a method. It is a recipe for disaster. My advice is if you want to get serious about dropshipping, then you should start reading the threads on this forum and stop looking for a quick, no pain, get-rich-quick scheme. They don't work and they don't exist.

Online drop shipping arbitrage is a recipe for disaster? Can you prove your assertions?

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David Snape 11 years ago

I imagine there are actually some retailers that would not mind at all if you engaged in retail arbitrage. Like me for instance. I have a product that I wouldn't mind if someone on ebay wanted to make a profit from.
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jlb148

11 years ago

My 2 cents!

During my research on the legalities of arbitrating products between Amazon and eBay is how I came across your post.

I realize there are a lot of people that are using this business model and may not realize that they are in a very gray area without proper knowledge.

Allow me to give you some examples how their lack of knowledge can cause serious harm to themselves and others.

Those who want to argue the first sale doctrine; I believe that the first paragraph will moot your argument.

The first-sale doctrine is a legal concept. The doctrine enables the distribution chain of copyrighted products, for example, enabling individuals to sell their legally purchased product to others. In trademark law, this same doctrine enables reselling of trademarked products after the trademark holder put the products on the market. The doctrine is also referred to as the "right of first sale," "first sale rule," or "exhaustion rule." However, if the individual does not legally purchase the product, then they have illegally infringed on trademarked products and trademark holders. The keyword is "legally purchased".

Through my research I have come to realize that there is software that will set up these eBay stores and scrape contents from Amazon such as images and text. Not only is this against Amazon's policies but it is an infringement on copyrights. I have come across several listings of my product on eBay at a much higher price. My products are sold exclusively on Amazon. The logical argument would be "Well that's okay because you are making more sales" this is not true. This deceptive practice causes companies like mine financial harm which brings us into another area of the law.

This area of the law is referred to as the Unfair Competition law.

Unfair Competition law: an overview

"The law of unfair competition is primarily comprised of torts that cause an economic injury to a business through a deceptive or wrongful business practice. Unfair competition can be broken down into two broad categories. First, the term "unfair competition" is sometimes used to refer only to those torts that are meant to confuse consumers as to the source of the product. The other category, "unfair trade practices", comprises all other forms of unfair competition... "https://www.law.cornell.edu/wex/unfair_competition

Here's an example of what is taking place with my products through the "Retail Arbitrate" model.

When others list an exclusive product at an inflated price to make a few dollars then order that product through Amazon as a gift. Here is what happens behind the scene on my side:

Amazon charges:
Shipping and Handling: $12.83
Gift Wrapping: $4.95

The customer receives the product at the inflated price. This customer also becomes a customer of Amazon because this product was ordered from Amazon. Amazon then sends this new customer e-mails listing the product that they have purchased from the deceptive listing, but at the original price (lower price). The deceived customer requests a refund from these EBay listings because they can get the product at a lower price and these listings carry a 14 day return policy. The customer is than send a return shipping label to return the product to Amazon. Amazon then charges me a restocking fee of $15. This customer then makes a purchase directly through Amazon at the lower price, costing me an additional $12.83 for shipping and handling.

The results of these deceptive activities cost $45.61 in transaction fees alone on a product that I am selling for $34.95. This is grounds for filing a lawsuit against these individuals. Additionally, these products being returned affect my Amazon account which could lead to termination of the account.

Individuals who do not have the proper knowledge not only can be sued but can have their eBay and PayPal accounts closed. Closing these accounts is as simple as filling out a form online by the person or entity that you have infringed upon.

This lead us back to the question "Is Retail Arbitrage Legal? Only if it does not infringe on others work or cause financial hardships to others and is within the limits of the law.

How do you stay within the limits of the law?
Here is a basic outline that will keep you on the right path and out of trouble and keep you from getting a "Takedown Order".

Buy the product and have it in your possession. This eliminates the first-sale doctrine legal concept.
Produce your own pictures and description of the product. Do not copy someone else's work as this is a violation of copyright laws.
Eliminate third parties between you and the customer. Do not use someone else's account to fulfill your customers order. This will eliminate third-party financial damages lawsuits.
The transaction should be between you and your customer as this is the best practice since it builds trust between you and your customer.

In conclusion, I hope that this will enlighten others of the legalities of the Retail Arbitrage business model.
Best regards,
John

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shenigan

11 years ago

John,

Your post is very useful and I enjoyed reading it. All good information. I just wanted to expound this post with my own experiential illumination, for the useful insight it might bring to those who are eager for such clarity:

Originally Posted by jlb148

“Is Retail Arbitrage Legal? Only if it does not infringe on others work or cause financial hardships to others and is within the limits of the law.

How do you stay within the limits of the law?
Here is a basic outline that will keep you on the right path and out of trouble and keep you from getting a "Takedown Order".
__________________________________________________ ______________

Buy the product and have it in your possession. This eliminates the first-sale doctrine legal concept.

Drop-shippers distribute trademarked products to online resellers' customers, everyday. They even provide them with manufacturer-licensed images and sales copy, without issue.
__________________________________________________ ______________

Produce your own pictures and description of the product. Do not copy someone else's work as this is a violation of copyright laws.

Authorized drop-shippers are licensed distributors & can share those rights with their client-resellers, as provided in their supplier-contracts.
__________________________________________________ ______________

Eliminate third parties between you and the customer. Do not use someone else's account to fulfill your customers order. This will eliminate third-party financial damages lawsuits.

Again, drop-shippers have authorized reseller contracts in place allowing their client-resellers to sell their suppliers' merchandise via their platform, thereby using said drop-shippers accounts.
__________________________________________________ ______________

The transaction should be between you and your customer as this is the best practice since it builds trust between you and your customer.

The transaction IS between them and their customer. They're just not the orig. supplier. Nor, are they required to be, as long as they are an authorized distributor. Also, most customers are smart enough to realize that there are many intermediary resellers between them and the manufacturer. Fortunately, this business model is older than any person. Thus, it has proven stable over many generations.
__________________________________________________ ______________
In conclusion, I hope that this will enlighten others of the legalities of the Retail Arbitrage business model.
Best regards,
John

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marktechvanc

10 years ago

Hi, A good retail arbitrage is nothing but having discounts a conductor looks at weekly sales for great deals, and understands when sales start and end. Lots of people doing retail arbitrage as start-up work. Hopefully it is a potential massive amount of profit.

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marktechvanc

10 years ago

hi, Lots of people doing retail arbitrage as start-up work. Hopefully it is a potential massive amount of profit.

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Amazon / Ebay Arbitrage May Not Be Legal?

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