UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON AT SEATTLE
AMAZON.COM, INC., a Delaware corporation, Plaintiff, v.
FBA STORES, LLC, a limited liability company; FBA DISTRIBUTORS, LLC, a limited liability company; FBA ADVANTAGE, LLC, a limited liability company; AWS, LLC, a limited liability company; ONLINE AUCTION LEARNING CENTER, INC., a corporation; CHRISTOPHER BOWSER, an individual; ADAM BOWSER, an individual; and DOE Companies 1 – 20, Defendants.
(my vote’s on Jeff)
I personally find this lawsuit interesting for a couple reasons. The first is that I have a well known antipathy towards people who calls themselves coaches or mentors on Amazon who have very little applicable or relevant experience, particularly those selling PL, or private label, training.
For example, I have an MBA from a well respected Jesuit University, Seattle University, which has been ranked by various publications as a top rated school in the Northwest and in the United States as a whole. I have worked on multiple private label or licensed brand programs, for Amazon, The Home Depot, Disney, and more. In addition, my team members and business partners worked on branded programs at Starbucks, Williams-Sonoma, and Hawaiian Airlines, to name a few, and have degrees and work experience in business and marketing.
Some of the people calling themselves coaches started an Amazon store, and then bought some stuff on Alibaba and started calling themselves “coaches.” Some may have experience in marketing, but none in product development or legal compliance. Some were offering courses on developing brands without ever having even been inside of a factory.
Their advice has resulted in their students making such poor choices that babies have been injured, people’s houses burned down, and thousands of dollars in unsellable goods purchased, causing serious suffering for those who took bad advice, then had to go find people who could actually help them at least salvage the situation as much as possible.
I can’t adequately explain how heartbreaking it is to hear from a new client that they have tens of thousands of units of unsellable inventory when we deliver the news that their product isn’t legal or safe to sell, and they ask us, what can I do?? And my response has to be that they need to destroy the product. If it is highly likely to cause a fire, or injure a person, what other advice can we give?
At Cascadia, we would rather be cautious, slow, and careful, while we make sure our advice is accurate than move super fast, or potentially give you inaccurate or incomplete advice. I am very proud of our reputation for providing the best, most actionable advice in the areas we consult. We strive to always meet our deadlines, but if there is a battle between accuracy and timeliness, accuracy will always win.
The second is that not only has Amazon come out swinging, but so has the State of Washington. This is surprising as the Washington AG is essentially saying that the losses to Washington State are significant enough, both in terms of individuals harmed, but the harm to one of our own major businesses, to justify pursuing a coaching company based in Las Vegas and Massachusetts. Washington State did not sue the review companies along with Amazon, but they are suing these “coaches” Adam and Chris Bowser.
Fair Warning: the total Complaint is 110 pages, including Exhibits. The section without Exhibits is 44 pages. My summary and personal analysis is therefore not short – but is definitely shorter than reading the whole Complaint yourself.
Disclaimer: Cascadia Seller Solutions offers educational courses and professional services in the same service categories as those offered by Chris and Adam Bowser. Because I used to work under the Legal Department at Amazon, I also feel it is important to state that I am a former Amazon employee, and the views, information, or opinions expressed in this post are solely my own and do not necessarily represent those of my former employer or to the best of my knowledge, its current employees.
The opening salvo
I love the wording from the lawyer who wrote this complaint. Yowza! Them’s fightin’ words!
Defendants Christopher and Adam Bowser are con-artists who prey on people hoping to become sellers on Amazon.com…the Bowsers lure people to seminars that purportedly offer inside information about, and special access to, Amazon’s systems. The Bowsers attract victims in part by deceitfully suggesting that they are affiliated with, or somehow sponsored or sanctioned by, Amazon; indeed, the names “FBA Stores, LLC” and “AWS, LLC” both illegally trade on Amazon trademarks and falsely suggest some connection to Amazon. When the Bowsers’ victims attend these seminars, they are duped into paying tens of thousands of dollars by false promises of unrealistic profits they will earn as Amazon sellers. The Bowsers do not and cannot deliver on their false promises because they have no special information about Amazon and no way to offer consumers any advantage as Amazon sellers; worse yet, the Bowsers actively mislead consumers about Amazon’s systems and what is permissible under Amazon’s selling policies. When the Bowsers’ victims realize they have been duped (as many eventually do), the Bowsers refuse to return those victims’ money.
Some key takeaways:
- Don’t use Amazon’s intellectual property to sell your services!! We don’t use orange, we don’t use a smiley swoosh, we don’t use Amazon or FBA or Zon or Zone, or Ama or anything similar to it in our branding or our website because the clear intent is to benefit and profit from Amazon’s dominance and brand recognition in this space.
- We clearly label ourselves former employees. I state in interviews when people ask about my connections that connections are not only not terribly valuable at Amazon – it’s a technology company that happens to sell things – but that I don’t trade on those connections for success on the platform anyway. Success must come from understanding Amazon, not claiming that you’re in some way offering “secret insider sauce.”
- The last bit about misleading consumers about what is permissible is the most frustrating part, because while I certainly can’t speak to any specific coach’s programs due to non-disclosures with clients who come to us, I can say unequivocally that some coaches in this space offer very poor advice that results in clients coming to us to salvage the situation. If it seems too good to be true; it probably is. Honest mistakes happen, but some of the advice we’ve heard given was not in any way an honest mistake.
Key statements in the complaint :
This is a case about two con-men and their companies that trade on the Amazon name to convince thousands of people around the country to sign up for their “selling on Amazon” training programs and to buy their wholesale products to sell on Amazon.com.
Defendants teach their “students” (as the Bowsers euphemistically call them, rather than victims) how to set up an Amazon seller account and how to increase their sales, in part by violating Amazon’s seller policies.
Amazon’s FBA service addresses several significant barriers to the online marketplace faced by new and small-scale Sellers. In this way, Amazon’s FBA service opens doors and creates opportunities, particularly for would-be entrepreneurs. But with reduced barriers to market entry come inexperienced market entrants and, unfortunately, bad actors who take advantage of that inexperience.
Many of these entrepreneurs have complained to Amazon, mistakenly believing that Amazon is associated with the Defendants.
Upon information and belief, FBA-Stores is not honest or transparent about Amazon’s selling policies, so many students are not aware that FBA-Stores is encouraging or facilitating conduct that violates Amazon’s policies.
The “Fulfillment by Adam” label is a transparent and amateurish attempt to justify FBA-Stores’ trading on Amazon’s FBA name and marks.
The consistent theme here in the Complaint is that Amazon alleges that the defendants used Amazon’s intellectual property to act as though they were Amazon, or had special information on Amazon, then provided tactics and advice that were going to get the student’s/victim’s accounts shut down. Having helped guide hundreds of sellers through the intricacies of Amazon’s policies over the past few years since the launch of Cascadia Seller Solutions in May 2015, we know exactly how hard it can be to comply and make accidental mistakes. But the complaint alleges that Chris and Adam Bowser were explicitly saying that these tactics were banned, and were teaching them anyway.
Complaint 13 summarizes the reason Amazon is pursuing Chris and Adam Bowser most clearly.
Defendants’ scheme includes, but is not limited to, the following misconduct:
- Using Amazon’s trademarks without authorization as a central pillar of their business model;
- Exploiting the Amazon brand to recruit “students” interested in becoming Amazon Sellers;
- Persuading their students to pay for expensive workshops and training programs based on exaggerated promises of special access to inside Amazon information and guaranteed profits;
- Manipulating students’ personal credit card applications so they can pay for their costly products and services;
- Teaching their students to open multiple Seller accounts in violation of Amazon’s Seller policies;
- Instructing their students to obtain fraudulent product reviews in violation of Amazon’s Seller policies;
- Supplying fraudulent documentation to Amazon on behalf of their student sellers to obtain approval to sell restricted product categories (“ungating”);
- Selling to their students over-priced, mislabeled, and/or counterfeit products; and
- Listing mislabeled and/or inauthentic products for sale on Amazon.com on behalf of their students.
In addition to the other jaw dropping bad behavior found here, the ungating one I find particularly interesting. There are a LOT of ungating courses or services on the marketplace that essentially use fake data or re-use the same data to get multiple sellers ungated in gated categories. This is not permitted!
We have challenges with clients on a regular basis who think we’ll cheat on their behalf. We will review your documentation and give you our professional opinion on the completeness and content quality for a Certificate of Analysis or General Certificate of Conformity – these are typically self issued certificates based on third party or in house laboratory testing, depending on the regulatory/safety framework involved. We have personally issued Certificates based on laboratory testing that we coordinated for clients.
But the paper trail is clear, the samples were sent to an actual lab, actual tests performed on them, actual time spent doing this, all paid for by the client. If an ungating service or ungating course you’re looking into claims that they’ll take care of everything for you, instead of providing advice or a service so that you can accomplish the task yourself, then you should look harder at that service before buying.
We offer a self-study course with various kinds of ungating described, and the processes and procedures to understand the policies and the “whys” behind it described in detail. Amazon wants you to understand your obligations and follow them, not just fill out some paperwork and forget it; or worse, pay someone else to do it for you, so you never truly understand your obligations in the Terms you have to agree to.
And of course, counterfeit products… not much else to say here other than that it’s a really common problem, and since Alibaba is filled with counterfeits, and many courses recommend starting with Alibaba… not much else to say there that I haven’t said – loudly – elsewhere. Please, if you are interested in sourcing in China, start with Global Sources. They vet their suppliers, they put on a great set of shows each year, and you’re a lot more likely to find real factories and not trading companies.
A look at the parties involved
Amazon’s an obvious one as the plaintiff, but the defendants are the known LLCs for Adam and Chris Bowser. They have multiple businesses, although the most baffling one to me is AWS LLC – why in the world would you rip off one of Amazon’s most well known and profitable intellectual properties? That’s just asking for a kick in the teeth.
To cover those companies that they haven’t yet discovered, Amazon included this into the complaint: “Defendant DOE Companies 1 – 20 are believed to be owned and operated by, or otherwise closely-related to, the named Defendants and have engaged and continue to engage in the same or similar conduct that forms the basis of Amazon’s claims as described in this Complaint. This Complaint will be amended to name each such entity once identified through discovery.”
It wasn’t very difficult through a few google search to find other LLCs they appear to be associated with, so I assume Amazon already has a bunch of research prepared, and are just awaiting the discovery period to solidify it and amend their complaint.
My favorite search result though, was a Yahoo! Answers thread from 2011 (remember those??) asking if Chris Bowser’s eBay training was a scam.
“Is chris bowser a scam artist?
i recently purchased chris bowser’s auction listing agent program to sell on ebay and i have not made any money. every time i listen to his webinars he wants me to buy more products. i cant even view his members area page without being charged 9.99 . i tried to cancel but he basically said he is shipping his product out to me and i have to try it first before i can get a refund. any advice on how to get my money back.”
“Best Answer: That is the big scam these people pull nowadays. They don’t make any money on Ebay so they develop a book or CD’s telling you how to do what they can’t do themselves. Don’t buy anymore of that garbage from him. Get your money back if you still can.”
Here’s Chris’s response:
Sounds like this has been an ongoing successful approach for him, but Amazon’s got deeper pockets and a better legal team than they’ll be able to afford. I was lucky enough to work with some of the smartest people I’ve ever met at Amazon – and many of them are in the Legal Department.
Amazon’s Marks and Services
Here’s the nitty gritty (in my personal opinion) of why these guys are getting the hammer thrown at them when there are a lot of less than honest operators in this space: intellectual property violations.
Through Amazon’s advertisement and promotion and the high level of recognition by the general consuming public of the United States, the Amazon Marks are famous and became famous prior to Defendants’ illegal acts—indeed, the Amazon Marks were famous before any of the corporate Defendants were incorporated…Today, the Amazon Marks are well known by the general consuming public of the United States.
Messing around with Amazon’s perception of trust and goodwill is a terrible idea, and part of why I’ve spoken out vocally about the misuse of customer trust when sellers put up unsafe products on Amazon willy-nilly. It’s a clear violation of the TOS, and a misuse of the trust customers place in Amazon.
We do provide ad creatives to our clients with the “Available at Amazon” logo – under Amazon’s clear and unambiguous terms of service for the use of that logo. Amazon is of course happy for you to send customers to Amazon to buy safe, legal, compliant products that service a customer’s need.
Unlawful Activities Play by Play
Based on my reading of this section, Adam and Chris Bowser are doing what every other coach in this industry does. They market solutions solely for use on Amazon; they offer products and services related to Amazon; they use online email marketing (likely Infusionsoft; the Complaint calls it Infusion) to market these services; they use direct mail and Facebook to advertise. Where they really messed up in my personal opinion was in being so blatant about their rip off of Amazon’s intellectual property – using Amazon’s logo on their tickets, a truck with Fulfillment by Amazon on the side of the brochure, that sort of thing.
One really interesting part of this for me is the part where Amazon alleges that the Bowser’s business would not exist as a service without Amazon. This is an interesting line to take in the Complaint, because many Amazon centric agencies, consultancies, and coaches wouldn’t exist without Amazon. But it does speak to the importance of diversification outside of just the Amazon milieu.
Again with the use of FBA, the Amazon swoosh, Fulfillment by Amazon… and the orange and blue, all of which is a blatant rip off of Amazon’s intellectual property.
Other examples of where Amazon had problems with Chris and Adam Bowser:
First, he suggests that students obtain 15 reviews from friends and family, with instructions designed to circumvent certain of Amazon’s automatic fraud detection devices (“understand this, you cannot have like fifteen people come to your computer and buy that product, they have to be on different computers, different networks, and that type of stuff”).
And here’s a sneaky little trick a lot of people don’t know about. Another thing you can do is buy reviews. I don’t know how much longer this is going to be around for; they’re actually currently being sued by Amazon. … So if you can’t find people to get reviews for you, you can actually go to BuyAmazonReviews.com and these people will leave you good reviews. Again, I don’t know how much longer this is going to be around for. If not this site there’ll be another site. (Emphasis added.)
Regarding reviews, Amazon currently has Amazon Vine Voice in beta testing and is likely to launch it Q1 of 2018. As soon as that happens, I recommend using no other method for launching new products on Amazon. This is likely to cost about $1000 per product based on the beta program, but the final numbers have yet to be released.
The traditional way to launch on Amazon without paying for Amazon reviews is to provide free product to influencers on YouTube or Instagram, or use Facebook ads, or email your own mailing list, and then bootstrap your Amazon reviews from real customers rather than paying for them.
As part of the “Diamond” level coaching package (available for an additional fee as discussed below), students are told that FBA-Stores will help them create a second store set up on a second computer so that Amazon will never link the two accounts to the same Seller.
Don’t think you’re smarter than Amazon. You’re not. There are appropriate reasons for having a second seller account; being able to sell twice as much of the same junky products is not one of them.
The individual 1-on-1 coaching sessions typically take place over the phone. They may also involve instruction through computer screen-sharing…FBA-Stores has at times hired coaches with little or no experience or specialized training…the main qualification for coaches appears to be that they themselves have registered as an Amazon Seller…FBA-Stores coaches historically have been independent contractors who work out of their homes and are paid by OALC.
This comes back to my point in the introduction – students just weren’t doing their research before buying from these guys.
They have no qualifications as teachers, as businesspeople, as product developers, as logistics professionals – basically their only qualification is that they sold a bunch of stuff on eBay, transferred the skills to Amazon, then marketed the heck out of their one skill – then hired contractors to coach instead of themselves.
However, this is why state AGs and the FTC (Federal Trade Commission) sue companies for false advertising and similar claims, because not everyone is able to correctly discern between what may be a scam and what isn’t. It’s up to the AG and Amazon to prove that it was a scam, of course.
Defendants intentionally or negligently misrepresent the products they have sold and continue to sell to FBA-Stores students…Defendants have sold used or refurbished products to FBA-Stores’ students as new (e.g ., Nikon cameras, cell phones), have sold counterfeit or knock-off products as brand name products (e.g., Garden Genie gloves and Rawlings baseball helmets), and have sold “original” series product as “pro” series (e.g., CopperFit ankle braces/sleeves).
In another section in the complaint, Amazon alleges that the Bowsers were bringing in large container loads full of this used, refurbished, or counterfeit/knock-off product. So not only is this just asking Product Policy to shut your listings down, everyone who signed up for their service got the same products at the same time, so there was a price war. This is why we never double up on products for clients – we only manage accounts where brands are in separate niches, or where they’re developing unique, custom products.
It’s also important to have a healthy sense of skepticism when working with Chinese factories. One client was told by the factory that they had developed a new alloy for him to fix the issues he was having. When we sent it to the lab, we found it was actually the exact same alloy – they had just lied, hoping he wouldn’t know how to verify their claim.
Upon information and belief, many students have been duped into borrowing large sums of money to pay for Defendants’ products and services. Many have been retirees on fixed budgets and others who similarly could not afford for the investment to fail.
This reminds me of John Oliver’s piece on televangelists – if you haven’t watched it, you should; it’s disturbing. So, these poor people were duped into breaking their contracts, buying junky products, then as a result probably got their accounts suspended (see below for Amazon’s evaluation), then they probably had to reach out to a company like ours for help in fixing the issue, so that they could try to salvage what they’d learned and not lose the ability to sell on Amazon forever, since Amazon shuts down any new accounts you might try to create after an initial account has been shut down for breaking TOS.
Internal analysis shows that FBA-Stores’ student Sellers are more likely than other third party sellers on Amazon to experience problems with their Amazon Seller accounts. More than a quarter of FBA-Stores accounts identified by Amazon have received warnings from Amazon or been suspended, including for possible trademark infringement, suspicion of product review abuse, poor delivery performance, high order defect rates, or other violations of Amazon’s BSA and incorporated Seller policies. The FBA-Stores accounts identified by Amazon have also performed worse than other Amazon sellers, as demonstrated by their higher-than-average rate of customer returns and lower average sales volume and revenue.
The thing I like about this section is that it shows how Amazon evaluates the health of accounts – infringement, review abuse, delivery issues, ODR, higher than average customer returns, and lower than average sales.
This is precisely the approach we take with our managed clients in our weekly deep dive reviews – we look at their performance notifications, their metrics, their returns data – and provide them actionable and useful advice on how to improve their metrics, not make them worse.
Doing things the right way is much slower, and can be a lot more boring. Using words like, “wealth plan” or “Amazon riches” or “quick easy money” might be attractive, but the boring, banal reality is that long-term success on Amazon just takes a lot of hard work and keeping your nose clean.
It also shows that Amazon has done its homework and is likely to come in with some solid research to justify their claims of “scamminess” and “con-artistry” towards the Bowsers.
Causes of Action, or “Summary of reasons why Amazon gets to sue these guys”
Count I: Trademark Infringement (Lanham Act § 32; 15 U.S.C. § 1114)
The actual use of the trademarks without authorization.
Count II: False Association/Federal Unfair Competition (Lanham Act, § 43(a); 15 U.S.C. § 1125(a))
The use of the trademarks in an unauthorized manner was intended to deceive.
Count III: False Advertising/Unfair Competition (Lanham Act § 43(a); 15 U.S.C. § 1125(a))
Following this awful advice made life unfairly difficult for those sellers who weren’t breaking every rule out there. Also, it was unfair to Amazon’s customers because the listing practices were deceptive.
Count IV: Dilution and Tarnishment of a Famous Mark (Lanham Act § 43(c); 15 U.S.C. § 1125(c))
Amazon was famous before you were; your crappy business hurt our famous marks.
Count V: Tortious Interference
Amazon has contracts with sellers for a reason; you don’t get to tell your “students” to sign the contract, then show them how to break it.
“Prayer for Relief” or What Amazon Wants From This
Immediately cessation of use of Amazon’s marks.
Destruction of all materials with the marks on them.
Disgorgement of profits and compensatory and treble (triple) damages to Amazon
Costs of lawsuit and attorney’s fees
Anything additional the court deems reasonable and fair
Exhibits used to support the Complaint
- Exhibit 1: Amazon’s BSA
- Exhibit 2: The physical materials for the courses, including the “complimentary VIP” tickets offered by Chris and Adam Bowser and their marketing materials that included specifically sales claims in dollars that the students were supposed to achieve (a huge no-no in coaching is saying how much the student will end up making)
- Exhibit 3: Their online marketing materials for their Diamond coaching programs and upsells
- Exhibit 4: Their online marketing materials for their Gold coaching programs and upsells
- Exhibit 5: Their online marketing materials for their Wholesale coaching and mentoring programs and upsells
- Exhibit 6: Sales page with what’s included in the packages and their prices
You may ask – don’t they say that they aren’t affiliated with Amazon; they “just love Amazon”? Yes… you can SAY that you aren’t affiliated in the small letters on the back of your brochure, but if all of the logos, images, and colors in the large print, signage, and ads for your event indicate that the course is from or affiliated with Amazon, then your case of claiming people should have understood that you weren’t affiliated is somewhat less effective.
In summary, Amazon alleges that Chris and Adam Bowser are con-men not business coaches
Whether Amazon is successful in their case remains to be seen. They have certainly painted Chris and Adam Bowser in the worst light possible, and even by the most generous interpretation of their actions, helping retirees get credit cards to pay for their Mastermind courses without any real hope of success is pretty awful of them.
The reason I’m so interested in this lawsuit is that there are a bunch of other companies out there that have had to shut down due to using intellectual property of larger companies to sell their services or software. Other cases involving Instagram, Amazon, and Facebook spring immediately to mind. But those were relatively straightforward misuse of intellectual property; this case is alleging that Chris and Adam Bowser are also con artists in addition to intellectual property thieves.
Ideally, Amazon has a program for service providers to go through to be officially sanctioned in some way. For example, Shopify has an Experts page where companies can be vetted and testimonials provided so that you as a consumer can hire a properly vetted and qualified Shopify expert to set up and run your Shopify store. There are also various types of accreditation programs, such as those used to issue CLEs (Continuing Legal Education) credits for lawyers that could also be used to evaluate and legitimize coaching programs like this.
I personally would be more than willing to have our quality of service and accuracy of advice evaluated by a third party. I am the first to say that since we will never compromise on quality when defining scope, if a client is looking for lower budget in a service, then necessarily the service schedule timeline will be longer. We are always looking for that perfect equilateral project balance where scope, schedule, and budget balance for every client – and I’ll let you know when I’ve found it!
It sounds like Amazon is alleging, according their Complaint, that Adam and Chris Bowser offered services that were expensive, both in initial cost, and indirect cost to the account of the student, and didn’t meet the expectations they themselves set with their students.
If Amazon proves their case, then Adam and Chris Bowser will deserve every monetary penalty coming to them for profiting off of the backs of people just hoping for a little better in life than what they have.