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Category: AMAZON SELLER

  • Amazon Sued by FTC for Price Inflation, Monolopy in Antitrust Lawsuit — How This Affects You

    Amazon Sued by FTC for Price Inflation, Monolopy in Antitrust Lawsuit — How This Affects You

    In a significant move that sends ripples across the American e-commerce landscape, Amazon.com, Inc is in the legal crosshairs once again, facing a substantial antitrust lawsuit that questions its marketplace dominance and business practices.

    The Federal Trade Commission (FTC), backed by 17 U.S. states, has rolled out a comprehensive legal challenge accusing the online superstore of engaging in anti-competitive practices that not only inflate prices for consumers but also impose an undue burden on sellers, stifling the competitive spirit of the online retail market.

    The lawsuit emerges as a crucial turning point in the ongoing saga of Big Tech’s confrontation with regulatory authorities, illuminating the intricacies between monopoly power, antitrust law, and the digital economy.

    For those keen to read and understand the dynamics of this legal battle, the key takeaway here is straightforward: The antitrust lawsuit represents not just a legal predicament for Amazon but also reflects the broader scrutiny and growing challenges faced by tech giants in the contemporary business environment.

    At the heart of this lawsuit lie allegations that Amazon’s practices suppress competition and manipulate the market to its advantage, effectively cornering small businesses and third-party sellers while leaving consumers with higher prices and fewer choices.

    Background of the Lawsuit

    In recent years, the lens of antitrust scrutiny has increasingly focused on Big Tech companies, including not just Amazon but also Microsoft, Apple, and Meta. Regulators have grown concerned about the immense power these corporations wield, fearing the establishment of monopolies that hinder competition and harm both consumers and small businesses.

    The term “antitrust” has thus become a buzzword, denoting a range of legal and business concerns pertaining to fair competition laws. These laws are designed to foster competition and prevent monopolistic practices, providing a level playing field for businesses of all sizes.

    Previous Allegations Against Amazon

    Amazon has not been a stranger to legal challenges and allegations. In the past, the company has been accused of using sensitive merchant data to launch competing products strategically, effectively disadvantaging other businesses on its robust platform.

    There were also whispers and formal accusations about Amazon’s practices regarding price discounting and prioritizing their own product listings, raising eyebrows in the legal and business communities alike.

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    Regulatory Shift with FTC Chair Lina Khan

    FTC Chair Lina Khan, known for her critical standpoint on Big Tech, has ushered in a new era of regulatory scrutiny. Under her leadership, there has been a discernible shift in how the Federal Trade Commission approaches and handles antitrust cases.

    Khan, author of the notable “Amazon’s Antitrust Paradox”, has long advocated for a reevaluation of antitrust laws in the context of modern, digital-dominated commerce, voicing concerns about the potential erosion of competitive practices in the online retail sector.

    Amazon Under the Microscope

    With the antitrust spotlight firmly on Amazon, this isn’t the first legal rodeo for Jeff Bezos’ brainchild. Before this FTC lawsuit, Amazon faced other legal challenges, including a dismissed case in the District of Columbia and ongoing litigation in California and New York. Each case unveiled more layers of the complex practices Amazon employs, gradually painting a picture of a corporation allegedly willing to bend rules to maintain and extend its market dominance.

    Lawsuit Overview

    The antitrust lawsuit against Amazon was filed in a federal court in Washington state. This legal action results from an extensive investigation conducted by the Federal Trade Commission (FTC) and supported by 17 state attorneys general. Together, these entities have mounted a collaborative effort to address and counter the alleged anti-competitive practices deployed by Amazon.

    Alleged Antitrust Violations

    Central to the lawsuit are accusations that Amazon has violated both federal and state antitrust laws. These laws are designed to preserve competitive integrity in the marketplace. Amazon is accused of crafting an environment where sellers are deterred from offering their products at lower prices on non-Amazon sites, which critics argue manipulates the market to Amazon’s advantage and detriment of both sellers and consumers.

    Specific Allegations

    • Price Inflation: The lawsuit alleges that Amazon manipulates listings to hide lower prices available elsewhere, coercing consumers to make purchases thinking they are receiving the best deal available.
    • High Seller Fees: Accusations point towards Amazon imposing exorbitant fees on sellers, who are then compelled to increase prices across the board, affecting consumers on and off Amazon’s platform.
    • Degrading Customer Experience: Despite knowing of superior alternatives, Amazon is accused of prioritizing paid advertisements and its products, intentionally degrading the customer experience.
    • Revenue from Sellers: With heavy fees, sellers purportedly relinquish nearly half of their total revenues to Amazon, a figure that has been on the rise since 2014, squeezing sellers’ profit margins and contributing to higher prices for consumers.
    • Fulfillment Strongarming: Sellers are supposedly strong-armed into utilizing Amazon’s logistics and fulfillment services to be eligible for Amazon Prime’s benefits, even when they might prefer other logistic solutions.

     Injunction Request

    The FTC and the supporting states are not only seeking legal redress for the alleged antitrust violations but are also requesting a permanent injunction against Amazon. This injunction aims to prevent the continuation of the alleged unlawful practices and seeks to dilute Amazon’s “monopolistic control” over the e-commerce market, thereby hoping to restore a competitive balance to the benefit of sellers and consumers alike.

    Amazon’s Defense

    Below are the summarized responses by Amazon to the specific allegations listed above.

    Refutation of Allegations

    In response to the heavy barrage of accusations, Amazon staunchly defends its position, contending that the FTC’s allegations are both factually and legally unfounded. The e-commerce behemoth asserts that the practices under scrutiny are not only lawful but also in line with industry standards, with other large retailers allegedly employing similar strategies.

    Consumer and Seller Impact

    Amazon argues that adhering to the FTC’s desired outcome would limit product selections for consumers, increase prices, slow down deliveries, and reduce viable options for small businesses utilizing the platform. Amazon emphasizes its role as a vital and supportive marketplace for millions of third-party sellers, underpinning their argument that the platform operates for the greater good of both sellers and consumers.

    Marketplace Competition

    Amazon also points to the intense competition within the online retail sector, highlighting that its policies are designed to navigate through this competitive environment efficiently. The company suggests that their platform policies not only reflect but actively promote a competitive spirit, ultimately benefitting the bustling community of sellers and buyers that call Amazon’s store home.

    Industry Reaction

    The unfolding lawsuit has elicited a spectrum of reactions from different quarters of the industry. While consumer advocacy groups have thrown their weight behind the lawsuit, viewing it as a necessary measure to check Amazon’s growing power, some industry groups and observers argue contrarily. These voices suggest that Amazon’s policies are not unique, with other large retailers engaging in similar practices, thereby questioning the singularity of focus on Amazon.

    Antitrust Scrutiny

    Speculations abound regarding the possibility of a forced breakup of Amazon to curb its alleged monopoly power. If regulators succeed in making a compelling case, Amazon might have to divest some of its business units to ensure compliance with antitrust laws and restore competition in the sectors it operates.

    Comparison with Other Tech Giants

    The antitrust spotlight isn’t exclusively on Amazon. Other tech juggernauts, including Microsoft, Apple, and Meta (formerly Facebook), have also been under scrutiny for alleged anti-competitive practices. Drawing parallels and contrasts between these cases and Amazon’s provides a comprehensive understanding of the regulatory environment and the challenges Big Tech companies face.

    Microsoft’s Activision acquisition was also just re-challenged after the FTC failed to block to deal last year, reasserting their position on monopolistic mergers (likely to appear more on antitrust and anti-monopoly and less as attacking Amazon).

    Administration’s Stance

    The shift in administration from Trump (republican) to Biden (democrat) has brought subtle changes to the approach towards Big Tech. It’s crucial to examine how different administrations view monopolistic tendencies, anti-competitive practices, and their strategies in dealing with giants like Amazon.

    Amazon’s Antitrust Paradox

    The term “Amazon’s Antitrust Paradox” coined by Lina Khan, refers to the conundrum where Amazon is celebrated for customer satisfaction due to lower prices and efficient service while being scrutinized for anti-competitive practices. This paradox encapsulates the challenges regulators face when trying to apply traditional antitrust laws to modern digital conglomerates.

    Global Antitrust Landscape

    The United States isn’t the only country raising concerns. Amazon faces antitrust scrutiny on a global scale, with regulators in the European Union and other jurisdictions examining the company’s business practices. International antitrust developments offer a broader perspective on the legal pressures Amazon navigates.

    Implications for Online Business Owners

    The lawsuit’s outcome could profoundly impact third-party sellers operating on Amazon’s platform. Should the FTC and the involved states prevail, Amazon may be compelled to adjust its fee structures and policies, potentially leading to a more favorable environment for sellers, with reduced fees and increased autonomy.

    If the lawsuit results in mandatory changes to Amazon’s fulfillment practices, sellers might gain greater flexibility in choosing logistics and fulfillment partners. This shift could enable small businesses to explore more cost-effective or logistically efficient alternatives, which might currently be overshadowed by Amazon’s stringent requirements for Prime eligibility.

    With accusations of Amazon discouraging sellers from offering lower prices elsewhere, a win for the FTC could empower sellers with more pricing freedom across different platforms, fostering a competitive pricing environment that could benefit both sellers and consumers.

    Depending on the lawsuit’s outcome, the e-commerce landscape might experience a reshaping in market dynamics and competition. A reduction in Amazon’s dominance would potentially open doors for smaller e-commerce platforms and retailers, distributing market share more evenly and fostering a competitive, diverse online retail environment.

    The case will likely set a precedent affecting not only Amazon but also other online marketplace platforms. The legal standards and business practices established in the wake of this lawsuit will shape the operational framework for current and future online marketplaces, influencing the way they engage with sellers and consumers.

    Conclusion: How to Continue Doing Business

    The ongoing antitrust lawsuit against Amazon.com, Inc is a watershed moment in the arena of e-commerce and antitrust law, reflecting the broader struggle between Big Tech’s market dominance and the push for fair competition and business practices. This legal battle encompasses various critical issues, ranging from price inflation and high seller fees to alleged monopolistic control and anti-competitive practices, all of which have significant implications for online business owners, consumers, and the e-commerce landscape at large.

    In light of these developments, online business owners should not only stay informed but also proactively explore alternative solutions to safeguard their interests and ensure sustained business growth amidst an uncertain and ever-changing e-commerce environment.

    For those online business owners who are navigating through this uncertain landscape and looking for robust, flexible financial solutions, considering opening a high-risk merchant account with DirectPayNet could be a strategic move.

    DirectPayNet specializes in providing secure and reliable merchant services tailored for high-risk businesses, offering a safety net and facilitating smooth transactions irrespective of the business environment’s volatility.

    With a high-risk merchant account from DirectPayNet, you’ll not only gain access to a suite of payment solutions designed to meet your unique business needs but also enjoy the support and expertise of a team committed to your success.

    In a marketplace shadowed by the giants, aligning with partners who understand your challenges and advocate for your interests is not just smart business; it’s essential for survival and growth.

    SECURE YOUR BUSINESS TODAY

  • The Power of Prime on Shopify, How Merchants Should Handle Amazon’s Buy with Prime Checkout

    The Power of Prime on Shopify, How Merchants Should Handle Amazon’s Buy with Prime Checkout

    The checkout experience often serves as the ultimate determinant of whether a browsing visitor becomes a loyal customer. The right balance between speed, security, and familiarity can make all the difference.

    And now, with the exciting collaboration between Shopify and Amazon, integrating the “Buy with Prime” feature, the landscape is shifting once again.

    For Shopify merchants, this presents both opportunities and challenges. How does one tap into the trust that Amazon commands while retaining the unique flavor of their brand? And what does this integration really mean for the future of your Shopify store? Dive in as we unpack these questions and explore the evolving synergy between these two e-commerce titans.

    A Quick Dive into the Shopify-Amazon Collaboration

    Shopify and Amazon – two names that resonate loudly in the e-commerce universe. The recent news about their collaboration has undoubtedly caused ripples throughout the online retail community. Let’s delve deeper into this groundbreaking partnership:

    • Announcement Recap: The e-commerce space witnessed a significant development as Amazon unveiled its intention to integrate the Buy with Prime app for Shopify. This move facilitates a seamless interaction between Amazon’s trusted Prime button and the myriad of Shopify stores gracing the online space.
    • Prime Benefits on Shopify: The marriage of these platforms brings forth exciting prospects for Prime members. Now, when they shop on a Shopify store, they can enjoy Amazon’s hallmark free delivery and easy returns. The massive reach of Amazon’s fulfillment network guarantees that Prime members receive their products with the same level of efficiency they’re accustomed to when shopping directly on Amazon.
    • Payment Simplified: When a customer eyes that enticing product on a Shopify store, the Buy with Prime option beckons. With a single click, Prime members can utilize their saved Amazon wallet payment method, and voila! The purchase is made. Behind the scenes, Shopify Payments takes the baton, ensuring a smooth and hassle-free transaction process.
    • Feedback and Future Prospects: Shopify President Harley Finkelstein and Peter Larsen, the Vice President of Buy with Prime at Amazon, offered a glimpse into the positive merchant responses they’ve received for the Buy with Prime button. Emphasizing the collaboration’s focus, Larsen shared how this integration is sculpted to bolster businesses, conserve time, and bring Prime shopping benefits to broader horizons.

    Canada’s Shopify stock (SHOP) increased by as much as 9% and Amazon stock (AMZN) increased by over 10% after the collaboration announcement.

    Shopify merchants still need a merchant account. Get yours here.

    Hosted vs. Branded Checkout Pages

    At the heart of every online purchase lies a crucial moment: the checkout. The final steps that determine whether a customer commits or abandons their cart. Two primary approaches dominate this stage in e-commerce: hosted and branded checkout pages. As the lines blur with integrations like “Buy with Prime” on Shopify checkouts, it becomes essential to understand these methods’ nuances.

    Branded Checkout Pages

    • Basics: Branded checkout pages are custom-designed and inherently match the website’s look, feel, and brand identity. Tailored to fit seamlessly within a store, they offer a consistent user experience from browsing to purchasing.
    • Pros:
      • Cohesive User Experience: It ensures the customer never feels like they’ve left your store.
      • Customizability: Merchants can tailor the process, from upselling opportunities to tailored thank you messages.
      • Brand Trust: A consistent look builds and maintains trust throughout the shopping journey.
    • Cons:
      • Security Concerns: Merchants are often responsible for ensuring data protection and security, which can be daunting.
      • Potentially Higher Abandonment: Without the trust of a known payment gateway, some customers may hesitate at the final step.

    Hosted Checkout Pages

    • Basics: Hosted checkout pages, like those offered by PayPal or Amazon’s Buy with Prime, redirect shoppers to an external site to complete their purchase. These are standardized pages hosted by third-party payment providers.
    • Pros:
      • Trust Factor: Platforms like Amazon have built monumental trust. Customers feel secure knowing a reputable third party handles their information.
      • Ease of Use: Often faster and requires less setup and maintenance from the merchant’s perspective.
      • Enhanced Security: The responsibility of data protection shifts to the hosting entity, which usually has robust security measures in place.
    • Cons:
      • Disjointed User Experience: Shoppers are taken out of the store’s environment, which can be jarring or confusing.
      • Less Branding Control: Merchants lose the opportunity to control the final stages of the customer journey.

    Why You Should Still Prioritize a Branded Checkout Page

    Branded checkout pages are more than just a visual treat; they’re pivotal for your brand’s identity and overall customer experience. Let’s look at what makes them superior.

    1. Fostering Brand Loyalty – Branding isn’t limited to logos and color schemes; it encapsulates the entire customer journey. A branded checkout page ensures that this journey is consistent from the moment a visitor enters your store to the final purchase confirmation. It’s an opportunity to make a lasting impression, one that nudges a one-time shopper towards becoming a loyal customer.
    2. Creating Unique Shopping Experiences – In the vast sea of e-commerce storefronts, what makes yours stand out? Beyond your unique products, it’s the tailored shopping experience. Branded checkout pages can offer personalized product recommendations, special offers, or even fun animations—all crafting a memorable checkout experience.
    3. Controlling Customer Data – With branded checkouts, you have direct access and control over your customer data. This is invaluable for future marketing strategies, personalized offers, and understanding your customer demographics. Third-party hosted checkouts might not provide the same level of insight, potentially hampering your growth strategies.
    4. Strengthening Brand Trust – While third-party checkouts from recognized names can instill trust, consistently branded pages can do the same over time. Customers grow familiar with your brand’s look and feel, which can reassure them during the checkout process. It’s about building a rapport where they recognize—and trust—your brand’s signature touchpoints.
    5. Flexibility and Customization – Having your branded checkout page means you’re at the helm. Want to introduce a new discount system or incorporate a loyalty program into the checkout process? You have the flexibility to innovate without being limited by third-party constraints.
    6. Upselling and Cross-selling Opportunities – Branded checkout pages allow merchants to weave in upselling or cross-selling seamlessly. Displaying related products, complementary accessories, or limited-time offers can boost sales while enhancing the shopping experience.

    Struggling with your checkout? We’re here to help!

    The Power and Trust in Amazon’s “Buy with Prime” Button

    Amazon, the e-commerce behemoth, has etched its mark on the consumer psyche. For many, the Amazon brand is synonymous with reliability, speed, and a vast selection. It’s no wonder, then, that the “Buy with Prime” button carries a weight of trust and recognition. Here’s why this integration is more than just a convenient checkout option.

    1. Instant Brand Trust – When customers see the Amazon Buy with Prime button on your product’s detail page or at checkout, there’s an immediate association with Amazon’s trusted brand. This trust translates to increased confidence in the transaction, often leading to higher conversion rates.
    2. Familiarity Breeds Comfort – For the millions of Prime members, the checkout process with Amazon is a routine. The familiarity of using their Amazon account details, the saved payment methods, and the knowledge of quick deliveries through Amazon’s fulfillment network bring an unparalleled comfort level.
    3. Enhanced Convenience – The sheer convenience of tapping into the saved Amazon wallet for payments eliminates the need for entering payment details afresh. This frictionless payment option can drastically reduce cart abandonment rates.
    4. Benefits of Prime – Free delivery and easy returns are among the key perks that Prime members cherish. When they spot and use Buy with Prime on your Shopify store, they’re immediately aware that they can avail of these benefits, making the purchasing decision swifter.
    5. Expanding Customer Base – Amazon Prime has a vast membership base. By integrating the “Buy with Prime” button, Shopify merchants can potentially tap into this vast pool, attracting new customers who prioritize the advantages of their Prime membership.
    6. Leveraging Amazon’s Infrastructure – Amazon’s multi-channel fulfillment network means products are often delivered faster and more efficiently. For merchants, this also signifies fewer logistical hassles and potential savings.
    7. Enhanced Customer Experience – For shoppers, choice is king. By providing an additional, trusted payment option, you’re enhancing the customer’s experience, giving them the flexibility to choose their preferred checkout method, be it Shop Pay, Amazon Pay, or any other.

    However, as powerful as the “Buy with Prime” button is, it’s essential to remember it’s an enhancement to your e-commerce arsenal, not a replacement. While it provides the trust and efficiency of Amazon, it doesn’t replace the unique brand identity and experience that your Shopify store offers.

    How Should Shopify Merchants Proceed?

    As the line between independent e-commerce storefronts and industry titans like Amazon blurs, Shopify merchants are presented with both challenges and opportunities. With the introduction of the “Buy with Prime” integration, what’s the best way forward?

    Embrace the Best of Both Worlds

    Don’t view the “Buy with Prime” integration as an “either/or” situation with your branded checkout. Instead, harness its power to complement your existing systems. Offer the Prime button as a supplemental checkout option, allowing customers the choice while preserving your store’s unique branded experience.

    Stay True to Your Brand Identity

    Amidst the rush to integrate popular features, never lose sight of your brand’s essence. The colors, design, and ethos of your branded checkout pages serve as crucial touchpoints. They should co-exist with third-party integrations, ensuring your brand’s voice remains dominant.

    Monitor and Adjust

    As with any new feature, it’s vital to track its performance. Monitor metrics like conversion rates, average order values, and customer feedback after integrating “Buy with Prime”. Use this data to adjust your strategies and optimize the shopping experience.

    Celebrate the Alliance, But Keep an Eye Out

    While collaborations like the one between Shopify and Amazon are momentous, always be aware of the broader e-commerce landscape. Alliances can shift, new players can emerge, and customer preferences can change. Always be ready to pivot and adapt.

    Final Thoughts

    For Shopify merchants, each day brings opportunities to grow, innovate, and serve their customers better. With the recent integration of Amazon’s Buy with Prime, the potential to tap into Amazon’s vast Prime membership and its associated trust is undoubtedly enticing.

    However, as we’ve journeyed through this discussion, one thing remains crystal clear: while third-party integrations offer a plethora of advantages, they never should, and never can, replace the unique identity and trust you’ve built with your brand. The heart and soul of your online store, your brand, is irreplaceable.

    While leveraging platforms like Amazon is strategic, it’s also essential to have partners that understand the nuances of e-commerce, especially in the high-risk sector. That’s where DirectPayNet comes in. With our expertise, we’re here to assist in ensuring smooth transactions, maximizing your revenue, and navigating the complexities of the high-risk merchant landscape.

    READY TO ELEVATE YOUR E-COMMERCE GAME?

  • FTC Sues Amazon – “Click to Cancel” Crackdown and How to Avoid Penalty

    FTC Sues Amazon – “Click to Cancel” Crackdown and How to Avoid Penalty

    Amazon is being sued by the FTC (Federal Trade Commission) for forcing customers into Amazon Prime memberships. The government body recently announced their new “Click to Cancel” rule, which is aimed at making it easier for customers to cancel any subscription they may have with a business.

    Shares for the Seattle-based big tech titan fell by 1.5% right after the FTC filed their lawsuit against Jeff Bezos’ e-commerce giant.

    Clearly, the FTC is not playing games when it comes to consumer protection. If you run an online store, here’s all you need to know to avoid the dark patterns and “Click to Cancel” crackdown.

    Quick FTC vs Amazon Lawsuit Breakdown

    The FTC’s claims are that Amazon tricks customers into continuing their Prime membership by making it too difficult to cancel.

    To do so, Amazon used dark patterns—marketing tactics aimed at deceiving customers or forcing an unwanted action to take place—to make continuing or signing up for Prime just one click away, but canceling a daunting process.

    The Prime signup and cancellation process has been under FTC investigation since March of 2021. However, news of this lawsuit is still sending shockwaves of fear throughout the industry.

    In fact, in 2021, Amazon settled with the FTC for $62 million over claims that it withheld tips from drivers.

    The FTC lawsuit actually comes just one day after a US Senate committee announced its own investigation into Amazon labor practices. An Amazon spokesperson has denied the accusations.

    The Dark Pattern Tactics Used by Amazon

    Dark patterns have been a tactic—and issue—utilized by online businesses since essentially the dawn of the internet and ecommerce. That fact is unsurprising, at best. If it makes a company money and it’s not illegal, then why not?

    The fact now is that dark patterns are illegal. Regulators are also recently taking measures against companies who use these nefarious business practices, which Amazon is guilty of. No wonder “Amazon’s antitrust paradox” is gaining traction…

    Dark patterns are user-interface designs and manipulative tactics designed to confuse and mislead consumers into making decisions they don’t necessarily want to make. For example, companies might promote one product but sell another; or shame customers when they decline an upsell or subscription offer/cancellation.

    The tactics used by Amazon include:

    –       On mobile, displaying a big yellow “FREE two-day shipping” button but a tiny blue “no thanks” button to decline. Shoppers might not see the button to decline the offer and feel obliged to subscribe to Amazon Prime.

    –       There is no indication of Amazon’s automatically-renewing Prime subscriptions.

    These are tactics that no business should utilize, let alone one as large as Amazon. As a ecommerce giant, the company doesn’t need to trick customers into subscribing—they make billions as-is!

    Amazon Prime Day is coming up…we wonder what the tech giant has in store for consumers.

    Our merchant accounts help you stay secure and compliant. Speak with us about your business today!

    FTC’s “Click to Cancel” Rule and How It Applies to Amazon

    We like to believe that businesses don’t actively decide to deceive consumers. At best, bad tactics aren’t used nefariously, but naively. With Amazon, though, that’s not the case.

    The Prime cancellation process was designed to be a labyrinth for users, even going so far as to be internally named “Iliad” after the epic poem by Homer. Amazon executives Neil Lindsay, Russell Grandinetti, and Jamil Ghani are accused of purposely “slowed, avoided, and even undid” adjustments designed to make the enrollment/unenrollment in the Prime program a better understood process.

    That’s exactly what Click to Cancel is designed to accomplish: a clearer, easier, more streamlined way of canceling a subscription.

    According to the FTC act, businesses must provide a method of cancellation that matches the method of enrollment. If a user subscribes online, there must be an online unenrollment method. The same goes for over the phone, email, and direct mail.

    Amazon actually does offer online cancellations, but they make it too difficult, and that’s another stipulation of the Click to Cancel rule. You see, cancellations must be easy, not labyrinthian. Because Amazon mirrors the Trojan War, in that it takes ten years to complete (joking), the process does not align with the requirements set in the FTC rule.

    How You Can Avoid the FTC Coming for Your Business

    It’s simple: don’t use dark patterns and make cancellations easy.

    You also need to send notifications about recurring and upcoming payments related to your subscription.

    These are all easily accomplished feats. In the previous linked text, we’ve outlined exactly what dark patterns and Click to Cancel entails, so you can follow that guide and secure your business.

    If you do happen to implement these tactics and are afraid that removing them will result in a serious decline in sales, then you need to review your product. If you have to trick consumers into purchasing, then your product is either too expensive or not usable as advertised.

    Security in All Areas of Business

    Staying out of the FTC’s watchful eye isn’t always such an easy feat, but you can rest assured that at least your payment ecosystem is reliable and compliant when working with DirectPayNet.

    We specialize in providing subscription merchant accounts to online businesses with PCI-compliant payment gateways and top-tier cybersecurity measures to ensure every transaction is safe, so you can avoid chargebacks and fraud.

    OPEN A SUBSCRIPTION MERCHANT ACCOUNT TODAY

  • Negative Reviews: How They Affect Your Merchant Account and What to Do About Them

    Negative Reviews: How They Affect Your Merchant Account and What to Do About Them

    Negative reviews can be troublesome for any business owner, but even more so for high-risk business and ones just starting out. They are also an unavoidable consequence of doing business. The sooner you come to terms with this, the sooner you can do something about it.

    Bad reviews can be harmful, yes, but there’s something you can do about it. Depending on your strategy, you could win over consumers with outstanding customer service that surpasses any negativity a review may hold.

    Negative Reviews Can Be Detrimental to Your Store’s Payment Processing

    The beating heart of any online store is its ability to process payments. It’s also understood that banks and payment processors do not like risk (or high-risk businesses, by extension). If they see negative reviews about your high-risk business, they will likely do two things: find more and deny service.

    Banks want to protect their own bottom line. As a business that’s labeled high risk, you threaten that bottom like—you are a risk to that bank/processor not making money. These providers are already under the impression that they’re sticking their neck out for you by even offering service. If you don’t have an immaculately clean image, then they will yank that offer right back.

    Supplements sellers, in particular, have trouble in this area. They fall into the high-risk category for banks and reviewers are exceptionally harsh if they feel scammed or that the product didn’t work as expected. Mitigating even a single bad review for supplement sellers can be difficult, but there are still ways to improve the customer experience and stay profitable.

    Strive to Maintain a Positive Relationship with Your Payment Provider

    Work to understand your provider’s process and requirements. If you are applying for the first time, you should communicate with the bank to fully understand their policies. The application process can be quite confusing and submitting them blindly often results in denial. Plus, if you submit too many then you may be given a red flag throughout the payment processing community.

    If you have already been approved by a payment processor, then work to maintain that relationship. Even if you were approved seemingly without a hitch, the nature of your business will surely keep it under that provider’s watchful eye. And you wouldn’t want to ruin your own sales because of one untrue or misleading review.

    Merchant accounts are a great option for high-risk businesses, as they are designed around them. Good merchant account providers, like DirectPayNet, will help repair a negative online reputation. Your success as a business is equal to a merchant account provider’s success, therefore it’s in everyone’s best interest to keep and public-facing information positive.

    Sites You Should Monitor for Bad Reviews to Maintain Your Merchant Account

    Reviews on Your Own Site

    If you allow reviewing on your own site (which you should), then you have a lot of control over what gets published. Reviews help you rank on Google as a business, and it’s proven that more businesses will get clicked if they have a star rating below their search listing.

    This doesn’t mean you can simply delete bad reviews the moment they appear. First, you should avoid keeping only 5-star reviews. Customers are surprisingly wary if a business looks too good. Second, deleting the really bad reviews doesn’t fix the problem. The customer who posted it will likely follow up with it, and if the review is gone then that opens another world of trouble. Now, that person will likely go to a social media site to publish an even worse review and you won’t be able to delete it. You’ve ruined your reputation by trying to save it.

    Reviews on BBB, Yelp, TrustPilot, and More

    Many businesses integrate review platform APIs into their own site to display customer reviews to avoid asking them to duplicate it. TrustPilot, Yelp, and Google reviews are popular choices as well as TripAdvisor for travel-related sites.

    The BBB (Better Business Bureau) and GlassDoor are also sites that allow customers to review businesses. But these are notoriously negative and are considered complaint sites as opposed to review sites.

    Potential customers trust reviews and ratings from these sites, so it is a good move to utilize them. The downside is your lack of control over what gets published. This is where you need to hire a review management team or set aside time each day to assess and respond to each review. If you leave negative reviews unchecked, then it can seriously hurt sales and approval for payment processing from banks.

    Ways Negative Reviews Affect Your Business

    For high-risk merchants, the biggest concern is denial by payment processors or removal of processing functionality. But those aren’t the only ones. There are even more ways customer reviews can affect your business.

    Creates a Bad Reputation

    It shouldn’t be a surprise that negative reviews can ward off potential customers. In a 2018 survey, 50% of new customers questioned a business’s quality if they have negative reviews. In that same survey, 85% of consumers trust online reviews just as much as personal recommendations.

    Decreases Revenue

    If bad reviews push customers away, then they surely decrease your bottom line. The amount of revenue changes based on your rating as well as the reason why people publish negative online reviews. If a business has a 1-star rating, they can expect at least 33% less revenue. The amount varies based on how many good reviews are available to counteract the bad ones.

    Lowers SEO Ranking

    A higher positioning in search engine results increases exposure to potential customers and sales. Search engine algorithms consider online reviews and ratings for businesses when positioning them. So, bad reviews lead to lower ranking which leads to less prospective customers and ultimately lower sales.

    Increases Chargebacks

    Bad reviews, especially ones that go unnoticed, can result in chargebacks. Because you didn’t respond, the customer will contact their bank directly for a refund or worse issue a chargeback. This can have a major impact on your small business by losing sales, paying extra fees and withdrawing valuable dollars that were used for your business needs.

    How to Manage Negative and Positive Reviews to Keep Your Business Healthy

    The bright side of all this is that negative reviews are manageable. And through review management, which does not necessarily include deletion, you will paint a better picture of your business. Encourage your happy customers to leave online reviews by offering a discount on a future purchase.

    Negative reviews give customers an idea of the worst possible situation they could run across when purchasing something from you. The scenarios that warrant 1- or 2-star reviews may not matter to them at all. Or they may see the situation and how you’ve corrected it. Both work positively towards your online reputation.

    Assess If the Review Is Real

    Fake positive and fake negative reviews are abundant on the internet. Both are harmful to your business. In either case, you can flag them as spam or fake on any platform.

    Fake positive reviews, on the surface, sounds like a great thing. However, they can harm your reputation and sales. Consumers can report you for creating fraudulent reviews (even if you didn’t publish them). Even if they don’t, when a customer reads your endlessly positive reviews, they will see how unrealistic they are and avoid your business. A fake positive review portrays the idea that you needed to fake your way to the top because your business is not capable of it through real sales and customer service.

    Fake negative reviews are more harmful towards being approved by a payment processor than for repelling consumers. Many fake reviews are obviously fraudulent. Some are even published by competitors. Make sure you understand if a review is real before taking the next steps.

    Respond to All Reviews

    Fake, negative, and positive reviews all deserve some acknowledgement.

    A simple “like” is a good way to show positive reviews that lack detail you’ve seen it and thank them for publishing. For detailed positive reviews, follow up with a statement thanking them for their support and try to include specifics from their order or experience to show how much attention to detail you pay. When you reply, your customers feel heard and this can increase word-of-mouth.

    Negative reviews deserve a conversation. Address the customer’s complaint or concern and don’t make excuses. You can offer to fix the problem, send your phone number to talk offline, offer a discount code for their next order, or inform them of how this won’t be a problem in the future. This lets them know that you’re on top of the issue and will reduce the event of a chargeback occurring. Once the review is addressed, you can ask the poster to adjust their rating.

    Fake reviews should also be addressed. Yes, you should flag them, but comment on them and ask for details of their bad experience. You can request order numbers, specifics about the product, proof they received it, and even offer to fix the problem offline. If the review is fake, then it should be removed shortly. And in the meantime, customers will see how positively you treat all reviewers.

    Use an Online Reputation Management Representative

    This manager can be yourself or someone you hire. Whoever it may be, they need to monitor review sites and social media comments while publishing feedback. The customer service efforts made here will increase your business reputation as well as your bottom line.

    Dedicated an hour or two each day to manage your online reputation as reviews—especially negative reviews—should be responded to within 48 hours at the most.

    Merchant Accounts from DirectPayNet Assist with Reputation Management to Keep Your Business in the Black

    Our merchant accounts are designed for high-risk businesses with features that help you avoid fraud and maintain your reputation. Contact us to speak with our experienced team of customer service representatives and ensure your store remains online and your business profitable.

  • Overcoming Payment Gateway Issues for Drop Shipping Merchants

    Overcoming Payment Gateway Issues for Drop Shipping Merchants

    There are plenty of benefits to starting a drop shipping store. The lack of a brick-and-mortar storefront plus zero need for inventory warehousing takes away most of the cost of having your own business. And while there are certainly some downsides (that can usually be avoided), the pros far outweigh the cons.

    However, an issue most drop shipping merchants run into even when setting up their business is with payment processing. There are many payment gateways, methods, and processing providers available, but not many give you the confidence and control you need to target each possible customer with the ease they expect.

    Drop shipping businesses are considered high risk and often denied payment gateway solutions by top providers.

    In essence, many payment solution providers are unwilling to work with drop shippers because they don’t trust that products will be delivered on time which may result in a chargeback or customer dispute. Disputes and chargebacks arise mainly from products not being delivered or delays due to items not being in stock, which happened a lot when Covid first hit the world.

    Drop shipping can be summed up as a semi-direct connection between the customer and the manufacturer (or wholesaler like AliExpress). You, as the drop shipper, are what connects these two ends together. For payment processors, you are considered high risk because you don’t touch the product nor do you have control over shipping. It’s a great business model for the online era and profitability if you can maintain trustworthiness with customers and manufacturers while securing a payment gateway solution.

    When you have such little control over the delivery and shipping of your product, there’s little that holds you accountable and profitable in your payment processor’s eyes. Thus the issues start multiplying with your payment gateway.

    As an online store, you need to meet your customers’ expectations which can lead to major payment gateway issues.

    Buyer expectation is the bane and success of so many e-commerce businesses. After all, if you’re not giving the people what they want, then you likely aren’t setting yourself up for success. Buyers expect products to be available now, in pristine condition, and they expect to pay for it with their preferred payment service.

    Product Availability

    There’s a clear understanding of buyer expectation when it comes to product offerings. Availability and shipping timelines can be an issue for payment processors. Most drop shipped products come from overseas. This usually results in long delivery timelines. Online shoppers expect a level of immediacy (no thanks to Amazon).

    Being clear on delivery times and constantly communicating with customers is the key to avoiding this issue. However, many payment providers see this as an issue and can refuse their service on your site. If they do allow service on drop shipping stores, it likely comes with exorbitant fees.

    Because products arrive directly from the manufacturer, there is no quality control on the drop shipper’s front. Product packaging can arrive damaged or the products. themselves, can be damaged or faulty. This results in customer complaints and chargebacks–two things major payment gateway providers want to avoid.

    Payment Options

    Buyers expect a wide variety of payment options for any form of online business. It’s important that you as a store owner pay attention to the payment solutions most commonly used in your area (i.e., country, city, region) and try to offer the best payment gateways available. Forcing your customers to use your preferred payment method won’t sit well with them, and will likely end with customers leaving items in their carts and never making a purchase.

    Options can include payment methods like:

    • Apple Pay
    • Google Pay
    • Amazon Pay
    • WooCommerce
    • Skrill
    • Authorize.net
    • 2checkout
    • Stripe
    • PayPal
    • and other standard credit/debit card processing forms

    Not all have the same rules and requirements for drop shipping companies. You’ll have to find a balance between what your customers use and what you can reasonably afford. Luckily, Shopify payments and WordPress checkouts are customizable, so you can choose which payment gateway provider suite your needs best.

    DirectPayNet provides equally customizable payment solutions for your drop shipping store that are easy to implement and will help scale your store. Take a look at our solutions here.

    Merchants need to juggle between popular payment gateways, legality, and affordability.

    Many of the most popular or most requested payment options from consumers are not-merchant friendly when it comes to drop shipping. This is something many businesses need to juggle. Will you give in to consumer demand and forgo legality (falsify your business as one that doesn’t appear to be drop shipping)? Will you adhere to aggregator or payment provider strict demands and pay upwards of 12%? In fees while still running the risk of being shut down? Or, will you ignore consumer request?

    Here are some of the payment gateways, methods, and processors that are widely used by both buyers and merchants around the world—and the issues they present to drop shipping e-commerce platforms.

    Stripe

    Stripe is an online payment gateway platform that’s simple to use and pretty seamlessly integrates into websites, especially WordPress sites. Sounds like the go-to choice for standard payment solutions with credit cards. debit cards, and bank accounts, right? Well, no. Stripe basically does not allow drop shipping companies to use its platform.

    Even so, you technically can still add Stripe to your site—but that comes with an enormous risk. If you use Stripe on your site and the company discovers that you’re a drop shipping e-commerce store, they can halt all payments, freeze your account, and put you out of business in an instant. Stripe is a serious payment gateway issue for drop shippers and though it’s possible, it’s not recommended by any means to use their payment gateway for your store checkout.

    PayPal

    PayPal is one of the easiest payment aggregators to use. Their one-click buying making shopping really easy for consumers and eliminates any second thoughts that might arise while going through the checkout process. Plus, you can use a PayPal account anywhere in the world. So, what’s the problem?

    PayPal is just like Stripe when it comes to drop shipping merchants. They simply don’t allow it. Again, there are ways around this that do allow you to use PayPal on drop shipping merchant sites, but don’t expect the business to last very long. PayPal is known to freeze accounts for up to 180 for an investigation period, which is a death sentence to merchants. The worst part is this timeframe is present whether you disobeyed their rules or not. PayPal gives plenty of payment gateway issues to you and your customers.

    PayPal, in particular, is an odd mix. They are incredibly convenient for customers but a nightmare for merchants. And judging by your interest in this article, PayPal is the #1 service you should avoid as a drop shipper.

    Dedicated Merchant Accounts

    Dedicated merchant accounts, by name, are not on the lips of every consumer. However, they are an oft demanded option for checkout and making purchases online. Plus, most have drop shipping security measures and business-friendly rules that don’t break the bank or threaten to shut you down.

    This method is better understood as the manual method, which asks customers to type in their own information. By wide and far, dedicated merchant accounts are the solution to avoid payment gateway issues as a drop shipper. You can have access to several payment modes as well as currencies so you can accommodate buyers world wide without worry of being shut down.

    Working with DirectPayNet will allow your drop shipping store to scale and pay reasonable fees with a partner who truly understands your business.

    Your best solution to avoiding payment gateway issues is with a dedicated merchant account.

    With services like PayPal, the biggest concern is that drop shipping can cause too many disputes or chargebacks. These companies are conservative in the sense that they’d rather sit back and wait for drop shipping merchants to prove their success before offering payment solutions to them.

    With this is mind, dedicated merchant account companies like DirectPayNet can help you obtain a payment solution for your drop shipping store, add important payment options for local markets as well as currencies to serve your customers.

    Benefits

    With a dedicated merchant account through DirectPayNet, you are in total control of your shopping cart, checkout page, and will have reasonable fees while not worrying about every dispute or chargeback. All of the major credit card types are accepted, like Visa and MasterCard. You can gain clearer data as to why a customer might abandon their cart during checkout, which can help you when marketing back to them. You’ll be able to manage risk and fraud more easily with a partner willing to help.

    Drawbacks

    The major payment processing issues when getting a dedicated merchant account is working with a partner you trust and that understands your business. DirectPayNet offers several solutions that come with your dedicated merchant account which can help decrease fraud and chargebacks on your check out cart. As a merchant, you can select payment services  with the security features you need.

    Secure a dedicated merchant account today and start reaping the benefits.

    While payment aggregators like PayPal and Stripe are widely used, it doesn’t mean they are the best solution for you. This is especially true for drop shipping businesses, in which these providers cause many payment processing headaches. Avoid the hassle, appease your customers, and starting raking in the profits with a dedicated merchant account by DirectPayNet.

    We have 10 years of experience in the field, securing dedicated merchant accounts for drop shippers in high-risk industries. Trust in our ability to provide you with the payment solutions you’re looking for without sacrificing ease, security, or consumer demand. We’ll give you the details on pricing, monthly fees, transaction fees, and more to stay transparent about our payment system. Our API is easy to implement, so don’t wait–get in touch now.

    Contact us today to get your dedicated merchant account up and running, and start reaping the rewards of being a drop shipper.