578: 5 Dirty Tactics Amazon Is Using To Screw Sellers And Raise Prices

Podcast: Download (Duration: 13:50 — 16.1MB)

Amazon’s dirty tactics for sellers in 2025 fall into five categories: stacked FBA fee hikes with a “safety valve” (AWD) that failed at Q4, a slashed lost-inventory reimbursement policy, aggressive lowest-price enforcement that Temu is exempt from, hostile customer service that treats sellers as guilty until proven innocent, and active suppression of your own brand in favor of Chinese knockoffs and Amazon private label ads placed directly on your listings. After 10 years of selling on Amazon and generating millions on the platform, my take is simple: the platform still moves volume, but the effort-to-profit ratio has collapsed and every seller needs an exit plan.

In this episode I walk through each tactic, name the specific 2024 and 2025 fee and policy changes, and share what real sellers (Amanda from my course, eight-figure seller Molson Hart at Viahart, my own store Bumblebee Linens) are dealing with right now. The takeaway at the bottom: stop treating Amazon as your only channel.

Below we cover the AWD trap, the new lost-inventory reimbursement rules, the lowest-price policy and the Temu loophole, the customer service and copyright-hijack problem, and the brand-suppression tactics that are the single biggest hit to seller profitability.

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Key takeaways

• Amazon FBA storage rates, inbound placement fees (27 cents to $1.58 per unit), and low-and-high inventory penalties keep stacking every year.
• AWD (Amazon Warehousing and Distribution) is pitched as a safety net but its Q4 2024 breakdown left sellers with canceled pickups and delayed transfers, and Amazon still raised its price in 2025.
• Effective March 2025, Amazon only reimburses “manufacturing cost” when it loses your inventory, not the retail price or landed cost. Freight, tariffs, and duties are excluded.
• Amazon’s lowest-price enforcement buries your listing if you sell cheaper on Walmart, Target, or eBay. Temu appears to be exempt, which is why the same product can be $40 on Amazon and $1 on Temu.
• Copyright-infringement takedowns are handled guilty-until-proven-innocent. Viahart lost 126 SKUs over Black Friday and Cyber Monday to a false Liahart claim despite owning the trademark.
• Search for your own brand and most top results will be competitors. Amazon places its own private-label ads directly on your product page at a lower price.

Why Amazon’s tactics against sellers matter to shoppers too

Amazon’s dirty tactics against sellers eventually reach shoppers through higher sticker prices, fake sales, and worse product quality. Every fee increase gets baked into the retail price.

Every “deal day” is offset by an inflated base price the other 340 days of the year. And when Chinese knockoffs win the Buy Box, shoppers get an inferior product with the same reviews attached.

Sellers are the canary. When the honest ones leave the platform, what remains is a marketplace of arbitrage, private label, and knockoffs.

Tactic 1: Amazon FBA and AWD fee hikes (the fake safety net)

Amazon’s first dirty tactic is stacking FBA fees every year, then offering AWD as an “escape” while raising AWD prices too. FBA used to be simple: send everything to one warehouse, Amazon does the rest, at a reasonable cost. Now sellers face annual storage rate hikes, holiday storage penalties, and inbound placement fees ranging from 27 cents to $1.58 per unit.

On top of that, Amazon penalizes sellers for both having too much inventory (long-term storage fees) and not enough (low-inventory-level fees). Hitting Amazon’s ideal inventory window is nearly impossible in practice.

The “solution” Amazon markets is AWD (Amazon Warehousing and Distribution). Ship everything to one central warehouse and Amazon sorts, stores, and redistributes as needed.

That is exactly how FBA used to work before the fees stacked up. AWD is a rebranded return to the old model, at a fresh new price.

How AWD failed in Q4 2024

AWD failed in Q4 2024 when demand exceeded capacity, pickups were canceled or delayed, and transfers from AWD to FBA warehouses stalled. Sellers I know missed critical holiday sales because inventory that Amazon had physically taken possession of never made it to the fulfillment centers that needed it. And after that Q4 disaster, Amazon still announced an AWD price increase for 2025.

Tactic 2: The new lost-inventory reimbursement rule (you eat the loss)

Amazon’s second dirty tactic is a March 2025 policy that only reimburses sellers for the “true manufacturing cost” when Amazon loses inventory, not the retail price or the landed cost. Freight from China, customs duties, and tariffs are excluded from the calculation.

Consider a $10 product that costs you $2 to source, plus $1.50 in freight and duties (landed cost around $3.50). Under the old rule, if Amazon lost the unit, you got $10 back.

Under the new rule, you get around $2, minus shipping and import duties Amazon does not credit back. Every warehouse mistake now moves money from your P&L into Amazon’s.

Amazon announced this reimbursement change and the AWD price hike right after publicly claiming there would be no new seller fee increases in 2025. That is the second reason sellers no longer trust Amazon’s fee guidance.

Tactic 3: Lowest-price enforcement and the Temu loophole

Amazon’s third dirty tactic is punishing sellers whose products are cheaper on Walmart, Target, or eBay by suppressing their Amazon listings, while apparently ignoring the same undercutting on Temu. Amazon uses web crawlers to check off-Amazon prices constantly. Get caught with a cheaper listing elsewhere and your Amazon listing effectively disappears from search.

Temu appears to be the one large marketplace Amazon does not price-check against. Temu charges no listing fees and near-zero transaction fees, which lets sellers list the same SKUs at fractions of the Amazon price.

I have seen a floor mat listed at $40 on Amazon and $1 on Temu. As a shopper, once you know that, why stick with Amazon?

This lowest-price enforcement is one of the specific practices cited in the FTC’s ongoing antitrust suit against Amazon.

Tactic 4: Hostile customer service and copyright hijacks

Amazon’s fourth dirty tactic is a support system that treats sellers as guilty until proven innocent on any copyright, trademark, or infringement claim, no matter how obviously false. Getting a human on the phone is nearly impossible, and the canned responses rarely resolve anything.

Amanda, a student in my Create A Profitable Online Store course, designs custom party supplies. She has gone through the work of registering copyrights and trademarks for her top products.

Chinese sellers still file false infringement claims against her listings on a rolling basis. Every time it happens she loses months of sales while she clears her name, and then the cycle starts again.

The Viahart Black Friday takedown

Molson Hart at Viahart, an eight-figure seller, had 126 of his listings taken down over Black Friday and Cyber Monday for infringing a trademark called “Liahart.” His company is Viahart LLC, his seller name is Viahart, he owns the Viahart trademark, and Viahart is in Amazon’s Brand Registry.

Amazon’s canned reply said all products using the term “Viahart” would remain suspended. He got his listings back eventually, and he also lost tens of thousands of dollars on the biggest sales weekend of the year.

Competitors buying out and returning your inventory

At my store Bumblebee Linens we have had a competitor buy out all of one SKU’s inventory almost every year, sit on it through the holidays, and return everything in January. We make zero sales on that SKU during peak season and lose money on FBA and return fees. Amazon’s return policy makes this attack cheap for the attacker and expensive for the seller being attacked.

Tactic 5: Amazon suppresses your brand and puts its own ads on your listing

Amazon’s fifth and most damaging tactic is actively suppressing your own brand in search and then placing ads for its private label, or a competitor’s product, directly on your product page. Search for my store Bumblebee Linens on Amazon and only 3 of the top 10 results are actually my products. The other 7 are competitors, and most of those are Chinese knockoffs paying for Sponsored Brand real estate.

Viahart owns the trademark for Brain Flakes, yet a Chinese knockoff holds the Amazon’s Choice badge on the branded search. Amazon rewards whoever wins the algorithm, not the actual brand owner.

Then Amazon takes it further. On a friend’s emu oil listing, Amazon places an ad for its own private-label emu oil at 30 percent off directly in the middle of her product page. She is paying for advertising on Amazon, and Amazon uses that page to promote its cheaper knockoff.

How much all this has changed the math on Amazon FBA

The math on Amazon FBA has changed enough in the past 3 years that most six-figure private-label sellers I talk to now consider Amazon a distribution channel, not a business. 2024 was the largest single year of seller fee and policy change increases Amazon has ever rolled out. Between higher FBA rates, new AWD fees, holiday inventory penalties, deal-day fees ($150 to several hundred per SKU for a Lightning Deal), and slashed reimbursements, the effort-to-profit ratio has collapsed.

The workload has increased in step. Sellers spend more time defending listings, fighting takedowns, and forecasting inventory to Amazon’s specifications than they do growing revenue.

What to do if you are still selling on Amazon in 2025

If you are still selling on Amazon in 2025, treat it as a paid distribution channel and rebuild everything else around your own audience. Amazon is fine for volume today. It is not fine as your only channel because you do not control any of it: your listing, your price, your reviews, or your customer relationship.

Practical moves worth making now:

• Launch or grow your own Shopify (or comparable) storefront and treat it as your primary brand home.
• Build an email list from every Amazon insert, every offer, and every off-Amazon touchpoint you have. Email is the one asset Amazon cannot take from you.
• Diversify off-Amazon: Walmart, TikTok Shop, Faire (wholesale), your own DTC site, retail placements.
• Trademark your brand and enroll in Brand Registry. It reduces takedown frequency and makes fighting bogus claims faster.
• Stress-test every SKU’s profitability at the new reimbursement rate, new AWD price, and higher inbound fees. Kill anything that only worked at the old numbers.

Frequently asked questions

What are the biggest Amazon fees hurting sellers in 2025?

The biggest Amazon fees hurting sellers in 2025 are the annual FBA storage rate increases, inbound placement fees (27 cents to $1.58 per unit), low-inventory-level fees, high-inventory long-term storage penalties, AWD storage costs, deal-day participation fees ($150-plus per Lightning Deal), and the effective loss from Amazon’s new “manufacturing cost only” reimbursement rule when they lose inventory.

What changed with Amazon’s lost-inventory reimbursement policy?

Amazon’s lost-inventory reimbursement policy changed in March 2025 so that Amazon only reimburses sellers for the estimated manufacturing cost of a lost unit, not the full retail price. The new calculation excludes freight forwarding fees, tariffs, and customs duties. For most private-label products imported from China, sellers now recover only a small fraction of their true landed cost when Amazon loses a unit.

Does Amazon really price-check against Walmart and Target but not Temu?

Amazon actively price-checks seller listings against Walmart, Target, eBay, and other large US marketplaces, and will suppress a listing if it appears cheaper off Amazon. Temu does not appear to be included in that enforcement, which is why many sellers list the same SKUs on Temu at a fraction of the Amazon price without Amazon suppressing them. This is one of the practices cited in the FTC’s antitrust case against Amazon.

What happened with the Viahart Amazon suspension?

Viahart, an eight-figure Amazon seller run by Molson Hart, had 126 listings suspended over Black Friday and Cyber Monday 2024 based on a false infringement claim against the trademark “Liahart.” Viahart owns the Viahart trademark, is enrolled in Amazon Brand Registry, and eventually got the listings restored. The suspension still cost the company tens of thousands of dollars in sales on the biggest shopping weekend of the year.

Why do Chinese knockoffs rank ahead of the real brand on Amazon?

Chinese knockoffs frequently outrank the real brand on Amazon because they aggressively bid on branded search terms, run promotions Amazon’s algorithm rewards, and file infringement claims to suppress the real brand’s listings. Amazon’s search results reward whoever performs best on the platform’s internal metrics, not whoever owns the trademark. Even the Amazon’s Choice badge can end up on a knockoff, as it has on Viahart’s Brain Flakes product.

Should I quit selling on Amazon in 2025?

Keep selling on Amazon in 2025 if the SKU still pencils out, and stop treating it as your only channel. Amazon still moves volume, and with the fee stack, reimbursement changes, and brand suppression, most sellers are better off using Amazon as a paid distribution channel while building a real brand on their own site, email list, and diversified marketplaces like Shopify, Walmart, TikTok Shop, and wholesale.

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