This Amazon seller is so frustrated she tried to quit — then Amazon pitched her a new anti-counterfeiting service

Key Points
  • Wee Urban's sales on Amazon plunged 80 percent in 2017, as the seller lost control of its listings.
  • The creator of baby clothes completely missed the holiday rush and is now focused on building a brand off Amazon.
  • Yet, last month Wee Urban was invited to be an "early adopter" of a new counterfeit prevention service.
Wee Urban owner Holly MacLean
Wee Urban

In January, Holly MacLean got an invite from Amazon to join a stealthy anti-counterfeit program for sellers. The service, called Transparency, aims to bring in 1,000 brands this year to test new technology designed to help clean up Amazon's sprawling and chaotic marketplace.

Unlike Amazon's own e-commerce business, which the company controls completely, the Amazon Marketplace features millions of independent sellers across the globe listing hundreds of millions of items. Launched in 2000 after several early attempts to create third-party services, it has become an increasingly important part of Amazon's business, and now accounts for over half the company's e-commerce volume. Rapid expansion has forced Amazon to deal with a surge in counterfeits and unauthorized selling.

That said, MacLean felt she was a very odd choice to help Amazon impose more order. Her company has been crushed by impostors on Amazon — and she blames the tech giant for being unable or unwilling to stop it.

"They're lighting all these fires," said the former schoolteacher and mother of two, "and then giving us the hose."

Her baby clothing company, Wee Urban, had been so devastated on Amazon by impostors pretending to be her that she had tried in August to remove her inventory.

After reaching a peak of $500,000 in Amazon revenue in 2016, Wee Urban's sales on the site plunged 80 percent in 2017. MacLean totally missed the holiday rush, and late last year hired an attorney to help her deal with copyright infringement and other issues.

So she was surprised when, in the middle of January, she received an email and eight-page presentation from a senior business development manager at Amazon, inviting her company to join the "early adopter phase" of Transparency, alongside big brands like Bang & Olufsen, Victorinox Swiss Army and 3M, according to confidential documents she forwarded to CNBC.

Transparency uses new barcode technology designed to verify a product's authenticity. It's free for the first six months for early adopters and then will cost between 1 cent and 5 cents per code, according to the documents she received from Amazon.

"I'm the worst candidate for this," said MacLean, who added that she's been blocked from listing items on Amazon. "I don't have any products on the platform."

Meanwhile, sellers with variations of the name Wee Urban have popped up on Amazon sites around the world, and MacLean hasn't been able to figure out who they are. She says she's had more than 100 conversations with Amazon reps to try and resolve the problem.

"We have and will continue to work with this seller to address her concerns," an Amazon spokesperson said in a statement. "If sellers think we've made an error that requires further review we encourage them to contact us directly and work with us so we can investigate and take the appropriate action."

Promotional image for Amazon Transparency program

In MacLean's view, Amazon is contributing to the chaos on the marketplace through lax enforcement and overly complicated processes for sellers to manage their accounts and police their listings. Then, through programs like Transparency, it's trying to charge them for services to fix these problems.

Even so, Amazon remains the go-to destination for an increasing number of small businesses, who are flourishing on the site and benefiting from Amazon's massive reach, expansive fulfillment centers and logistics systems. The vast majority of these businesses do not experience anything like what MacLean said she went through.

What MacLean experienced

MacLean, a 42-year-old former high school teacher, told CNBC that she started Wee Urban in 2010 after a health scare with one of her kids forced her to take time off. Struggling to find high-quality clothing for her boys, she began designing simple sleep sacks from organic materials and sold them on Etsy. She was locally sourcing content and materials and sewing the products herself.

Wee Urban had its own website and developed relationships with retailers across Canada before joining Amazon's marketplace in 2013.

After a blockbuster 2016, MacLean was contacted by Amazon's Canadian sales team, inviting her into a program that would unify her account so that anything loaded onto would sync with (Canada), making it easier to sell in multiple markets.

She agreed. But her account quickly spun out of control, she says. Wee Urban's sleeping bags started showing up on (Japan) from third-party sellers that MacLean didn't recognize. Products were appearing in various markets around the world, including China and India, from one or more sellers with some form of the name Wee Urban.

Starting around June, she claims, she would log into her account only to find that her sales in Canada were on hold and she was unable to load in new products. Other people appeared to be making money off her brand, yet customer complaints would come back to her — the real Wee Urban. She could see that mysterious third-party sellers were changing the price of her products that they listed.

Suspecting fraudulent activity, MacLean started pulling some inventory from Amazon's fulfillment centers and discovered that new barcodes had been placed on her items. Packages were affixed with yellow stickers and shorter barcodes than the ones on her official white stickers.

Fed up with the process, MacLean tried to close her account in August, with an effective termination date 60 days later in October.

It didn't work. She was still able to access her account and see that prices on her products were being altered. And she had suddenly been cleared to sell Nike and Apple products (screenshot below), even though she'd never asked for that permission and only ever sold her own brand.

"Someone applied to sell those products in my account," she said.

In December, MacLean says, her actual account was assigned a new seller ID and permitted to sell under the name Weeurban. She owns the trademark for both Weeurban and Wee Urban but was being blocked from using the two-word spelling of the name.

In an email to an Amazon sales manager last month, MacLean wrote, "There is only one Wee Urban — the Brand and one company, Wee Urban Ltd. How do we get our account to reflect this accurately, to have the other seller's Brand Ownership withdrawn so we can sell our branded products on and prevent the 'likelihood of confusion' across all marketplaces?"

In response, she was told she had complete control of the "display name for your selling accounts, and you can change them at any point to be whatever you wish." In following the instructions provided to edit her store details, the seller information page told her that the display name Wee Urban was unavailable (screenshot below).

Late last year, MacLean hired Phil Mann, one of the few intellectual property attorneys to publicly take on Amazon. Mann previously represented pillowcase maker Milo & Gabby, which sued Amazon in 2013 for allowing knockoffs to proliferate on the site. The jury sided with Amazon in 2015, concluding that the marketplace isn't liable for infringement on behalf of third-party sellers.

But the company is responsible for removing counterfeits and other infringing items when a seller shows sufficient proof of violations, and Mann was trying to get Amazon to clear up Wee Urban's listings.

After CNBC informed Amazon about this story, a representative from the company's "brand incidents team" reached out to MacLean to discuss her account. She sent the employee a follow-up email with 10 requests, including making the Wee Urban display name and ID consistent across all marketplaces and removing WEEURBAN altogether. The company told her that it's working on her requests, she said.

At this point, MacLean has mostly given up on Amazon and just wants to focus on promoting her products on her website and across 250 retailers in North America. Even though her Amazon business is just about dead, she said her sales elsewhere jumped 60 percent last year to about $500,000.

But she has a whole warehouse full of excess inventory, including 5,000 units waiting to be picked up from a facility in Buffalo. After doubling on Amazon every year through 2016, she expected similar growth last year and had her sleep sacks and dresses manufactured to meet that projected demand.

"It's a hard pill to swallow," she said. "I provide for my family with that income. There are vacations and braces coming down the pike."

Needless to say, she won't be signing up for the Transparency program.

"I have to focus on building my brand in other ways," she said.

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