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Santa Barbara business fights Amazon to get its $100,000 back

SANTA BARBARA, Calif. - Tonight’s Tipline Investigation involves the largest online retailer in the world, Amazon. The retail giant became what it is today partly due to a network of small retailers who sell their products using Amazon’s Merchant platform.

As one of those local retailers discovered, one mistake and they can lose everything.

Michael Waite lives in Santa Barbara, but sells his products all over the world through Amazon. His business, Diamond Hands Trading, was going so well Waite’s father decided to invest some of his retirement money.

But, a paperwork error brought everything to a screeching halt on May 3rd of this year.

“They came back and said I manipulated documents, which I did, my mistake 100%, that I manipulated documents and so they’re closing my account,” said Waite.

Waite said the mistake happened because he didn’t understand the Amazon system and he couldn’t get anyone from Amazon to help him, so he turned to the internet.

“I went on to YouTube and doing some research and watching videos from people that are supposed to be major sellers on Amazon and they’re stating that this happens all the time and so here’s a website you can go to, just put in your information and it creates the invoice for you and send that to Amazon,” said Waite.

However, Waite discovered that advice was bad, really bad.

“So what I was doing was retail arbitrage. I’m buying from the retailer at a very discounted price and then reselling it to the consumer paying taxes, the consumer pays taxes again,” said Waite.

Which is not allowed. That’s why Amazon froze his account and almost $100,000 of his money. But, Waite said that money had nothing to do with the paperwork mistake.

“It seems unbelievably unfair that a company can literally take $100,000 and say, ‘You made a mistake over here, we’re taking all of that from you and can’t talk to anybody about it,'” said Waite.

Waite told NewsChannel 3 he’s proven to Amazon that he just made a dumb mistake and his sellers performance ratings are perfect.

“I’m sending them everything they ask for over and over just getting the same auto reply and message with no humanity behind it, just nope, sorry,” said Waite.

Waite says other Amazon retailers told him to give up because the contract says he can’t sue Amazon.

“This behemoth that’s Amazon where to them this amount of money is nothing, but to me, this is my entire life, it’s ruining relationships in my family,” said Waite.

Waite said his 74-year old father doesn’t need the stress and there is a lot of stress.

At one point, Waite started getting messages from people claiming to be former Amazon employees who could fix his problem if he paid them.

We're not identifying them because we couldn't reach them for comment. One person wrote to Waite in broken English that he has an insider source in the US, UK and India who can fix Waite’s problem and then blame it on a ‘system error.’

The man also writes that he can reinstate Waite’s account in 48 hours if Waite pays 1500 pounds, a ransom of sorts. Waite responded, ‘Thank you, but I will continue to try and get it fixed the legitimate way.’ The man then tells Waite if he refers friends he’ll only charge 800 pounds.

Another person claiming to be a former Amazon employee from Pakistan also wrote to Waite claiming he can help.

Waite decided to contact the NewsChannel 3 Tipline instead. We looked over Waite’s documentation and contacted Amazon. We wanted to know why Amazon was keeping Waite’s $100,000 and if it knew about the ransom offers from people claiming to have contacts inside Amazon.

An Amazon spokesperson agreed to look into it. Almost three weeks later, Amazon reactivated Waite’s account and released his $100,000.

“With your help and everything else, I was able to get my funds released, payoff all of my debt and now I’m back in the clear. Feels amazing, even talking about it right now I’m probably starting to blush because I feel so good about it,” said Waite.

Amazon kept his money for 115 days. Waite said he is suing Amazon in small claims court to recover some of the money he lost while Amazon had his $100,000.

Amazon declined to comment on Waite's case, however a spokeswoman said they are looking into the so-called ransom demands by the people claiming to be former Amazon employees.

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C.J. Ward

C.J. Ward is the evening anchor for KEYT News Channel 3 and the station’s lead investigative reporter. To learn more about C.J., click here


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