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Is Online Arbitrage Legal? [Latest Updates]

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Before starting this business, you may be asking yourself, "is online arbitrage legal on Amazon"? Fortunately, the answer to this question is "Yes", but like other businesses, the online arbitrage legality can be affected by a few problems. Generally, online arbitrage is more hassle-free than retail arbitrage, and if you consider several simple steps, it's less likely to face serious problems. In this article, we outline the ways you need to avoid not get recognized as an illegal seller.
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Table of Contents

Ways to Avoid Trouble When Selling Online Arbitrage On Amazon

Buying goods and selling them for a profit is not only legal in the US, but also is encouraged because it causes market efficiency. But there are some grey areas. In this article, we focus on the legal problems that you may face and suggest ways to protect your business. If you wonder how to start an online arbitrage business or need more information about online arbitrage, we have a handful of guides on our blog.

Read More: Complete Guide on starting online arbitrage

As long as you buy a product legally, you can sell it again without changing the product’s condition. If you want to resell a “NEW” product, you have to resell it as new, not used.

Counterfeit Products

Counterfeit Products on amazon

Amazon will ask you to submit your invoices for the random products to assure you are a valid seller. So, getting the receipt when you purchase the items is advisable. Because if you cannot submit the required proofs, you can’t make Amazon sure that your purchase was legal and get suspended. Notice that sourcing counterfeit products is a huge danger for your business and can lead to losing your Amazon account or other worse legal consequences. Don’t forget to avoid any counterfeit products.

But online arbitrage legality doesn’t guarantee easy, headache-free selling.

Read More: Online Arbitrage vs Retail Arbitrage

Restricted Brands, Categories, or ASINs

Products that are prohibited on Amazon

Selling some brands, categories, or ASINs is only possible for authorized sellers. For example, you’re not allowed to sell in the book category. If you sell the books in another category, like home, it’s considered illegal and may lead to getting suspended. Don’t try to circumvent the laws.

If you need to sell banned products, you need to go through an approval process to be authorized.

IP Complaint

Another warning that you might receive is an IP complaint. If you violate the trademark or copyright, the brand owner can contact Amazon and file a complaint against you for ignoring their intellectual property. The best way to avoid IP complaints is not to sell brands that are known to issue IP Claims even if you are approved to sell them.

Notice that every platform has its terms and conditions. Also, selling some products to some territories/countries can be illegal. Before selling your goods to other countries, check the rules.

Read More: Is Online Arbitrage Dead for New Sellers in 2021?

Final Thought

Buying and reselling products is a legal business as long as you purchase the products legally and avoid counterfeit. Although online arbitrage and retail arbitrage are legal, selling the items can have the headaches like banned brands or IP complaints. For staying away from this grey area, it’s enough to consider several simple steps.

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