A supplier of advanced gaming laptops realized that Amazon had cost him thousands of dollars to market merchandise in California, even though he had stopped selling his wares there owing to state rules.
Consumers could no longer order the products, but Amazon’s automated ad system continued to promote them and charged him for the advertising.
This is what Rob Robinson, the owner of Computer Upgrade King, told Bloomberg. He said that from November to January, he made no profit because he was charged for non-sales-generating ads.
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Robinson also stated that Amazon originally denied there was a problem, despite noting it for several weeks.
When Bloomberg raised the matter with Amazon, the corporation admitted that Robinson and other “sellers paid for misdirected advertisements and that it was working to fix the problem.”
Amazon apologized to Robinson and issued a $15,000 refund, which was apparently a fraction of the $300,000 he requested.
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Over the last year, ad clicks in California accounted for around $10,000 of the seller’s advertising spend. Those were associated with products that could not be sent to addresses in the state due to compliance requirements. In the previous 12 months, ad clicks tied to inactive listings accounted for around $5,000 of the seller’s advertising budget.
More than 85% of Computer Upgrade King’s goods are approved for shipping in California. To calculate the return amount, Amazon mapped the visible impressions and outcomes over the previous twelve months. That number fell short of Robinson’s expectations.
The error impacted a very small number of merchants — less than 0.00215% of advertising in California linked to products that could not ship to addresses in the state according to California Energy Commission rules.
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This was an isolated technical issue. The company responded rapidly to address the issue and refund the affected merchants.
“We will similarly contact and refund any affected sellers, and are updating our processes to ensure any such ads are not charged going forward,” according to a spokeswoman for Amazon.
For years, Google and Microsoft have touted automated ad systems, implying that artificial intelligence (AI) and calculated data could not only outperform marketers in campaign monitoring, but would also speed up the process and free up time for them to do other things.
Computer Upgrade King, which employs approximately 80 people, offers PCs and accessories to gamers, primarily through Amazon’s online marketplace.
Last year, Amazon started sending Robinson emails informing him that certain of his products were “restricted from sale in certain locations, although they are permissible for listing on Amazon.” At the time, California was implementing regulations limiting personal computer power use.
Robinson told Bloomberg that it was OK to give up some of his sales in order to avoid paying for expensive lab results for hundreds of specialized products he offers.
As a result, items were removed from sale. However, advertisements for those things continued to appear.
This is not the first time Amazon has encountered this issue, according to Bloomberg. Rachel Johnson Greer, a former Amazon compliance staffer who left the business in 2015, told Bloomberg that at the time, Amazon was creating automated methods to guarantee that products sold on the site followed state and local standards.
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