A few months ago on Tuesday, I didn’t get my normal payout from Walmart Marketplace. That’s not necessarily surprising since, if you’ve been on Walmart for any length of time, you know that they still have quite a few issues with their platform, one of which is that payments don’t always go out on time every time.
I didn’t think much of it until a few days later when I still hadn’t been paid out. I logged into Walmart to see this:
“This is new…” I thought to myself. “… And this is next level.”
Instead of reaching out with a warning or a request to stop selling the products in question (which my company typically honors by the way), these guys went straight to court, filing a restraining order that froze my account before I even knew anything was wrong. One morning, my funds were just locked up, with no prior notice.
What’s Going On? Am I Being Sued?
Probably yes.
Let’s get the disclaimer out of the way – I am not an attorney, this is not legal advice, and you should for sure hire someone to handle this issue for you (see bottom of the page for more about who to hire to handle this). This is a post about my experience with this issue and what I learned or think I’ve learned in the process. Cool? Okay then…
In my case, this was real, I was being sued, and Walmart was holding my money.
The company suing me alleged all kinds of crazy things, but the crux of it was that they alleged that I was infringing on their trademark.
As I mentioned before, I found out I wasn’t the only one. In fact, on the lawsuit paperwork which I eventually got emailed, there were like 100 other sellers all named on the lawsuit. These are apparently known as SAD schemes. Sellers like me find ourselves up a creek without a paddle with Walmart holding our money and wondering what is going on.
What Walmart Had to Say
Of course the first thing I did was reach out to Walmart asking what was going on. And, in good Walmart fashion, they told me basically nothing
My team and I reached out multiple times but this was the copy/paste response.
So at that point, I had to figure out for myself what was going on since Walmart wouldn’t even tell me which Illinois count had my case. All I could see from Seller Central was this and Walmart wouldn’t give any more info.
“Awesome”
After checking with a few colleagues, I found out some of them had also had one or more accounts with this same issue. In fact, one of their accounts had over $60,000 that was not only held by Walmart but was allegedly paid out to to the company who had opened up the restraining order (TRO = temporary restraining order) against them.
“So Walmart may not just hold the money but may give it to the company suing me but won’t tell me anything about who they are… awesome. Definitely real. Definitely sucks.”
How the Scheme Works
“But aren’t I supposed to get served with papers like in the movies where the bike messenger pretends to fall and then hands the guy getting sued the paperwork and says, ‘you’ve been served!’? Or no… that’s just in the movies?”
Apparently not. This is how these stupid things work…
Under normal circumstances, the accused is supposed to get served with a lawsuit. However, apparently, in some special cases, the plaintiff (company suing) can make a case that the circumstances are NOT normal and ask the court to seal the documents so that they don’t have to serve papers. In my case, I didn’t even get a damn email from anyone.
This essentially means that I didn’t even have a chance of knowing what was going on so that I could defend myself, which seems to be part of the point.
If I hadn’t responded —because I didn’t even know about the lawsuit—they moved forward with a “default judgment.” This means they’re trying to get the court to rule against me without any defense on my part. And I couldn’t defend myself since I didn’t get served papers.
This is how my colleague ended up with $60k of his Walmart balance sent off to China or somewhere. Oh yeah… did I mention that the company suing me wasn’t a US company? Nope.
What I Did
Being that I the case was in Illinois, I had to find an Illinois attorney to represent me, and he did just that.
I also had to move super fast since I figured the plaintiff was going to ask for the default judgement and try to get my money from Walmart.
I hired a litigation attorney, and he jumped on the case. End to end it took about 3 months to get it fully resolved to where Walmart removed the notice from my Seller Center account and there is no more hold on the money.
As of last week, this account is finally all clear.
What You Can Do to Protect Yourself and Resolve Your Issue:
Reactive Steps (if you’re already in this)
- Get working on this immediately so you don’t end up with the default judgement. From what I understand, while they can be overturned, it increases the timeline.
- Find an attorney if you don’t have one – If you need help, reach out using this form and I’ll put you in touch with the attorney I used. He’s not cheap, but he’s good, and it was one of the best attorney experiences I’ve had in terms of response times, keeping me in the loop, and handling the problem. (I’m not including his email here so he doesn’t get spammed and so we can filter out serious inquiries so as not to waste his time.)
Proactive Steps (if you want to make sure this doesn’t happen to you or at least that you mitigate your risk)
- Use an IP Alert Chrome Extension like ours when researching products to let you know if there is a chance of this happening if you list these items. I’m pretty sure we have the biggest database of Walmart-related issues logged of any tool right now.
- Buy and use an additional Walmart Seller Account so that all of your eggs are not in one basket. Having a 2nd or even 3rd Walmart account can allow you to continue to sell and bring in sales so that this type of situation doesn’t put you out of business
Conclusion
If you’re going through this right now, I understand how frustrating it is. You will get through this.