Section 5 Suspension on Walmart – What it Means. What You Can Do

Recently, some Walmart Sellers have had their accounts permanently closed by Walmart’s Trust & Safety team with a vague message citing Section 5 of their TOS (which is very hard to find). In this article, we will be looking at what this Walmart section 5 email is all about and what you can do to avoid it. 

Walmart Section 5 Suspension Email

If you get a section 5 suspension email from Walmart, it would look like this:

Hello,

We reviewed your account. This message is to inform you that due to a violation of the terms of the Retailer Agreement, including section 5, we are terminating your Agreement, and therefore your participation in the Walmart Marketplace. Your seller account and product listings will be deactivated, effective immediately.

Please note that no appeals will be accepted for this matter.

Your outstanding balance will be released within 180 days or earlier depending on the timing of any pending refunds, chargebacks, and any other liabilities. The final payment will be net of customer refunds, credit card chargebacks, and any other liabilities to Walmart. Our partner payments team will notify you separately if any additional action is required on your part.

Regards,

Walmart Trust & Safety

As you can see from the above email, it is quite vague and it does not explicitly state the reasons for your termination. To really understand the fundamental reasoning behind the section 5 suspension, let us take a look at Walmart’s seller agreement terms of service.

Walmart Seller Agreement - Section 5

The most recent copy of Section 5 from Walmart’s Seller Agreement reads like this:

  1. Referral Fees and Payment 

(a) Referral Fees. Walmart.com will earn a referral fee equal to a percentage of the gross sales proceeds from the sale of Products
(i) including all shipping and handling, gift wrap, and other charges, and
(ii) excluding only those taxes separately stated and charged (the “Referral Fee  Percentage”) from each Product sale through the Walmart.com Site (the “Referral Fee”) as further set forth in the Referral Fee Schedule. Walmart.com will remit to you the total amount it collects from the sale of Retailer’s Products, less the Referral Fee, for Products shipped in each 14-day period within 7 days of the end of the such 14-day period. 

(b) Payment. At Walmart.com’s option, all payments to your bank account will be remitted through an Automated Clearing House system. If Walmart.com concludes that your actions and/or performance in connection with this Agreement may result in customer disputes, chargebacks, or other claims, then Walmart.com may, in its sole discretion, delay initiating any remittances and withhold any payments to be made or that are otherwise due to you under this Agreement for the shorter of:
(i) a  period of 90 days following the initial date of suspension; or
(ii) completion of any investigation(s)  regarding your actions and/or performance in connection with this Agreement. As a security measure,  Walmart.com may, but is not required to, impose transaction limits on you or some or all customers relating to the value of any transaction or disbursement, the cumulative value of all transactions or disbursements during a period of time, or the number of transactions per day or another period of time. 

The most likely reason for Section 5 suspensions is that customers filed chargebacks or other disputes likely claiming that they did not receive their items. Amazon has a similar policy that can result in account deactivation (not just suspension) wherein one cannot even log in to the Amazon account. This “Section 5” notice seems to be Walmart’s version of this.

Unfortunately, it does not seem that Walmart has a great way of notifying sellers when or if chargebacks take place, and therefore the Section 5 termination letter can come as quite a shock.

What You Can Do to Avoid This Suspension

Here are some of the things you can do to avoid Walmart’s section 5 suspension:

  • Have great customer service. Since Walmart is not very strict (yet!) about their policies in responding to customers in a timely manner, it can be tempting to slack off and provide poor support. Usually, disputes can be prevented with prompt responses from your company letting the customer know that you are taking care of the issue. Communication is everything, and communicating well can avoid unwanted disputes and chargebacks.
  • Be sure you actually shipped items out and that they are actually delivered. Yeah I know, this should be a no-brainer, but if you track your packages from warehouse to customer yourself, you can often get in front of situations where a package is lost in transit or otherwise undeliverable. This can help you pre-emptively help the customer by sending a replacement item or by contacting the carrier and opening a case

What You Can Do If You Are Already Suspended

In the world of eCommerce, we’ve found that sometimes “no” really doesn’t mean no. So even though Walmart says that you shouldn’t bother appealing this situation, we would recommend that you give it a try anyway. The worst they can say is no and in that case, you are no worse off. You will likely need to send an email to Walmart’s performance team since you may not be able to log in to Walmart Seller Central.

If you would like help with this process, please contact us. If you have more information about this issue, please let us know!

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