A federal regulator has ruled that Amazon is a distributor and bears responsibility for faulty products sold on its marketplace. This decision is the result of a longstanding legal grey area related to Amazon’s liability for recalled products sold by third-party sellers, who make up more than half of the company’s e-commerce sales. Amazon has argued that it should not be legally responsible for defective products sold by third-party merchants on its platform, stating that the liability lies with the seller, not the marketplace itself.
The U.S. Consumer Product Safety Commission determined that Amazon is a distributor of products that are defective or fail to meet federal consumer product safety standards, thus holding legal responsibility for their recall. More than 400,000 products are said to be subject to this ruling, including faulty carbon monoxide detectors, hairdryers without electrocution protection, and children’s sleepwear that violates federal flammability standards. The agency stated that Amazon failed to inform the public about these hazardous products and did not take adequate steps to encourage customers to return or destroy them, leaving consumers at risk of injury.
Amazon is required to submit a plan to notify customers and the public about the hazardous products, as well as remove them by incentivizing their return or destruction. In response to the CPSC’s decision, Amazon expressed disappointment and announced plans to appeal. The company claimed that when notified by the CPSC three years ago about potential safety issues with certain third-party products, they promptly informed customers to stop using the products and refunded them. However, the CPSC’s lawsuit against Amazon in 2021 aimed to hold the retailer accountable for recalling defective products sold by third-party sellers on its marketplace.
Amazon announced in 2021 that it would directly compensate customers for valid claims of property damage or personal injury caused by third-party products sold on its platform, up to $1,000 or more in certain cases. The company stated that it has proactive measures in place to prevent unsafe products and regularly monitors listings on its platform. If Amazon discovers an unsafe product for sale, it claims to address the issue immediately and refine its processes to ensure the safety of customers. However, the CPSC’s ruling now sets a clear standard for Amazon’s responsibility as a distributor for faulty products sold on its marketplace. As a result, this decision could have significant ramifications for Amazon’s e-commerce business.
Overall, the ruling from the U.S. Consumer Product Safety Commission holds Amazon accountable as a distributor and legally responsible for recalled products sold on its platform. While Amazon has expressed disappointment and intends to appeal the decision, the company has previously taken steps to compensate customers for damage or injury caused by defective products. Moving forward, Amazon will need to comply with the CPSC’s order to notify customers and the public about hazardous products and remove them from its platform. This decision establishes a clear standard for Amazon’s role in ensuring the safety of products sold on its marketplace and may impact the company’s e-commerce business in the future.
