The U.S. Consumer Product Safety Commission ruled that Amazon is a distributor and therefore bears responsibility for faulty products sold on its marketplace. This decision could have significant implications for Amazon’s e-commerce business, as third-party sellers make up over half of the company’s sales on Amazon.com. Amazon has previously argued that it shouldn’t be held legally liable for defective products sold by third-party merchants, stating that the liability should rest with the seller, not the marketplace.
The CPSC’s ruling applies to more than 400,000 products, including faulty carbon monoxide detectors, hairdryers without electrocution protection, and children’s sleepwear that violated federal flammability standards. The agency accused Amazon of failing to notify the public about these hazardous products and not taking adequate steps to encourage customers to return or destroy them, leaving consumers at risk of injury. As a result, Amazon must submit a plan to notify customers and remove the hazardous products by incentivizing their return or destruction.
Amazon expressed disappointment in the CPSC’s decision and plans to appeal. The company claimed that when notified by the CPSC three years ago about potential safety issues with certain third-party products, it swiftly informed customers to stop using the products and issued refunds. However, the CPSC filed a lawsuit against Amazon in 2021 in an effort to compel the retailer to accept legal responsibility for recalling defective products sold by third-party sellers on its platform.
In response to the legal action, Amazon announced 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 specific situations. The company also stated that it has proactive measures in place to prevent unsafe products and continuously monitors listings in its store. If an unsafe product is discovered for sale, Amazon addresses the issue immediately and refines its processes to protect customers.
The CPSC’s ruling signals a clear standard for Amazon’s responsibility for recalled products and could lead to changes in how the company operates its e-commerce platform. As Amazon appeals the decision, the outcome of the case will likely impact the industry and the relationship between online marketplaces and third-party sellers in terms of product safety and consumer protection. This ruling underscores the importance of ensuring the safety of products sold online and holding marketplaces accountable for the products they distribute to consumers.
