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At the heart of the debate is whether Amazon qualifies as a ‘distributor’ of products sold by third parties, an argument the tech giant just lost to US regulators.
A consumer safety body in the US has ordered Amazon to recall “hazardous” products sold through its platform and replace them or refund customers even if they were listed by third-party sellers.
The Consumer Product Safety Commission (CPSC) found that Amazon bears legal responsibility for recalling unsafe products, such as faulty carbon monoxide detectors, hairdryers without electrocution protection and children’s sleepwear that violated federal flammability standards, because the company is a “distributor” of the goods.
In a statement published yesterday (30 July), the CPSC said that more than 400,000 products sold through the e-commerce giant are subject to this order because they pose a “substantial product hazard” under US consumer product safety laws.
It also accused Amazon of exposing consumers to “substantial risk of injury” by failing to notify the public about these hazardous products and not taking adequate steps to encourage customers to return or destroy them.
‘Inadequate’ protections
While Amazon did not contest the claim that the products in question were hazardous, it argued that it was not a distributor in the way the commission had defined the term and therefore bore no responsibility for the safety of the products sold under its Fulfilled by Amazon program.
Amazon, which made almost $575bn in net sales last year, also argued that sending messages to initial purchasers about “potential” safety issues and providing initial purchasers with Amazon credits – rather than refunds incentivising product return or destruction – were sufficient to remedy the product hazards.
However, the CPSC rejected Amazon’s argument, ruling the company acts as a distributor in this matter and that its actions are “inadequate” to protect the public.
A spokesperson for Amazon told CBS MoneyWatch that it “stands behind the safety of every product” on its platform, regardless of whether it is sold by Amazon or a third party.
“We have proactive measures in place to prevent unsafe products, and we continuously monitor the listings in our store. If we discover an unsafe product available for sale, we address the issue immediately and refine our processes.”
Amazon must now submit its proposed plans to notify consumers and the public about the hazardous products and remove them by incentivising their return or destruction. Once the CPSC considers Amazon’s plans, it will address them in a second order.
Last month, Amazon was slammed with a billion-pound lawsuit in what became one of the biggest cases of collective action taken by UK retailers for alleged misuse of their data. Days later, it was ordered to pay nearly $122m after a US court found the e-commerce giant guilty of patent violations against AlmondNet, an adtech company based in New York.
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