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The U.S. Consumer Product Safety Commission (CPSC) has ruled that Amazon can be held accountable for defective products sold by third-party merchants on its online marketplace. The decision, released on Tuesday, rejects Amazon’s argument that it acts solely as an intermediary between consumers and sellers.
According to the CPSC, Amazon qualifies as a distributor of goods and therefore has legal responsibility for recalling hazardous products. The ruling requires Amazon to implement a plan to notify purchasers about product hazards and provide refunds or replacements for affected items.
Amazon’s marketplace, which hosts millions of third-party sellers, represents about 60% of the company’s e-commerce sales. Despite the platform’s success in generating record revenue, it has faced issues with counterfeit, unsafe, and expired goods. Amazon has claimed to invest heavily in ensuring product safety and compliance.
The decision addresses a long-standing debate over Amazon’s liability for products sold on its platform. Historically, Amazon has argued that it merely connects buyers with sellers and is not involved in the sourcing or distribution of third-party products. This defense has been effective in past legal battles, such as a 2018 case involving a faulty hoverboard that caused a fire.
In 2021, the CPSC sued Amazon to compel the recall of hundreds of thousands of hazardous products, including faulty carbon monoxide detectors, unsafe hairdryers, and children’s sleepwear with burn risks. Amazon responded by removing the flagged products from its platform and notifying customers of potential safety issues, offering credits in lieu of refunds.
The CPSC deemed Amazon’s actions insufficient and criticized the company for not offering full refunds to encourage consumers to return or destroy the hazardous items. The agency’s decision, issued by an administrative law judge, dismissed Amazon’s claim that it should be considered a third-party logistics provider. The judge highlighted Amazon’s Fulfilled by Amazon service, which involves storing and managing products in its warehouses, as evidence of the company’s extensive control over the items sold.
The ruling asserts that Amazon cannot evade its responsibilities under the Consumer Product Safety Act by emphasizing its logistics role. The CPSC stated that Amazon must comply with the law to safeguard consumers.
Amazon expressed disappointment with the CPSC’s decision and announced plans to appeal. The company reiterated its commitment to product safety and stated that it will continue to remove recalled items from its platform and inform shoppers about safety concerns. Amazon’s updated returns policy, implemented in 2021, allows customers to report faulty goods directly to Amazon rather than contacting third-party sellers.