Amazon to pay damages for dangerous goods sold by independent merchants

14 August 2021

Amazon will start directly paying compensation to customers affected by dangerous products sold by independent sellers in its store, as it faces mounting pressure over the safety of goods on its site.

From September 1st, the ecommerce company said it would compensate for personal injury or property damage on claims up to $1,000 (€852), which it said represented “more than 80 per cent” of cases.

Policy change to affect US customers first but will be expanded to other countries soon

Amazon might “step in to pay claims for higher amounts if the seller is unresponsive or rejects a claim we believe to be valid”, it added.

More than half of the products sold on Amazon now come via third-party sellers, rather than being sold directly by Amazon itself.

While this has resulted in a greater selection of goods, it has also introduced significantly more risk, since these products are not vetted by Amazon before being sold.

Logistics network 

Many of those sellers make use of Amazon’s logistics network to store, pack and deliver products to customers’ doors. Sellers can also list their products on Amazon but use other companies, such as FedEx or UPS, to handle delivery.

Last month, Amazon was sued by the US Consumer Product Safety Commission, a federal agency, in an effort to force it to recall hundreds of thousands of products.

The agency said Amazon had to “accept responsibility” over products that posed a risk of “serious injury or death”. They included hairdryers without sufficient protection against electric shocks, faulty carbon monoxide detectors and children’s bathrobes that did not meet flammability standards.

Amazon said it had already removed the majority of the products in question.

Under its new rules, Amazon said claims would be analysed by “advanced fraud and abuse detection systems with external, independent insurance fraud experts”. Frivolous claims would be dismissed, it said, saying its system would save sellers time and money investigating claims themselves.

“By standing behind customers and the products in our store, regardless of who sells them, Amazon is going far beyond our legal obligations and what any other marketplace service provider is doing today to protect customers,” the company said in a blog post.

Court cases 

But the change in policy also comes in the wake of shifting attitudes in courts. Earlier this year, Amazon admitted it was not able to guarantee the safety of the products sold through its marketplace, telling Texas’s highest court that checking products handled within its logistics was “not realistic”.

That case involved a 19-month-old child who was left severely injured after she ingested a lithium battery from a remote control sold by a Chinese seller on the platform. Amazon has maintained it is a middleman in the transaction and should not be held responsible – a position the Texas Supreme Court agreed with, finding Amazon not liable.

However in California, judges have ruled against Amazon in precedent-setting cases in which it said Amazon could be held potentially liable for third-party sales, in the same way a bricks-and-mortar retailer might be.

Recent disputes that were ruled in favour of consumers have involved a woman blinded in one eye by a faulty dog leash, and a woman who suffered third-degree burns because of a defective laptop battery.

Amazon said the policy change affected the US first but would be expanded to other countries soon.

Source: The Financial Times Limited 2021

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