Federal Regulators Hold Amazon Liable for Defective Products Sold by Third-Party Merchants

In a landmark decision, the U.S. Consumer Product Safety Commission (CPSC) has held Amazon accountable for faulty products sold by third-party merchants on its marketplace, declaring that the e-commerce giant is a distributor and responsible for the recall of hazardous items. This designation breaks a previously ambiguous legal status concerning Amazon's liability for products sold via its platform. This is prepared by SSP.

The unanimous ruling mandates Amazon to notify customers and remove products deemed dangerous, such as faulty carbon monoxide detectors, hairdryers lacking electrocution protection, and children's sleepwear violating flammability standards. More than 400,000 products are subject to this order. According to the CPSC, Amazon failed to inform the public about these unsafe items and did not take sufficient measures to encourage customers to return or destroy them, putting consumers at substantial risk of injury.

Amazon must now submit plans to communicate the dangers of these products and incentivize their return or proper disposal. "We are disappointed by the CPSC’s decision and plan to appeal," an Amazon spokesperson commented. "Upon initial notification three years ago, we swiftly alerted customers, advised them to stop using the products, and issued refunds."

Despite Amazon's ongoing claims that liability should fall on the third-party sellers, the CPSC's ruling emphasizes that Amazon cannot evade its obligations under the Consumer Product Safety Act by merely offering logistical services. This ruling stems from a lawsuit filed by the CPSC in 2021, aiming to compel Amazon to accept legal responsibility and improve safety processes.

Amazon stated it has "proactive measures in place to prevent unsafe products" and continues to monitor and address any hazardous listings found in the store promptly. However, the federal regulator’s decision underscores the duty Amazon holds in safeguarding consumer safety, marking a significant shift in how online marketplaces might be regulated in the future.