On July 30, 2024, the Consumer Product Safety Commission (CPSC) issued a decision and order against Amazon, finding that Amazon is a “distributor” of third-party products under the Consumer Product Safety Act (CPSA) and therefore bears legal responsibility for recalls of products sold on the platform.
More than 400,000 dangerous products listed on Amazon.com and sold by third-party sellers through the Fulfillment by Amazon program are affected by this order, including hair dryers without shock protection. The Commission concluded that Amazon failed to inform the public about these dangerous products and failed to take reasonable steps to induce its customers to return or destroy the products, thereby exposing consumers to a significant risk of injury. This decision is now subject to judicial review, which Amazon can seek in federal district court.
This decision and order comes after the Commission allowed an administrative complaint against Amazon on July 14, 2021. During the administrative proceedings before the ALJ and the Commission, Amazon argued that it was not acting as a distributor of the dangerous products under the CPSA and was an exempt third-party logistics provider like Federal Express and therefore was not responsible for taking remedial action under the Act. The ALJ rejected Amazon’s argument and found that Amazon was acting as a distributor through the Fulfilled by Amazon program. Both parties appealed the ALJ’s decision to the Commission, which reviewed the case file and heard oral argument, resulting in the final decision and order.
The Commission found that Amazon’s involvement with these products goes well beyond logistics and includes a range of services. These services include product and return storage, notification of and participation in recalls, and price monitoring.
Subject to possible judicial review on a variety of legal and constitutional grounds, Amazon must now develop and submit plans to inform shoppers and the public about the dangers of the products and provide refunds or replacements for those products. The Commission will review those plans and then issue a second notice-and-remedial order.
While this case is very fact-specific, if upheld upon judicial review, it could have profound implications for the responsibility and role of third-party platforms in consumer product safety issues. In fact, state and federal appeals courts in California, New York, and Pennsylvania have already ruled that Amazon is not just a marketplace platform and is liable as a merchant. That Amazon alone is affected is of course profound, but other third-party platforms will also need to re-evaluate their legal positions and responsibility for consumer product safety. In practice, tolerating uncertified, unsafe, counterfeit, and poorly designed and manufactured products with only minimal platform involvement in recalls may no longer be a viable business model. This would benefit legitimate, fully safety-tested and designed manufacturers. It is also possible that some third-party platforms will go in the opposite direction, distancing themselves from consumer/seller services and attempting to act only as a passive intermediary.
The Commission concluded that Amazon was a “distributor” of products that were defective or did not meet federal consumer product safety standards and therefore bears legal responsibility for their recall. More than 400,000 products are affected by this order: notably defective carbon monoxide (CO) detectors, hair dryers without shock protection, and children’s sleepwear that violated federal flammability standards.
www.cpsc.gov/…
(View source.)
