In another development that underscores the complicated nature of running third-party marketplace operations, the United States Consumer Product Safety Commission has filed a suit against Amazon seeking to clarify and enforce the retailer’s responsibility to recall dangerous products sold on its website, even if by third parties.
In response to the suit, Amazon stated that it has cooperated with the CPSC but that the commission had not followed up on discussions. Amazon continues to deal with the changing nature of online retail, which most observers recognize as having accelerated during the COVID-19 pandemic, and the continued increase in products outside of the United States selling through its third-party marketplace. In the case of a significant proportion of products originating from overseas producers, U.S. laws regulating commerce fail to apply or can’t be enforced.
Amazon has announced partnerships with companies, including, recently the Asmodee Group, to sue parties selling products online that violate patent and other rights, many of them doing so from outside the U.S., and particularly from China, as part of the retailer’s ongoing effort to support the integrity of its marketplace operations. However, some companies and now the CPSC have expressed concern that Amazon isn’t doing enough to protect U.S. companies and consumers. It should be noted, however, that CPSC itself admits it is unsure of how far its powers extend in regards to marketplace operators and their obligation to directly accept responsibility for recalls. The initial focus of CPSC action is those products delivered to consumers through the Fulfilled by Amazon service.
The CSPC has announced that it has filed an administrative complaint against Amazon to force the retailer “to accept responsibility for recalling potentially hazardous products sold on Amazon.com.”
The suit quotes the organization’s acting chairman Rober Adler as saying that the filing is a “huge step for the agency in that, “we must grapple with how to deal with these massive third-party platforms more efficiently, and how best to protect the American consumers who rely on them.”
In targeting the Amazon-sold products it has identified as requiring recall, the CSPC filing goes on to declare:
“The complaint charges that the specific products are defective and pose a risk of serious injury or death to consumers and that Amazon is legally responsible to recall them. The named products include 24,000 faulty carbon monoxide detectors that fail to alarm, numerous children’s sleepwear garments that are in violation of the flammable fabric safety standard risking burn injuries to children, and nearly 400,000 hairdryers sold without the required immersion protection devices that protect consumers against shock and electrocution.
The Commission voted 3-1 to approve the complaint, which seeks to force Amazon, as a distributor of the products, to stop selling these products, work with CPSC staff on a recall of the products and to directly notify consumers who purchased them about the recall and offer them a full refund. Although Amazon has taken certain action with respect to some of the named products, the complaint charges that those actions are insufficient.”
In response to a HomePage News inquiry, an Amazon spokesperson delivered a statement:
“Customer safety is a top priority, and we take prompt action to protect customers when we are aware of a safety concern. As the CPSC’s own complaint acknowledges, for the vast majority of the products in question, Amazon already immediately removed the products from our store, notified customers about potential safety concerns, advised customers to destroy the products and provided customers with full refunds. For the remaining few products in question, the CPSC did not provide Amazon with enough information for us to take action and despite our requests, CPSC has remained unresponsive. Amazon has an industry-leading recalls program, and we have further offered to expand our capabilities to handle recalls for all products sold in our store, regardless of whether those products were sold or fulfilled by Amazon or third-party sellers. We are unclear as to why the CPSC has rejected that offer or why they have filed a complaint seeking to force us to take actions almost entirely duplicative of those we’ve already taken.”
Joe Martyak, CPSC director of communications, told HomePage News that the agency regarded Amazon’s response as not robust enough to protect and compensate affected consumers, stating that Amazon delivered credits instead of full refunds for recalled products.
He pointed out that the suit is based on a CPSC determination that Amazon’s responsibility as regards consumer safety issues is far beyond those of a platform facilitating third-party sales. Another party may manufacture a product, he stated, but Amazon is warehousing it, doing the inventory, involved in the price setting, taking the orders from consumers, fulfilling the orders, shipping, combining shipping with other products at times, providing customer service, restocking and doing consumer returns and exchanges. As such, CSPC is taking the position that Amazon is a distributor, not simply a landlord, and as a distributor is subject to Consumer Product Safety Act section 15 dealing with recalls. Although the act’s text was written before online marketplace platforms existed, Martyk asserted that CSPC exists to protect consumers who are buying in these new situations.
“We are seeking Amazon to be responsible for the ‘Fulfilled by Amazon’ products on their site,” he said. “They do not see themselves legally responsible for these products. We assert Amazon has legal responsibility for the safety of these products.”
For its part, Amazon insisted that it has a viable procedure to deal with recalls. According to the company, that incorporates a standard corrective action plan for a recall that typically includes a stop-sale, customer messaging and refunds, which it details in monthly reporting to CPSC, so completing all key customer-facing components of a recall. Amazon added that it had offered to include monthly reporting in the company’s Recalls Pledge, and CPSC declined. Further Amazon stated that it had notified customers about recalled products using a template discussed and agreed upon with the CPSC staff, notified all customers that purchased the products in question directly via email and provided public notice, such as a press release typically when a retailer is unable to track and notify impacted customers in a manner similar to what physical retailers do.
Amazon further stated that it agreed with commissioner Adler’s position that it and the CPSC should work together to create a new framework for the recall of third-party products, and it has been in active discussions with the commission to develop a framework.
Martyak also said that collaboration was the preferred form of resolution to a recall issue but that CPSC requires a sufficient degree of progress in discussions, which can continue even with the suit ongoing.
“We want to collaborate with Amazon on the needed recalls here,” he said.
The suit demonstrates, however, that discussions were not moving at a pace and to a purpose CPSC could accept.
CSPC chairman Adler issues a statement about his vote as regards the Amazon filing:
“Today the commission voted to file an administrative complaint against Amazon.com to require them to take responsibility for recalling products sold under their ‘Fulfilled by Amazon’ channel.
“I voted to approve the filing of the complaint, but I did so with great reluctance. It is true that CPSC faces a massive challenge in ensuring that consumers are protected from potentially hazardous products sold on third‐party platforms. Alas, our statute is not perfectly clear on the point because these types of platforms did not exist when the agency was formed or when our statute was updated in 2008. That means that for every product for which CPSC determines a recall is necessary, a lengthy negotiation must first take place about the threshold question of whether that sales platform is even subject to our laws. If they resist, that leaves the agency without a full partner in recall activities, since many of the suppliers to these platforms are not domestic companies or companies with the financial ability to conduct recalls.
“Clearly the current approach is not sustainable. To continue product‐by‐product is like using an eyedropper to empty the ocean: ineffective, inefficient and frustratingly insufficient to protect consumers. The best solution to this problem would be for CPSC and third‐party platforms to work together to craft agreements that establish a framework for dealing with these products.
“I look ahead to a future of CPSC’s interaction with these behemoth businesses with great concern. I hope that today’s action will inspire stakeholders to help the agency to solve this problem for consumers.”
