As Amazon maintains its chokehold on ecommerce sales, the United States Product Safety Commission (CPSC) is attempting to reclassify Amazon as a distributor of goods. If successful, this would expose Amazon to liability for third-party products sold on the Amazon Marketplace. Despite the uncertainty that arises from purchasing products from Amazon, Amazon is not currently liable for third party sellers selling dangerous products to consumers. Currently, Ohio and other states have determined that Amazon cannot be held liable for injuries to consumers from products that were purchased on the Amazon Marketplace.
Despite that, consumers have heard of or experienced the horror stories that comes with purchasing products on Amazon—from altered makeup products causing severe harm to consumers to explosive household tools. With this in mind, the CPSC is seeking to change the status quo and provide a deeper-pocket for injured consumers seeking recovery.
The U.S. Product Safety Commission Definitions for Amazon
Although sales on the Amazon Marketplace account for forty percent of purchases made on ecommerce marketplaces, Amazon maintains that it is a third-party logistics provider. Under federal law, a third-party logistics provider is defined as “a person who solely receives, holds, or otherwise transports a consumer product in the ordinary course of business but who does not take title to the product.” 15 U.S.C. § 2052(a)(16). Under this definition and current interpretation, Amazon maintains it is not liable for the safety of products sold on its platform because it is merely the platform for sellers and consumers.
This statute was enacted in 2008. This statute is likely outdated given the dramatic change in how consumers use ecommerce platforms in the marketplace, especially since the pandemic. Thus, regulatory actions such as this one could present fundamental changes to the liabilities and obligations of Amazon Marketplace and similarly situated ecommerce platforms. Specifically, if the CSPC determines Amazon is a distributor of goods, Amazon would be reclassified as “a person to whom a consumer product is delivered or sold for purposes of distribution in commerce, except that such term does not include a manufacturer or retailer of such product.” 15 U.S.C. § 2052(a)(8). Under this definition and interpretation, Amazon would have a new obligation—to ensure the products sold on the Amazon Marketplace are safe for consumers.
Courts Are Split Across the Country Regarding Amazon’s Liability For The Safety of Products Sold on Amazon
In 2021, counsel for the CSPC filed a complaint against Amazon, in the United States Consumer Product Safety Commission, for allegedly distributing unsafe products sold by third parties through Amazon’s Fulfillment By Amazon logistics network. In response, Amazon asserted that it acts “as a third-party logistics provider rather than a distributor,” and therefore, the CPSC lacks legal standing to bring the lawsuit under federal law. The commission determined Amazon does fall within definition of a “distributor” and consequently have a safety responsibility over third party sellers using its platform. Amazon appealed the decision and the commission’s vote is pending to date.
Prior to 2021, the Ohio Supreme Court determined that Amazon is not a “supplier” under Ohio’s product liability laws, which allowed Amazon to escape from liability related to the tragic death of an 18-year old after he ingested a large amount of caffeine supplement purchased from a third party seller on Amazon. Stiner v. Amazon.com, Inc., 162 Ohio St.3d 128, 2020-Ohio-4632. Under current Ohio law, suppliers of products can be held liable where the manufacturer is insolvent or otherwise defunct, which is a common occurrence among third-party sellers utilizing the Amazon Marketplace and which various state and federal legislatures have sought to address in prior sessions. See R.C. 2307.78(B).
As it stands, plaintiffs face an uphill battle in holding Amazon liable for products sold by third parties on the Amazon Marketplace. Creating more cause for concern is Amazon position as a recoverable, United States entity where so many third-party sellers are foreign companies that appear and then disappear all too frequently. Although Amazon stores thousands of products throughout its warehouses across the United States, some sellers do not use Amazon’s fulfillment services and in other instances, Amazon attempts to separate itself in the chain of possession of the products from the manufacturer to the purchaser.
Implications For Amazon
Should the CPSC be successful in its pursuit of Amazon, Amazon should increase its monitoring of the products sold on the Amazon Marketplace and tighten its policies and procedures. This new process could not only cause additional headaches for Amazon but lead to rising costs for brands seeking to sell genuine products on the Amazon Marketplace. That being said, Amazon has already started taking proactive steps to prompt third-party sellers to reach out to consumers with important updates by creating a safety alert and recall page. However, this will likely only be the start if the CPSC succeeds and Amazon’s obligations to consumers continue to increase.
KJK eCommerce attorneys Hannah R. Albion (HRA@kjk.com) and Kyle D. Stroup (KDS@kjk.com) will continue to monitor the CPSC’s efforts to modify Amazon’s classification as a distributor of goods. Please reach out to them with any questions