As Amazon maintains its chokehold on ecommerce sales, the United States Consumer 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 that sell dangerous products to consumers, which is compounded by the pseudo-anonymous nature by which third-party sellers may sell products on the Amazon Marketplace. 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 come 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This statute, which was enacted in 2008 prior to the ecommerce boom, is likely outdated given the dramatic change in how consumers use ecommerce platforms in the marketplace, especially since the pandemic.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 the CPSC’s may present fundamental changes to the liabilities and obligations of Amazon with respect to its Marketplace as well as other, similarly situated ecommerce platforms.
On July 30, 2024, the CPSC issued its Decision and Order against Amazon, with a unanimous vote determining that Amazon is a “distributor” of products. The CPSC explained that “products listed on Amazon.com and sold by third-party sellers using the Fulfilled by Amazon program pose a ‘substantial product hazard’ under the Consumer Product Safety Act.” Under this definition and interpretation, Amazon now has a new obligation—to ensure the products sold on the Amazon Marketplace are safe for consumers. The CPSC also determined that “Amazon failed to notify the public about…hazardous products and did not take adequate steps to encourage its customers to return or destroy them, thereby leaving consumers at substantial risk of injury.”
Courts Are Split Across the Country Regarding Amazon’s Liability For The Safety of Products Sold on Amazon
While the CPSC’s Decision and Order, which began in 2021 with an administrative complaint, will provide some clarity, the Ohio Supreme Court reached a different conclusion as to Amazon’s role in ecommerce.
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’s 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
Because the CPSC was successful in its pursuit of Amazon, Amazon had to submit proposed plans to notify consumers and the public about hazardous products, remove the products from commerce by incentivizing their return or destruction, and implement a monthly progress report and records retention program. As a result of this ruling, Amazon should also increase its monitoring of products sold on the Amazon Marketplace and tighten its policies and procedures moving forward, which may place additional strain on first- and third-party sellers. This new process may lead to rising costs for brands seeking to sell genuine products on the Amazon Marketplace. That being said, Amazon has already implemented a safety alert and recall page.
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.
This article was updated on to reflect the July 30, 2024 CPSC Decision and Order against Amazon.