Amazon is deemed accountable under federal safety regulations for unsafe products sold on its platform by third-party sellers and distributed by the company, according to a ruling by a U.S. government agency issued on Tuesday.
In a unanimous decision, the Consumer Product Safety Commission stated that Amazon was considered a “distributor” of defective items sold on its website and processed through its fulfillment service.
Consequently, the company is legally responsible for the recall of over 400,000 products, such as hairdryers and faulty carbon monoxide detectors, as per the agency. It directed Amazon to establish a system for notifying customers who purchased flawed products and to eliminate these items by providing incentives for their return or disposal.
Amazon has announced its intention to challenge the ruling in court.
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Overall, Amazon holds approximately 40% of e-commerce sales in the U.S., based on data from the market research firm Emarketer. The company vends a range of products directly to customers and collaborates with nearly 2 million third-party vendors who drive a significant portion of sales on the platform.
Since 2021, the online retailer has disputed the “distributor” designation, following a lawsuit from the Consumer Product Safety Commission for allegedly distributing dangerous items.
While Amazon promptly informed customers about substandard products three years ago, instructed them to cease using the items, and issued refunds, the agency contended that the company failed to adequately encourage customers to return or discard the products, leaving them vulnerable to harm. Instead of issuing refunds, the company provided customers with Amazon.com credits, claiming that the defective products had “potential” safety concerns, according to the agency.
Amazon contended before an administrative law judge and the five-member commission that it should not be classified as a distributor under the Consumer Product Safety Act. The commission stated that the judge dismissed the company’s argument, and the recent order upholds that decision.
