Federal Government Wants to Hold Amazon Liable for Unsafe Products | Kohrman Jackson & Krantz LLP

As Amazon maintains control over e-commerce sales, the U.S. Product Safety Commission (CPSC) is trying to reclassify Amazon as a distributor of goods. If successful, Amazon would be held liable for third-party products sold on Amazon Marketplace. Despite the uncertainty of buying products from Amazon, Amazon currently has no liability for third-party sellers who sell unsafe products to consumers. Currently, Ohio and other states have determined that Amazon cannot be held liable for injuries to consumers caused by products purchased on Amazon Marketplace.

Still, consumers have heard or experienced horror stories related to purchasing products on Amazon—from tampered cosmetics that seriously harm consumers to explosive household tools. With that in mind, the CPSC is working to change the status quo and provide deeper remedies for injured consumers seeking compensation.

US Product Safety Commission Definitions for Amazon

Although Amazon Marketplace sales account for forty percent of e-commerce purchases, 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 does not take title to the product.” 15 USC § 2052(a)(16). Under this definition and current interpretation, Amazon maintains that it is not responsible for the safety of products sold on its platform because it is merely a platform for sellers and consumers.

This statute was enacted in 2008. This statute is likely outdated, given the dramatic shift in how consumers use e-commerce platforms in the marketplace, especially since the pandemic. As such, regulatory actions like this one could introduce fundamental changes to the responsibilities and obligations of Amazon Marketplace and similarly situated e-commerce platforms. Specifically, if the CSPC determines that Amazon is a distributor of goods, Amazon would be reclassified as “a person to whom a consumer product is delivered or sold for distribution in commerce, except that such term does not include a manufacturer or retailer of such product.” Under this definition and interpretation, Amazon would have a new duty—to ensure that products sold on Amazon Marketplace are safe for consumers to consume.

Courts across the country are divided on Amazon’s liability for the safety of products sold on Amazon.

In 2021, the CSPC General Counsel filed a complaint against Amazon with the United States Consumer Product Safety Commission for allegedly distributing unsafe products sold by third parties through Amazon’s Fulfillment By Amazon fulfillment network. In response, Amazon argued that it was acting “as a third-party logistics provider and not a distributor,” and therefore the CPSC had no standing to bring suit under federal law. The Commission determined that Amazon fell within the definition of a “distributor” and was therefore responsible for the safety of third-party sellers using its platform. Amazon appealed the decision, and the Commission’s vote is currently pending.

Before 2021, the Ohio Supreme Court ruled that Amazon was not a “supplier” under Ohio’s product liability laws, allowing Amazon to avoid liability related to the tragic death of an 18-year-old after he consumed a large quantity of a 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 if the manufacturer goes bankrupt or otherwise fails, a common occurrence among third-party sellers using the Amazon Marketplace and something various state and federal legislators have attempted to address in previous sessions. See OJ 2307.78(B).

In the current situation, plaintiffs face the difficult task of holding Amazon accountable for products sold by third parties on the Amazon Marketplace. Of greater concern is Amazon’s position as a recoverable entity in the United States, where so many third-party sellers are foreign companies that come and go all too often. Although Amazon stores thousands of products in its U.S. warehouses, some sellers do not use Amazon’s fulfillment services, and in other cases Amazon is trying to separate itself in the chain of possession of products from manufacturer to buyer.

Consequences for Amazon

If the CPSC is successful in its pursuit of Amazon, Amazon should increase its monitoring of products sold on Amazon Marketplace and tighten its policies and procedures. This new process could not only create additional problems for Amazon, but also lead to increased costs for brands that want to sell original products on Amazon Marketplace. That said, Amazon has already begun taking proactive steps to encourage third-party sellers to provide consumers with important updates by creating a page with safety alerts and product recalls. However, this will likely be just the beginning if the CPSC is successful and Amazon’s obligations to consumers continue to grow.