Consumer product recalls have been a daily part of our lives for well over 100 years. But the federal institution of manufacturer liabilities wasn’t fully cemented until 1972.
That was the year the U.S. Consumer Product Safety Commission (CPSC) was established to provide mandated standards of safety regulation, activity and enforcement against faulty and unsafe products. And at heart, those standards have become a cornerstone of both manufacturers’ and consumers’ lives, leading to a number of well publicized recalls and lawsuits estimated to be… well, inestimable.
There’s just one catch.
There is no common federal regulatory law regarding who bears the onus on product liability.
There’s a definitive rule of standards the CPSC provides which manufacturers must adhere to. But product liability law can also affect distributors, independent processing plants, retailers, franchisees and just about any other entity you can think of in a supply chain. Product liability law can be variable, and frequently based on previous cases and appellates established from state to state.
Yet those cases are becoming increasingly more complex now that eCommerce is rapidly gaining traction as a dominant retail force. By default, eCommerce is a global phenomenon. Where in the supply chain is domestic product liability law applicable if (for example) the majority of players are located overseas?
And if you think product liability doesn’t affect “Earth's most customer-centric company,” think again.
The CPSC to Amazon: ‘You’re Responsible’
As a result of a three year lawsuit alleging Amazon failed to prevent the sale of hazardous items through its FBA platform, the CPSC announced in July of this year that it had unanimously voted to hold the eCommerce giant legally responsible as “a distributor of products that are defective or fail to meet federal consumer product safety standards” for failing to prevent the sale of third party seller’s defective products and adequately notify customers of product recalls and take adequate steps to encourage customers to return or destroy them.
“The Commission determined that these products,” read the CPSC’s announcement, “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 (CPSA). Further, Amazon failed to notify the public about these 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.
“Under the Commission’s Decision and Order, Amazon must submit proposed plans to notify consumers and the public about the hazardous products, and to remove the products from commerce by incentivizing their return or destruction. The Commission will consider Amazon’s proposed plans and address them in a second order in this case.”
While Amazon does have official protocols regarding notification of product recalls, they’re not particularly robust. Typically, distributors and manufacturers alike must notify both the media as well as customers through official recall notices which frequently include photographs of hazardous products. Amazon’s argument?
They are “not a distributor and bore no responsibility for the safety of the products sold under its Fulfilled by Amazon program,” according to the CPSC announcement. Instead, Amazon argued, they were simply a “logistics provider.”
As a result, Amazon was able to sidestep legally required notifications, Amazon sending messages to customers that the CPSC said "downplayed the severity" of hazards—including warnings that the products in question "may fail" to meet federal safety standards, "potentially" posing risks of "burn injuries to children," "electric shock," or "exposure to potentially dangerous levels of carbon monoxide."
But this isn’t solely a question of semantics. Nor does it affect a handful of products. It affects over 400,000 faulty products sold on Amazon Marketplace between 2018 and 2021—including defective carbon monoxide detectors, unsafe handheld appliances and flammable children’s pajamas, among others.
Amazon, Federal Regulatory Guidelines and the Overseas Dilemma
The vast majority of the products cited in the initial 2021 CPSC lawsuit were manufactured overseas. Yet the regulations enforced by the CPSC typically only apply to domestically manufactured products. And their ability to recall products originating overseas is relatively limited—particularly in China, home to an estimated 75 percent of Amazon Marketplace sellers.
Yet while outcry from domestic sellers regarding unfair violations of Amazon sales and marketing protocol prompted the retailer to initiate a crackdown on “Made in China, Sold on Amazon” brands, a quick review reveals that many of the same manufacturers listed in the CPSC’s 2021 lawsuit remain active on Amazon Marketplace to this day.
In the past, domestic FBA sellers were bound to an official business solutions agreement stating they must indemnify and hold Amazon free from blame for any faulty products sold through their marketplace. The CPSC ruling specifically holds both Amazon and manufacturers at fault for safety hazards caused by non-compliant products.
Yet a high number of overseas Amazon native brands are fly by night sellers, making accountability for standards of safety compliance and quality control next to impossible to enforce. The crackdown could potentially force Amazon to adopt even stricter policies on the manufacturing and sale of consumer products—a standard that Amazon sometimes only selectively enforces.
Amazon’s Reaction to the CPSC Decision
As part of the decision, Amazon is now required to develop and implement a plan in conjunction with the CPSC to notify consumers about product recalls, as well as offer shoppers refunds or replacements for the affected products.
Yet Amazon feels the decision is an unjust one and have indicated they may have plans to appeal it.
"We are disappointed by the CPSC’s decision," an unnamed Amazon spokesperson told Ars Technica. "We plan to appeal the decision and look forward to presenting our case in court.
“We stand behind the safety of every product in our store through our A-to-Z Guarantee, regardless of whether it is sold by Amazon or by one of our selling partners… We have proactive measures in place to prevent unsafe products, and we continuously monitor the listings in our store. If we discover an unsafe product available for sale, we address the issue immediately, and refine our processes."
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