Amazon has long maintained that it should not be liable for defective products sold by third-party merchants on Amazon.com, and insists that the responsibility lies with the seller, not the market that promotes the sale.
This is a legal argument, similar to the arguments made by Facebook and other social networks regarding their own responsibility for the content on the platform.
But surprisingly, Amazon Recently announced It will directly compensate customers for effective claims for property damage or personal injury caused by third-party products sold on its platform, up to $1,000, and in some cases even higher.
The plan starts next week.
“This is a big deal because Amazon is negotiating,” providing consumers and third-party merchants with opportunities to solve problems, said Vinkat Balasubramani, Seattle technology lawyer and co-founder Focus phase locked loop law office.
However, as he pointed out, Amazon does not bear legal responsibility. In this way, this is also a strategic move to solve Amazon’s own legal and regulatory challenges.
Amazon is taking voluntary liability for defective third-party products under its own terms, trying to show that it is solving this problem without the need for regulation or legislation. By insisting that it actually “far exceeds” its legal obligations, it also tries to avoid complying with other people’s rules.
This move comes at a time when a series of court rulings threaten Amazon’s greater responsibility for the products sold on its platform, which could have a huge financial impact on the company.
Eric Goldman Have warned It may even force the company to close its market and focus on first-party retail.
Another important background to this policy is the recent lawsuit filed by the US Consumer Product Safety Commission (CPSC) against Amazon., Attempts to force retailers to bear the legal responsibility for recalling defective products sold in their markets.
When asked why the company decided to launch a new plan now, a spokesperson said that the move is “based on our continued investment in helping sellers grow their businesses and protecting our stores from fraud and abuse. .”
Amazon said it spent $18 billion in logistics, tools, services, procedures, and personnel in 2020 to support third-party sellers.
In this episode of Day 2, GeekWire’s podcast on all Amazon content, we discussed the new policy Balasubramani and Boyce, And explore the impact on consumers, third-party sellers and companies.
- Balasubramani, regular writer at Goldman Sachs Technology and Marketing Law Blog, Is a lawyer specializing in technical issues, including intellectual property, privacy, social media, and Article 230, according to which social networks are not responsible for activities on their platforms.
- Boyce is a collaborator of GeekWire on the Day 2 podcast. He was once a top 200 Amazon seller and now provides advice and cooperation to third-party sellers. Last year, he was cited as a source in the US House of Representatives’ antitrust report on Amazon and other technology giants.
Listen above, subscribe for day 2 in any podcast app, and continue reading to learn more.
Big picture: “I think this is Amazon’s initiative to say to consumers,’Well, we will try to solve this problem for you, even if we may not bear any responsibility, and the $1,000 dispute is relatively easy for us. This is one of the few cases. One. To deal with,” Balasubramani said.
However, he added, “In the field of product liability litigation, which usually involves personal injury or bodily injury, this amount may not be for resolving these types of disputes.”
Fine prints: Balasubramani says A sort ofmazon terms and conditions Because the claims under the new policy are more beneficial to consumers than he expected. They prevent consumers from submitting additional arbitration or court cases on the issue during Amazon’s review of claims, but these clauses do not require consumers to waive these rights indefinitely.
For example, someone can withdraw the claim or refuse to accept Amazon’s proposal to resolve the claim, and then take the company to court.
However, Amazon ultimately controls the claim process and reserves the right to determine the payment amount and reject claims that it considers “unproven, meaningless, or abusive.”
Compensation is limited to the purchase price of the product and “up to $1 million in medical expenses, salary losses and property losses directly caused by defective products.”
The claim must be filed with Amazon within 90 days of the event that caused the claim.
What this means for third-party sellers: Amazon’s new policy is an extension of the “A to z” return program for third-party sellers.
Announce new policy, Amazon emphasizes that third-party sellers need to have their own product liability insurance. Amazon offers a plan to help sellers obtain insurance.
Boyce remembers that when he started selling products on Amazon in 2002, he needed to provide proof of a large number of product liability insurance policies, which was a considerable expense for his small business, but for many years he noticed that the company had only recently Stop asking the seller to provide this proof.
Amazon said that if sellers have proper insurance and comply with Amazon’s policies, it will provide consumers with claims of up to $1,000 without seeking reimbursement.
However, Boyce said that in light of recent legal and regulatory decisions against the company on this issue, he believes that Amazon has seen the writing on the wall, prompting the company to take action on its own to prevent Congress or the courts from taking further action.
“This is what companies do. I really can’t blame them,” Boyce said. However, he said that he hopes the company can take consumer safety and accountability for defective products “earlier and more seriously”.
Amazon and CSPC: One of the backgrounds of the new policy is Complaint against Amazon in July The Consumer Product Safety Commission wants to designate the company as a distributor to require Amazon to recall products that are determined to be defective, even if these products are on the market.
Acting Chairman Robert Adler wrote that he voted for the complaint “very reluctantly”.
“Obviously, the current method is not sustainable,” Adler wrote“Continuing to produce by-products is like emptying the ocean with a dropper—ineffective, inefficient, and frustratingly insufficient to protect consumers. The best solution to this problem is for CPSC and a third-party platform to jointly develop an agreement to deal with These products establish a framework.”
Amazon’s solution to CSPC is to create “Recall Commitment” For the industry. The company said that the pledge will call for online market recalls of third-party products. Amazon stated that it is “proud to be the first signatory and to help spread the promise and encourage others to join.”
Amazon issued the following statement regarding the CSPC lawsuit:
We do not agree with the Consumer Product Safety Commission’s statement that we are a distributor under the regulation, and our view is reinforced in Chairman Adler’s statement. However, more importantly, Amazon has always believed that we have an obligation to provide customers with the safest shopping experience. This is why when sales partners fail to communicate with regulators about the recall, Amazon will send messages to customers and bear the cost of refunds. We did this for the products mentioned in the lawsuit and worked with the staff of the US Consumer Product Safety Commission to finalize an agreement that will establish new regulations for the recall of third-party products. We don’t know why the CPSC committee rejected the proposal, especially because its staff worked with us to develop the proposal.
Legislative alternatives: Amazon said that if product liability is adopted across the industry, it is open to legislative changes to apply product liability to the online market.
“Under the current legal framework, sellers are responsible for the products they sell. We have advocated legislative reforms so that all stores-online and offline; traditional retailers or markets-have the same liability standards,” said an Amazon spokesperson. Said in a statement to GeekWire.
Last year, the company Support California Product Liability Law The condition is that it applies to “all online markets, regardless of its business model.” Competitors and critics point out that Amazon will be in a more favorable financial position to comply with such laws, thereby putting its competitors at a disadvantage.
Where is this going? The fact that Amazon owns but does not own third-party products supports its argument against product liability.
But unlike some other markets, Amazon’s extensive fulfillment business makes it harder for the company to prove that it’s just a sales platform. Balasubramani said.
Product liability largely depends on state law, which is one of the similarities with Amazon’s previous fight against the collection of state sales taxes for online purchases.Amazon Final surrender And began to collect taxes across the country.
Balasubramani said he believed In terms of product liability, the trend is also turning against Amazon.
“More and more courts are fully willing to hold Amazon accountable. They will increasingly face responsibility in multiple forums. From their perspective, I don’t know what the solution is,” he said. “But from a legal point of view, I think they have to face this up and say,’Well, we are losing the battle as a seller/distributor without responsibility; what else can we do now?”