Amazon Fights Responsibility: Product Recalls Are Not Their Liability. CSPC Thinks They Are.
CPSC vs Amazon: The Fight About Who's Responsible Is On
Amazon fights responsibility for product recalls. In a previous blog we mentioned that US product safety watchdog CPSC sues Amazon for selling dangerous products. They voted to file an administrative complaint against the e-commerce giant. This is just the latest indication of the pressure on Amazon to ensure the safety of products the platform hosts. These federal agency and Congressional efforts will almost certainly cause more pressure on product manufacturers. They need to ensure the products they offer for sale on Amazon are compliant with the relevant regulations. When a product purchased from the world's largest online store causes someones harm or death, who is to blame?
Who Is To Blame?
The answer to the above question is disputed over many years in courts and state legislatures nationwide. Amazons' finger has always pointed to the third-party sellers that technically sold the items. In many occasions Amazon and their court-rivals pondered over the fact whether or not product liability laws contemplate online shopping or digital middlemen. Several courts agreed with Amazon. Now, CPSC is aiming for the determination that Amazon is responsible for its third-party merchants. Effectively that could hold the e-firm legally liable for failing to warn customers about defective products or allowing banned products to resurface for sale. Potentially forcing the company to spend more time and money monitoring its online store. Also, Amazon's insurance costs would almost certainly rise as a result. This development is unwanted for the giant and that could be why Amazon fights the responsibility for product recalls.
CPSC Tries To Declare Amazon a Distributor
The agency is also seeking a precedent-setting ruling that the company based in Seattle is a consumer product distributor under federal law. That classification would subject the company to future mandatory recalls on behalf of its sellers. Declaring Amazon a distributor would overturn a typical tech industry stance, which claims that businesses like Facebook and Google aren't liable for what's said, uploaded, or sold on their platforms.
“If CPSC wins on this, it’s going to be a huge deal for Amazon,” says Boaz Green, a former agency staffer who now works for Neal Cohen Law advising companies that sell their products on Amazon. Product safety advocates and some in Congress have been calling for action to tame “what’s perceived as this Wild West, unregulated market, with all these small sellers they can’t get at. But they can get at Amazon, or they can try”, according to Bloomberg Law.
The Battle Is On
It is becoming a true battle now that Amazon fights the responsibility for product recalls. It involves an aspect of the retail Empire that is frequently misunderstood: the majority of things sold on Amazon.com are not owned by the Seattle-based retailer. After all, third-party sellers are technically selling them. These are not only home-made crafters, they also include a group of established brands and hundreds of thousands of Chinese manufacturers and distributors. They pay fees to be listed on Amazons' platform. Ever more often, their program called "fulfilment by Amazon" sellers store their items in the company's warehouses. This program also takes care of shipping and handling.
Amazon Fights Responsibility: Is It A Result Of "Fulfilment By Amazon"?
Amazon's development was boosted by this technique, which stocked its shelves with an almost limitless supply of goods. However, the marketplace allows its vendors to sign up and manage their listings using self-service tools. Therefore it has grown increasingly difficult to control. When consumers are hurt by dangerous or counterfeit goods, they have little choice but to file a lawsuit against a corporation that has won more cases than it has lost. Now that US watchdog CSPC has sued them, Amazon fights to take responsibility for product recalls.
Are Webplatforms Liable For Content Published By Others?
Cases involving product liability have typically been decided on specific factors. Did Amazon take ownership of the products? Did they play a role in the creation of a market for a certain product? The corporation usually claims to be a neutral marketplace that connects buyers and sellers. From that perspective Amazon thinks it is immune to accountability since other companies produced item descriptions and coordinated product delivery. Section 230 of the Communications Decency Act is a legal provision that that protects web platforms from liability for content published by others. Amazon uses this section as one of their safeguards.
Amazon Has Attempted Collaborating With CSPC
Prior to the lawsuit, Amazon proposed collaborating with the Consumer Product Safety Commission. The aim was to establish a voluntary system in which Amazon and other marketplaces would organize recalls on behalf of their merchants. "It became evident that Amazon would refuse to go through formal, legally mandated recall processes". According to a representative for the agency "this caused talks to break down".
CSPC Chairman Says Lenghty Negotiations Are No Longer Sustainable
In a statement, acting CPSC Chairman Robert Adler lamented that before it can carry out a recall of a product sold on a marketplace, the agency typically has to go through “a lengthy negotiation” with companies like Amazon to establish whether they’re even subject to regulation. “Clearly the current approach is not sustainable,” he stated.
Amazon Is Not Easy to Take On
“This is a shot over the bow for online platforms in general", said Creighton Magid of the lawsuit. He is a product liability and regulatory attorney with Dorsey & Whitney LLP. It’s also a gamble for the roughly 500-person agency CSPC. Their office coordinates hundreds of product recalls but rarely seeks to take uncooperative manufacturers or retailers to court. And now they do, Amazon fights the responsibility for product recalls. Magid, who represents businesses that must comply with product regulations, said the CPSC is an under-resourced agency that has to be very selective in what it does. Here, it’s “taking on an 800-pound gorilla,” he said to Bloomberg Law.
"We Can't Let The Consumer Pay For The Harm"
“Somebody needs to pay for the harm,” says Daniel Hinkle, a senior state affairs counsel with the American Association for Justice. That is a trade group for trial lawyers. “Because if they don’t pay for the harm, it’s the consumer that does. They’re the ones who are out a home, a car or a child, or are relegated to a wheelchair for the rest of their lives.”
We continue to follow this case that potentially can have a big impact on Amazon’s business model and of the sellers that are using the Amazon platform.