Federal Consumer Product Safety Update: Amazon is Responsible for Hazardous Products Sold by Third-Party Sellers
By Adam J. Langino, Esq.
Introduction
For the last few years, Amazon.com, Inc. (“Amazon”) and federal consumer safety regulators have battled over whether Amazon should be held responsible for recalls of third-party sellers’ hazardous products. This article will explain why this legal issue arose and what the ramifications are for Amazon, its third-party sellers, and consumers who purchase (or have purchased) hazardous products from Amazon.
Background
The United States Consumer Product Safety Commission (CPSC) is the government entity charged with protecting the public from unreasonable risk of injury or death from hazardous consumer products. Products should be safe and lacking significant or harmful defects. If a product is found to be hazardous, manufacturers and sellers may voluntarily recall the product, or they may be mandated by the CPSC to recall the defective products. Recalls are designed to retrieve defective and potentially unsafe products to take them out of the marketplace and prevent harm to consumers. With particularly hazardous products, customers and customer bases are identified to discontinue use and minimize further potential harm.
The Significance of CPSC’s 2021 Administrative Complaint
In July 2021, the CPSC filed an administrative complaint against Amazon after over 400,000 products were recalled.1 The Complaint asserted that Amazon’s recall efforts were insufficient to protect the public. Amazon is the world’s largest retailer, mostly working with third-party sellers, and CPSC wanted them to accept responsibility for recalling potentially hazardous products sold on Amazon.com in the same manner that other sellers are required to under the law.2 Though Amazon’s response was not in accordance with CPSC standards for recalling hazardous products, Amazon maintained that they had done enough and weren ’t responsible to do more.
The CPSC’s decision to file the administrative complaint brought an important issue contested among the states to a federal level: whether Amazon can and should be held responsible for hazardous products sold on its website. Third-party platforms are increasingly more common, and Amazon has consistently been the largest. The CPSC wants to create a standard for how American consumers who rely on third-party platforms like Amazon can be protected from hazardous products.
The CPSC maintained that certain named products were defective and posed a risk of serious injury or death to consumers. The products sold on Amazon.com that led to this legal battle fall into three categories: children’s sleepwear garments, carbon monoxide detectors, and hair dryers. The sleepwear products were found to be problematic because they were tested by CPSC staff and failed to meet flammability requirements for children’s sleepwear as required under the Flammable Fabrics Act (FFA) 16 C.F.R. Part 1615 and 1616. They were sold from May 2019-April 2020. The Carbon monoxide detectors recalled were sold by Amazon between February 2018 and November 2020. When tested by CPSC technical staff, they failed to activate when carbon monoxide gas is present. Consumers purchased over 24,000 defective carbon monoxide units during this time. The recalled hair dryers were defective because they were not compliant with U.S. safety standards to provide integral immersion protection. Over 390,000 defective units were sold between June 2019 and March 2021.
After Amazon was notified by CPSC about the defective and hazardous products on their site, they removed the Amazon Standard Identification Numbers (ASINs) for the items previously sold on Amazon.com. Without working collaboratively or consulting with CPSC to coordinate the recall effort, Amazon unilaterally notified consumers of the hazard. They offered consumers an amazon gift card refund credited to their account. The CPSC asserted in its 2021 Complaint that this response was insufficient to remediate the hazard and was not compliant with mandatory corrective action typically required where the extent of the hazard is so significant.
The CPSC argued that Amazon should be treated as the responsible distributor subject to federal standards for recalls based on the following reasons. Amazon’s contracts with participating third-party sellers provide that, in the event of a return, the products are shipped back to Amazon and not the third-party seller. At that point, Amazon is responsible for inspecting the product to determine whether it can be resold. If a product is returned because it was defective and unsafe, Amazon has the power to decide whether to resell it. Additionally, Amazon has the authority under their contracts with third-party sellers to determine a product’s listing format, including how it’s displayed to consumers. CPSC asserted that Amazon’s contracts give it a significant amount of control over products beyond simply overseeing a sale between a third-party seller and a consumer.
CPSC wanted Amazon to work with CPSC on the recall and destruction of the hazardous products to ensure they don’t end up back on the market to harm someone unsuspecting. The Commission evaluating the Complaint has the authority to take remedial action if there is a “substantial product hazard” under the Consumer Product Safety Act (CPSA) Section 15(a).3 The named products meet the substantial product hazard standard because children are often in their sleepwear while standing near hot stoves, and children are in danger of being burned while wearing the products. Additionally the carbon monoxide detector failure is a clear product hazard because the product’s inability to detect and to alarm could result in death in the event of a carbon monoxide leak in use. Lastly, hairdryers that do not meet integral immersion protection standards pose a risk of shock and electrocution to those using them.
Distributors of hazardous consumer products have a duty to inform the Commission and to respond sufficiently to address the danger posed by the products. CPSC wanted Amazon to be deemed the responsible distributor under the law. Additionally, they wanted Amazon to cease and desist distributing and to send out CPSC approved direct notice to consumers affected because they did not view Amazon’s response to be sufficient under the circumstances. Amazon’s efforts were not viewed as enough to facilitate the return and destruction of the products. CPSC sought to have Amazon refund the full purchase price, provide proof of destruction, and ensure that functionally equivalent products were also removed from Amazon.com.
Amazon’s Disputed Responsibility at the State Level
Prior to CPSC’s administrative complaint in 2021, there were two notable cases at the state level that addressed this issue and ultimately came to different conclusions.
In March 2021, a case against Amazon arose after a remote-control design defect caused a child to die from swallowing a battery.4 The Texas court relied on state statute when it found that the manufacturer could be liable, but Amazon would not be. The Texas Products Liability Act is a “liability-restricting statute.” Id. (noting that other states similarly restrict liability by statute, including Colorado, Tennessee, Ohio, and Washington). The general rule of this Act provides that a non-manufacturing seller “is not liable for harm caused…by a product”, unless one of the statutorily enumerated exceptions applies. Manufacturers also have a statutory duty to indemnify sellers in Texas. To evaluate Amazon’s liability, the court looked to Amazon’s role in the distribution chain.
The court did not focus on the terms of Amazon’s contractual agreements and instead relied on whether Amazon “held title” to the property at any point during distribution. The Court held that Amazon would not be considered a “seller” under Texas law because it doesn’t hold title to third-party products sold on its website. It viewed Amazon’s role as merely controlling the process of the transaction and delivery, making it and other similar online marketplaces not strictly liable for defective products manufactured by third parties. This decision relied on Texas state law and is not binding on the federal CPSC complaint.
A month later, in April 2021, a California court addressed the same issue but came to a different conclusion.5 In Loomis v. Amazon.com, LLC, a charging hoverboard sold on Amazon caused a fire.63 Cal.App.5th 466 (Cal. Ct. App. 2021). Unlike the Texas court, the Loomis court relied heavily on Amazon’s contractual terms in evaluating its liability in this case. In Amazon’s service agreements with third-party sellers (Amazon’s “BSA”), Amazon expressly reserves the sole right to control its website listings, “to determine the content, appearance, design, functionality, and all other aspects of the Amazon Sites, including by redesigning, modifying, removing or restricting access to any of them, and by suspending, prohibiting or removing any listing.” Additionally, Amazon has the right to refuse to process or cancel any transactions at its sole discretion.
The hoverboard company, TurnUpUp sold hoverboards totaling over $700,000 through Amazon from September 2015 through December 2015, netting Amazon over $100,000 in fees from those sales. However, after multiple press reports of fires involving hoverboards, , Amazon’s product safety team began investigating hoverboards sold on their site. The team identified 17 reports of fire or smoke caused by Amazon-sold hoverboards. The incidents involved different models and manufacturers. This led Amazon to remove all third party hoverboard listings from its website, and Amazon claimed they sent all prior hoverboard purchasers an e-mail notifying them of the reported safety problems. The plaintiff in this hoverboard case against Amazon, Loomis, did not recollect receiving such an email. Beyond the emails Amazon alleged they sent, Amazon did not recall any of the hoverboards they sold or refund purchases.
The CPSC conducted its own investigation into hoverboard safety during this time. They discovered the same issues and contacted Amazon about the danger posed. CPSC issued a letter in February 2016 stating that non-compliant hoverboards constituted a potential “substantial product hazard.” The recall of certain models by CPSC was announced in July 2016. The Loomis case addressed whether the doctrine of strict products liability should apply to Amazon’s hoverboards.
Strict products liability holds that a “manufacturer is strictly liable in tort when an article he places on the market, knowing that is to be used without inspection for defects, proves to have a defect that causes injury to a human being.” Id. (citing Greenman v. Yuba Power Products, Inc., 59 Cal.2d 57, 62 (1963)). The purpose behind this doctrine is to ensure the costs of injuries that result from defective products are borne by those who put the products on the market and not the injured, powerless individuals. Id. California precedent applies strict liability to the manufacturer and retailer alike to afford maximum protection to an injured plaintiff.
Since 1997, consumers injured by defective products in California can sue “any business entity in the chain of production and marketing, from the original manufacturer down through the distributor and wholesaler to the retailer.” Id. (internal citations omitted). The “stream of commerce” approach to assessing liability requires a plaintiff to show: 1) the defendant received a direct financial benefit from the sale of the product; 2) the defendant’s role was integral to the business enterprise and a necessary factor to bring the product to the consumer; 3) the defendant had control over, or a substantial ability to influence, the manufacturing or distribution process. In Loomis’ case, she had communicated concerns through Amazon prior to receiving her hoverboard, TurnUpUp was not allowed to communicate with Loomis directly, and any returns would have to be routed through Amazon. Additionally, Amazon was paid a fee for Loomis’ purchase, receiving a 15 percent “referral fee” of the total sale price. To the court, these factors distinguished Amazon from merely the “store front” that it described itself as.
The Loomis Court decided that Amazon should be held liable, stating that it was “undisputed” that Amazon puts itself squarely in the middle of the sale based on its contract terms and the control it maintains throughout and after a sale.
Amazon’s Responsibility to Consumers
Coming off the heels of these two contradictory decisions in Texas and California, the CPSC’s Complaint brought the issue of Amazon’s liability to the federal level. Consumer Reports noted in July 2021,6 “Amazon has claimed for years that it serves only as an intermediary for other retailers’ sales and cannot be held liable for defective products.” The CPSC vote to file an administrative complaint against Amazon was “a huge step forward for this small agency”, according to the CPSC chairman at the time.
Amazon argued in response to the CPSC complaint that what they were being asked to do was redundant and duplicative of what they had already done. Consumer Reports’ Manager of Safety Policy, William Wallace, disagreed, stating that “Amazon is not above the law.” Id. Hundreds of thousands of products were being recalled due to serious hazards, and, as the federal agency tasked with protecting the public, CPSC didn’t think Amazon’s steps to remediate the problem were enough.
In July 2024, a decision was finally reached regarding the 2021 complaint against Amazon. The Order issued by CPSC found Amazon responsible under federal safety law for hazardous products sold by third-party sellers on Amazon.com.7 In a unanimous decision, Amazon was found to be a “distributor” of products that are defective or fail to meet federal consumer product safety standards. Because Amazon was found to be a distributor by the Commission, they bear the legal responsibility for their recalls and will have to comply with recall requirements that other distributors in the United States do.
Amazon argued that they sent messages to initial purchasers about “potential” safety issues and provided them with Amazon.com credits (not refunds incentivizing product return or destruction) and that this should be a sufficient enough remedy to protect consumers. The Commission disagreed and found it inadequate. The products listed in the complaint were found to pose a “substantial product hazard” under the CPSA, and Amazon did not properly notify the public about the hazardous products or take sufficient adequate steps to encourage customer return or destruction.
Without properly incentivizing returns and cataloguing destruction, the likelihood of these hazardous products ending up back in the stream of commerce to harm someone else is higher. Consumers were therefore left at substantial risk of injury due to Amazon’s actions (and inaction). Additionally, the general public needs to be notified, not just the initial buyer. Second-hand purchases and gifting can lead to other consumers ending up with hazardous products without being aware of the danger the products pose. This is why Amazon’s remedy wasn’t enough.
The Commission’s decision means Amazon will have to submit their proposed plans to notify consumers and the public about hazardous products, and to remove them from commerce by incentivizing their return or destruction. There will be a second order in the case after the Commission has an opportunity to consider Amazon’s proposed plans. Ramifications of this order could be big for Amazon, so they plan to appeal.
Conclusion
CPSC urges consumers to visit SaferProducts.gov to check for recalls prior to purchasing products and to report any incidents or injuries to the CPSC. If you purchased any of these recalled products or have purchased a product on Amazon that was hazardous and resulted in harm, an attorney may help you understand whether you have a claim against the manufacturer of the product and/or Amazon.
Over my career, I have successfully resolved many products liability injury claims, and I am licensed to practice law in Florida and North Carolina and co-counsel claims in other states. If you would like to learn more about me or my practice, click here. If you want to request a free consultation, click here. As always, stay safe and stay well.
3 https://www.law.cornell.edu/uscode/text/15/2064
4 https://www.txcourts.gov/media/1452450/200979.pdf