Game Changer: Amazon.com is Legally Responsible for Third-Party Seller Recalls (For Now)

On July 30, 2024, the Consumer Product Safety Commission (CPSC) issued a Decision and Order against Amazon, finding that Amazon is a "distributor" of third-party products, as defined by the Consumer Product Safety Act (CPSA), and therefore bears legal responsibility for recalls of products sold on the platform.

Over 400,000 hazardous products listed on Amazon.com, which are sold by third-party sellers using the “Fulfilled by Amazon” program, that are subject to this order, including such items as hairdryers without electrocution protection. The Commission determined that 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. This decision is now subject to judicial review, which Amazon can seek in a federal district court.

This Decision and Order comes after the Commission authorized an administrative complaint against Amazon on July 14, 2021.  During the administrative law proceedings before the ALJ and the Commission, Amazon argued that it was not acting as a distributor of the hazardous products within the meaning of the CPSA and is an exempted third-party logistics provider akin to Federal Express, and therefore was not responsible for taking remedial actions under the law.  The ALJ rejected Amazon's argument, holding that Amazon acted as the distributor via the “Fulfilled by Amazon” program.  Both parties appealed the ALJ's ruling to the Commission, which considered the record in the case and heard oral argument, resulting in the Final Decision and Order.

The Commission found that Amazon’s involvement with these products goes well beyond logistics and includes an array of services. Among the services noted are holding products and returns, being notified about and involvement in recalls, and pricing oversight.

Subject to likely judicial review on various statutory and constitutional grounds, Amazon must now develop and submit proposed plans to notify purchasers and the public about the product hazards, and to provide refunds or replacements for these products. The Commission will consider these plans and then issue a second order on notification and remedies.

Although this case is highly fact-specific, if it is upheld on judicial review, it may have a profound effect on the responsibilities and role of third-party platforms in consumer product safety issues. Indeed, state and federal courts of appeal in California, New York, and Pennsylvania have already held that Amazon is not just a market platform and is liable as a distributor. Affecting Amazon alone is profound, of course, but other third-party platforms will need to reevaluate their legal positions and consumer product safety responsibilities. Tolerating as a practical matter uncertified, unsafe, counterfeit, and poorly designed and manufactured products with only modest platform recall involvement may no longer be a viable business model. This would benefit legitimate, fully safety- tested and designed manufacturers. It also is possible some third-party platforms will go the opposite direction, distancing themselves from consumer/seller services and attempting to act only as a passive conduit.