Amazon's Revised Guarantee: Compensation up to $1M for Medical Expenses, Lost Wages, Property Damage from Defective Products

By B.N. Frank

Last month the US Consumer Product Safety Commission (CPSC) filed a complaint against Amazon over the sale of hundreds of thousands of unsafe products sold by third parties through its Fulfilled by Amazon (FBA) program. The changes made to the company’s “A-to-z Guarantee” will go into effect next month.

From Ars Technica:

Amazon’s plan to avoid lawsuits: Pay customers $1,000 when products injure people

Amazon creates new claims process as it faces US complaint over third-party sales.

Amazon today announced a new policy in which it will pay customers up to nearly $1,000 when a third-party product causes property damage or personal injury. Payments of any amount less than $1,000 will be made at no cost to sellers who hold valid insurance, but Amazon said it will also pay customers more than that when a seller refuses a valid claim.

When “a defective product sold through Amazon.com causes property damage or personal injury, Amazon will directly pay customers for claims under $1,000—which account for more than 80 percent of cases—at no cost to sellers, and may step in to pay claims for higher amounts if the seller is unresponsive or rejects a claim we believe to be valid,” Amazon’s announcement said.

Today’s announcement came less than a month after the US Consumer Product Safety Commission (CPSC) filed a complaint against Amazon over the sale of hundreds of thousands of hazardous products, including carbon monoxide detectors that fail to detect carbon monoxide, hair dryers without required protection from shock and electrocution, and flammable sleepwear meant for children. The CPSC wants Amazon to take more responsibility for dangerous products offered by third parties under the Fulfilled by Amazon (FBA) program, in which Amazon stores products in its warehouses and ships them to customers while taking a cut of the proceeds. As the CPSC noted, people “who purchase FBA consumer products on amazon.com may reasonably believe they are purchasing the products from Amazon.”

The updated claims process seems to apply both to FBA products and those shipped by third-party sellers. Amazon said the guarantee holds “regardless of who sells” the product causing damage or injury.

Technically, payments can go up to $1 million

The change to Amazon’s “A-to-z Guarantee” will take effect on September 1. The claims process terms and conditions, which were updated today, don’t currently mention the $1,000 amount but say that compensation for property damage or personal injury “will be limited to (a) the purchase price of the product; and (b) compensation of up to $1 million for medical expenses, lost wages, and property damage proximately caused by a defective product.”

Obviously, Amazon doesn’t expect to pay $1 million for claims over third-party products very often. The promise to pay small claims at no cost to sellers could minimize objections from third-party merchants while giving customers a reason to avoid litigation. But Amazon customers should remember that they can still sue Amazon for bodily injuries or property damage, especially if the amount offered doesn’t cover their expenses.

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