Amazon Criticized By Officials For Product Safety Risk and Deception

Amazon and other online merchants appear to be taking advantage of a loophole in regulatory laws which enables them to sell defective products without fear of penalty. JL

Todd Frankel and Jay Greene report in the Washington Post:

A top consumer protection regulator raised concerns about whether Amazon committed “widespread deception” by selling thousands of products without warnings despite federal agencies deeming those goods to be unsafe, deceptively labeled or banned altogether. Product safety regulators  have been worried about how online platforms responsibilities are different from traditional retailers and manufacturers. The Consumer Product Safety Commission can go after a store if it fails to report a defective product or sells a recalled one. The same is true of a company that makes a bad product. An online platform falls under neither category.

A top consumer protection regulator raised concerns about whether Amazon committed “widespread deception” by selling thousands of products without any warnings despite federal agencies deeming those goods to be unsafe, deceptively labeled or banning them altogether.

“This article raises real concerns about whether Amazon is profiting from widespread deception on its platform,” Federal Trade Commissioner Rohit Chopra tweeted. “Deceptive acts or practices can threaten our health and safety, and are unlawful under the FTC Act.”

Sen. Richard Blumenthal (D-Conn.) echoed Chopra’s concerns, saying in a tweet that the company needs to “prioritize safety over profits.”

The remarks come after a Wall Street Journal investigation found 4,152 unsafe items listed for sale on Amazon. The company removed many after the news outlet made it aware of a variety of safety issues.

(Amazon chief executive Jeff Bezos owns The Washington Post.)

This article raises real concerns about whether Amazon is profiting from widespread deception on its platform. Deceptive acts or practices can threaten our health and safety, and are unlawful under the FTC Act. https://t.co/sRm87bk3pI

— Rohit Chopra (@chopraftc) August 23, 2019

Amazon didn’t dispute the Journal’s reporting. In a blog post, though, the company listed steps it takes to vet products it sells, as well as the third-party merchants that sell on the site and were responsible for the items the article cited.

“We invest significant resources to protect our customers and have built robust programs designed to ensure products offered for sale in our store are safe and compliant,” the company wrote in its post.

Lawmakers have stepped up criticism of tech giants in recent months, and much of their concern has focused on the companies’ inability to control the massive platforms they run. Facebook, for example, has been at the center of disinformation campaigns that have targeted the 2016 U.S. presidential election as well as campaigns elsewhere around the world.

Amazon’s massive platform traffics in products. Amazon has long pushed to build its vast selection, opening the site up to third-party merchants whose products are listed alongside the goods that the company sources from vendors. The company has said that those merchants generate 58 percent of the sales of physical products on its site.

Those sellers have helped Amazon create a store with roughly 500 million items for sale, said Juozas Kaziukenas, chief executive of Marketplace Pulse, a business intelligence firm focused on e-commerce. Amazon has built its catalogue by making it easy for sellers to list goods, an approach that makes it difficult for the company to police every item for potential safety concerns.

“In many ways, Amazon has built themselves into a corner,” Kaziukenas said. “The building blocks of Amazon prevents them from fixing it.”

Amazon has long aimed to provide the widest selection of goods at the lowest prices with rapid delivery, “but not at the expense of our customers’ safety, and this insinuation is simply wrong,” spokeswoman Cecilia Fan said.

Product safety regulators for years have been worried about the rise of online platforms and how their responsibilities are different from those of traditional retailers and manufacturers.

The Consumer Product Safety Commission can go after a bricks-and-mortar store if it fails to report a defective product or sells a recalled one. The same is true of a company that makes a bad product. An online platform such as Amazon falls under neither of those categories.

Still, Amazon talks about product safety with the CPSC and is a member of the commission’s retailer reporting program, which includes a handful of major retailers that send consumer safety complaints as a kind of early detection system for problematic products.

“The CPSC continues to work with platforms for third-party sellers to ensure safe consumer products and to stop sale of recalled products,” acting chairwoman Ann Marie Buerkle said in a statement to The Post.

Consumer advocates, too, have argued that protecting people from unsafe products is complicated by Amazon’s gray-area role in many purchases.

“Do we need to change the laws of product safety to close a loophole?” said Rachel Weintraub, general counsel for the Consumer Federation of America. “Consumers expect products are going to be safe and shouldn’t be at disadvantage if they’re going online.”