Amazon Sues Consumer Product Safety Commission; Fights Recall Ruling

Amazon is suing the US Consumer Product Safety Commission over ruling handed down last year which found the company legally responsible to recall hundreds of thousands of products sold on its site.

Following a unanimous ruling that Amazon was a “distributor” of faulty items sold by 3rd sellers and shipped through Fulfillment by Amazon (FBA), the CPSC ordered Amazon in January to notify customers who bought more than 400,000 items covered by recalls and give refunds to those who could prove the products were properly disposed of or destroyed.

CPSC Rules Amazon Must Recall Dangerous Items Sold By 3rd Party FBA Sellers

Consumer Product Safety Commission rules Amazon was a distributor of dangerous & defective products, legally responsible for recall.

Value Added ResourceLiz Morton

But Amazon disputes it qualifies as a “distributor” of products offered by 3rd party sellers, and in the lawsuit filed on March 14, the company maintains it serves as a “logistics provider" which cannot be held liable for recalls of products that were made, owned and sold by others.

When a product presents a safety hazard, federal law grants the Consumer Product Safety Commission authority to order a recall. But Congress has enacted requirements the Commission must follow when exercising that authority.

The Commission may issue recall orders to the manufacturers, distributors, and retailers of a product, but not to third-party logistics providers who store the product in their warehouses and transport it to customers...

...The Commission overstepped those statutory limits by ordering Amazon to conduct a wide-ranging...

...Amazon falls within the definition of third-party logistics provider with respect to products sold using the FBA service because it does not manufacture, own, or sell those products, but instead stores and ships them on behalf of third-party sellers who retain title throughout the transaction.

Indeed, courts have recognized for similar reasons that Amazon’s activities under the FBA service do not render it a “distributor” or a “seller” under product liability common law...

...Amazon respectfully requests that this Court declare that the Commission exceeded its authority in designating Amazon as a distributor of products sold through the FBA service, set aside the unlawful and unnecessary notice and remedies mandated by the Commission, and vacate the Final Order in its entirety

Director of safety advocacy for Consumer Reports, William Wallace isn't buying that argument, stating in a press release he believes the law is clear that Amazon is a distributor of these goods.

“Instead of demonstrating its commitment to consumer safety, Amazon has fought the CPSC every step of the way for more than three years, and now it’s going to court. The law is clear that Amazon is a ‘distributor’ in this case and must carry out a recall. It’s absurd to suggest that because a company hosts a marketplace online it should be exempt from sensible requirements that help get hazardous products out of people’s homes and prevent them from being sold. The court should reject Amazon’s arguments. Taking Amazon at its word would mean hazardous products slipping through the cracks, even when they are capable of injuring or killing people.”

Amazon's suit goes on to argue that the CPSC is an “unconstitutionally structured agency” that overstepped its authority with the new directive and that the ways in which the order would require the company to notify consumers of the recall is a violation of Amazon's First Amendment free speech rights.

The Commission’s notice requirements also violate Amazon’s First Amendment rights. The First Amendment to the U.S. Constitution provides that “Congress shall make no law...abridging the freedom of speech.”

The First Amendment protects against government attempts to both restrict and compel speech. Government attempts to compel commercial speech must satisfy the demanding intermediate scrutiny standard set out in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980).

For speech that concerns lawful activity and is not misleading, the government carries the burden of demonstrating a “substantial interest” in regulating the speech; that the regulation would “directly advance[]” that alleged interest; and that the regulation is no more extensive than necessary.

The Commission seeks to compel both the form and content of Amazon’s speech by ordering Amazon to send additional direct notices to purchasers, post notices on Amazon’s webpages, and include certain content in the notices...

...Because the compulsory notice requirement exceeds the Commission’s statutory authority and violates the First Amendment, this Court should hold the notice requirement unlawful and set it aside.

The lawsuit comes amidst other legal and regulatory actions seeking to expand product liability applications to online marketplaces.

For example, lawmakers in Illinois are considering passing legislation which would hold both online sellers and ecommerce marketplaces responsible for product liability claims, with eBay's government relations team taking action to lobby heavily against the proposed new law.

eBay Lobbies Against Illinois Law That Would Hold Sellers & Marketplaces Responsible For Product Liability

IL lawmakers seek to hold online sellers & marketplaces responsible for product liability; eBay Mainstreet hopes to stop proposed law in its tracks.

Value Added ResourceLiz Morton

Also, in a potentially precedent-setting development for ecommerce marketplaces, a New York district court recently handed down a partial summary judgment in the ongoing Nike v. StockX case, ruling that StockX is liable for the sale of 37 pairs of counterfeit sneakers through the platform by 3rd party sellers.

Nike v StockX: Court Rules Marketplace Partially Liable For Sale Of Fake Sneakers; Case Heads To 2025 Trial

NY district court hands down partial summary judgment in Nike v StockX suit, ruling StockX is liable for sale of 37 pairs of counterfeit sneakers.

Value Added ResourceLiz Morton

And the Department of Justice has asked for an extension of time to file their opening brief appealing the Section 230-based dismissal of the EPA lawsuit which sought to hold eBay liable for prohibited and restricted chemicals and pesticides as well as illegal emissions control cheat devices sold on the platform.

DOJ & EPA Stall Appeal Of Precedent-Setting eBay Section 230 Case

DOJ granted extension to file appeal of Section 230 dismissal in EPA suit which sought to hold eBay liable for illegal items sold on the platform.

Value Added ResourceLiz Morton

The Consumer Product Safety Commission declined to comment on Amazon's lawsuit, according to ABC, but in a previous statement about the hazardous products order, Commissioner Richard L. Trumka Jr. said it was the CPSC's job to “hold companies like Amazon accountable" and “no company is above the law.”

The suit is AMAZON.COM, INC v CONSUMER PRODUCT
SAFETY COMMISSION Case 8:25-cv-00853-LKG IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND.