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Amazon is suing the Consumer Product Safety Commission (CPSC) over an order it issued to the company related to recalling third-party sellers’ items.
The order that triggered the lawsuit came years after the CPSC initially recalled more than 400,000 units of products sold on Amazon’s marketplace through merchants signed up for Fulfilled by Amazon (FBA). That recall spurred an investigation, and years later, a decision that Amazon would be responsible for recalling hazardous products sold on its marketplaces, even if they are listed by third-party sellers.
At the time of the order, the CPSC determined that Amazon should be categorized as a distributor, rather than a third-party logistics provider, for its FBA program. In that order, it noted that the company “does considerably more than is allowed by the definition of ‘third-party logistics provider.’”
That distinction is important because distributors are subject to more stringent regulations than third-party logistics providers. In its new lawsuit, Amazon insists, as it did leading up to and upon being handed the CPSC’s order, that it should be qualified as the latter. If the CPSC had classified it that way, that would have shielded Amazon from the responsibility associated with processing recalls.
“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,” Amazon wrote in its complaint.
When the order first came down last year, an Amazon spokesperson promised that the company would appeal the CPSC’s decision. Now, it has made good on that threat.
In the lawsuit, filed March 14, Amazon alleges that the CPSC and its current commissioners have “overstepped…by ordering Amazon to conduct a wide-ranging recall of products that were manufactured, owned, and sold by third parties,” and thus, treating it as a distributor rather than a third-party logistics company.
Amazon alleges that the CPSC has used its power to “act as judge, jury, and prosecutor in the same proceeding,” violating the constitutional rights of the company.
“The body that voted to file the complaint against Amazon— the commissioners—also has the power to hear the evidence, decide factual disputes, interpret and apply the law to the facts and fashion the remedy. That arrangement contravenes Amazon’s Fifth Amendment rights because it ‘violates the [Supreme] Court’s longstanding teaching that ordinarily ‘no man can be a judge in his own case’ consistent with the Due Process Clause,’” Amazon states in its claim.
But the company doesn’t merely take the issue with how its fate was decided—it also believes it shouldn’t be delineated as a distributor, primarily because it doesn’t sell many of the products for sale on its own platform. Instead, because it fulfills orders for sellers that price, create listings for and supply their own products, and because “Amazon does not sell or take title to any of the products,” it asserts that it should be categorized as a third-party logistics provider.
“Amazon falls within the definition of [a] 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,” the company states.
In its complaint, it requests that a judge vacate a final order from the CPSC, filed in January, that required the company to take further action on the recalls. It also asks that a judge label Amazon a third-party logistics provider rather than a distributor and that the court rules that the CPSC’s prior actions unconstitutional.
Non-profit Consumer Reports supported the CPSC’s decision when it was first announced last year, and it continues to believe that Amazon should be held responsible for the items it fulfills for third-party sellers.
William Wallace, director of safety for Consumer Reports, said the lawsuit, which alleges overreach of power on behalf of the CPSC, is a power grab from the e-tailer. He also stated that Amazon should be classified as a distributor, not a third-party logistics company.
“Amazon wants to be held blameless for the safety of products sold by third parties on its platform, which is bad enough—but what’s even worse is that the company is attacking the legal foundation on which the CPSC rests,” Wallace said in a statement. “Amazon’s suit suggests the company thinks the people of the United States would be better off without an independent, bipartisan safety agency to enforce our laws and protect consumers from dangerous products. We strongly disagree and condemn Amazon’s reckless constitutional claims.”
