Amazon to Pay Customers $1,000 When Products Cause Injury

Amazon announced a new policy to compensate customers at almost $1,000 for property damage or physical/bodily injury caused by a third-party product. Payments of up to $1,000 will be provided at no cost to sellers who have proper insurance. However, Amazon stated that it would also compensate customers for amounts greater than $1,000 if a seller refuses to honor a valid claim.

Amazon Faces Third-Party Sales Complaint

When a defective product sold on Amazon.com results in property damage or personal injury, Amazon will pay customers directly for claims under $1,000 — which account for more than 80% of cases — at no cost to sellers and may step in to cover losses for greater amounts if the seller is unresponsive or refuses a claim that is valid, according to Amazon’s announcement.

Today’s announcement comes less than a month right after the US Consumer Product Safety Commission (CPSC) submitted a complaint against Amazon for selling hundreds of thousands of potentially dangerous products, including hair dryers that lack required shock and electrocution protection, carbon monoxide detectors that do not detect carbon monoxide, and flammable children’s sleepwear. 

The CPSC is urging Amazon to take greater responsibility for unsafe products supplied by third parties through the Fulfilled by Amazon (FBA) program, in which Amazon stores and ships products to customers while collecting a cut of the proceeds. As the CPSC found, individuals who purchase FBA consumer goods on amazon.com may believe they are making an Amazon purchase.

The improved claims process appears to apply to both FBA and third-party seller-shipped merchandise. According to Amazon, the guarantee is valid regardless of who sells the goods that result in damage or injury.

Payments can reach $1 Million

Amazon’s “A-to-z Guarantee” is making a modification, effective September 1, 2021. The terms and the conditions of the claims process, which were updated, no longer mention the $1,000 threshold but instead state that compensation for property damage or personal injury will be limited to 

• The product’s purchase price; and
• Up to $1 million in compensation for medical expenses, lost wages, and property damage proximately caused by a defective product.

Clearly, Amazon does not anticipate paying $1 million for third-party product claims regularly. The pledge to pay small claims at no expense to sellers may reduce objections from third-party businesses while also motivating customers to avoid litigation. However, Amazon customers should consider that they may still sue the company for personal injury or property damage, particularly if the settlement amount does not meet their expenses.

Suppose you submit a claim via the A-to-Z Claims Process. In that case, you agree not to file a claim in an alternative forum (such as a court or arbitration) until Amazon have an opportunity to notify you of a decision on your claim, the terms state. In addition, it “generally” resolves claims within 90 days, and that customers may withdraw claims at any point during this process.

Amazon to Investigate Each Claim

Amazon encourages sellers to purchase insurance, stating that it has collaborated with an insurance broker to develop Amazon Insurance Accelerator, which enables sellers to purchase insurance at low rates from trustworthy suppliers.  

Whether via Amazon or another channel, Sellers who purchase insurance will not be responsible for small claims awarded to consumers. For claims of less than $1,000, Amazon will absorb these costs and will not seek reimbursement from sellers who follow the new policies and maintain proper insurance, the company stated.

Amazon outlines the new claims process as follows:

From September 1, Amazon will handle property damage and personal injury claims between Amazon customers, sellers, and their insurance providers for products sold on Amazon.com. 

Customers can contact Amazon Customer Service to report a claim, and Amazon will notify the seller and assist them in resolving the issue. If a seller fails to react to a claim, Amazon will intervene to remedy the customer concern, shoulder the expense, and prosecute the seller separately. 

If a seller rejects a claim that the company believes is valid, Amazon may intervene to resolve the customer issue; in these instances, sellers will retain the option to defend their merchandise against the claim.

Amazon stated that it would investigate the claim using its advanced fraud and abuse detection methods in conjunction with independent insurance fraud specialists in each situation. 

The corporation will make legitimate claims against sellers and will dismiss unsupported, frivolous, or abusive claims. By performing this effort on behalf of sellers, Amazon relieves them of the burden of independently investigating these accusations.

Amazon Can Still be Sued

Customers who submit claims have the right to sue Amazon even if the company denies the claim. If Amazon rejects a complaint for any reason, neither you nor Amazon renounce any rights or defenses you may have, Amazon said in amended terms and conditions.

However, if you accept an offer from Amazon, you must agree not to litigate the company. You are not obliged to receive the offer to resolve your claim, but if you do, you acknowledge that the claim is settled and finally resolved between you and Amazon and the seller who gave you the product, Amazon states. You shall also assign your claim to Amazon, to the extent permitted by law, so that it may pursue collection from other sources at its discretion.

Editor’s Note on Amazon $1,000 Compensation To Each Customer:

This article is written to inform you of the latest announcement by Amazon about its new policy to compensate $1,000 to customers for property damage or bodily injury. 

What do you think of Amazon’s new policy? Share your thoughts with us via the “Contact Us” button below! 

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(PC – Seattle City Council)