Amazon Can Be Held Liable - What This Means To You
Every company that signs up as a seller on Amazon’s marketplace must sign the same agreement. This agreement called the “Amazon Services Business Solutions Agreement,” is a short agreement often perused over or a box quickly checked but it contains a few key points of information all sellers should be aware of. It gives Amazon complete and near unilateral control of the sellers that use its third-party marketplace. It controls your data, your terminations, your enrollment, most importantly, and not to be forgotten your indemnification.
Under section 6.1 is a subsection saying that you will defend, indemnify, and hold harmless Amazon against any claims or losses. The short version, if sued you will take the brunt of any costs or punishment. Amazon could not be held liable for any actions or situations between a marketplace seller and a buyer. Should you choose to not indemnify Amazon in an expeditious manner, you will find your account under suspension until doing so. As well, Amazon will retain legal counsel and pass those charges along to you.
In previous cases and situations, Amazon’s stance has been that transactions between buyers and sellers are to be worked out between those parties and that Amazon merely provides the platform in which they do business. A 2019 trial court ruling agreed to this, but this is 2020 and as of the most recent appeals court ruling this has been overturned. Amazon is on the hook as well now, and that should make your eyebrow raise.
Most sellers skip over the Business Solutions Agreement, we all know we really are selling our soul and virtues when we sign up for the platform there’s no need to be reminded of this in a long written legal fashion. Handing over valuable brand and product data and diving into the murky fight for millions of dollars of potential sales on a daily basis. But what a lot of sellers miss out on and skimp over is actually section 9 of this agreement simply titled “Insurance.”
Section 9 says if your gross proceeds from Your Transactions exceed the insurance threshold during each month over any period of 3 consecutive months, OR if requested by us, then within 30 days you will maintain and provide Amazon with record commercial liability insurance with Amazon as an additional coinsured.
Why is this important all of a sudden you ask, it’s been around for years and years and no ones asked for it? They don’t make you upload it! “I’ve never been sued”, or at least you don’t plan on it. This is important because legally (and please refer to the experts) in the past Amazon was NOT a responsible party, you were. They held you under lock and key with that beautiful Seller Central account. Play by our rules and you can live another day. Now that Amazon is found to be held liable for products on its marketplace you can expect a whole new slew of rulings and proceedings.
Here’s where we can expect this to go in a few different ways. Mind you, this is no legal opinion and you should proceed with caution or consult your own legal counsel. This is merely speculation and first hand experience when dealing with Amazon in this arena.
If this ruling stands and is enforced and Amazon is in fact responsible for products sold on its marketplace I very much expect a wave of changes coming to the platform highlighted in no particular order below:
Requirement of commercial liability insurance posted within the account in an upload portal. This is pretty basic, Amazon wants to make sure that Sellers and ultimately themselves are covered by the rules they are already “applying.”
A crackdown on products with safety issues. This will be vital for both the counterfeit and safety complaints. Expect more products to come under additional scrutiny from Amazon.
Some categories/product offerings being taken down. Simply put, I could see some markets disappearing off of Amazon and moving into the restricted products section. There’s a lot to police and Amazon is only so big. This is a big extreme but the weight of litigation could weigh heavy here especially with Amazon under a very big microscope from an investigative and antitrust perspective.
To wrap up, I would keep a keen eye on this development and make sure you have your ducks in a row when it comes to insurance and product compliance. Whether it’s specific tests, documents, MSDS sheets or the like having everything you can should amazon request it will be immensely helpful to stay above water within Amazon’s ocean.