Amazon to pay customers up to $1,000 for products that cause personal injury, property damage

Defective product claims under $1,000 account for more than 80% of Amazon's cases

Amazon announced on Tuesday it will pay customers who have been injured or have had property damaged by products sold through third-party sellers. 

Beginning Sept. 1, Amazon will introduce an updated version of its current complaint process, known as the A to Z Guarantee, that will pay the e-commerce giant's customers up to $1,000 for valid claims regarding defective products sold by third-party sellers on its platform that cause property damage and personal injury. 

Defective product claims under $1,000 account for more than 80% of Amazon's cases.

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"By standing behind customers and the products in our store, regardless of who sells them, Amazon is going far beyond our legal obligations and what any other marketplace service provider is doing today to protect customers," Amazon said in a blog post.

Customers can file a claim through Amazon's customer service department. Amazon will then vet the claims using its own fraud and abuse detection systems as well as external, independent insurance fraud experts before notifying third-party sellers. Sellers will be kept informed at every step of the process so they can continue to ensure their products are safe.

If a seller does not respond to a claim, Amazon says it will "address the immediate customer concern, bear the cost ourselves, and separately pursue the seller." If a third-party seller rejects a claim that Amazon believes is valid, the company will give it the opportunity to defend its product against the claim. Amazon will not seek reimbursement from sellers who abide by its policies and hold valid insurance.

Additionally, Amazon will launch its Insurance Accelerator program to help third-party sellers buy insurance at competitive rates from trusted providers. Sellers who opt-in will only pay for the cost of the insurance itself. They can also continue to obtain insurance from any qualified insurance provider of their choice.

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The announcement comes after the U.S. Consumer Product Safety Commission (CPSC) filed a lawsuit against the company in July in an attempt to "force Amazon to accept responsibility for recalling potentially hazardous products sold on Amazon.com."

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The agency's complaint charged Amazon for specific defective products, which it says "pose a risk of serious injury or death to consumers." The products include 24,000 faulty carbon monoxide detectors that fail to alarm, numerous children’s sleepwear garments that are in violation of the flammable fabric safety standard risking burn injuries to children, and nearly 400,000 hairdryers sold without the required immersion protection devices that protect consumers against shock and electrocution.

While acknowledging that Amazon has made some efforts to protect consumers on some of the items it flagged, it argued that the company's actions were "insufficient."