Amazon will pay up to $1,000 to people injured by faulty products from third-party sellers

Amazon is changing its policy around third-party sellers.

PATRICK T. FALLON/AFP via Getty Images

• Amazon will pay up to $1,000 to people injured by third-party products sold on its platform, it said.
• Third-party Amazon sellers won't have to chip in if they have valid insurance, Amazon said.
• Amazon said the new policy, which starts September 1, does not mean it accepts liability.
• See more stories on Insider's business page.

Amazon will soon start paying compensation to US customers who are injured, or have their property damaged, by items sold by third-party sellers, it said Tuesday.

The new policy starts September 1, and payments are capped at $1,000, it said in a blog post.

Amazon will pay customers directly, it said. Sellers remain liable, but Amazon won't expect sellers to pay it back if they had valid insurance, it said.

Amazon also announced that from September 1 it will play a bigger role in mediating damage claims between customers and third-party sellers.

"Customers can contact Amazon Customer Service, and we will notify the seller and help them address the claim," it said in the blog post. "If a seller does not respond to a claim, Amazon will step in to directly address the immediate customer concern, bear the cost ourselves, and separately pursue the seller."

At the moment, customers contact sellers through Amazon if they have a problem, but the company rarely steps in.

Amazon has previously distanced itself from liability around third-party products sold on its platform. Amazon said the new compensation policy does not mean it accepts liability for injury or damage from third-party items.

Read more: Sellers on Amazon and Etsy can have their businesses shut down instantly by ruthless rivals and scammers using a clever loophole

In an August 2020 case, a California woman sued Amazon, claiming a replacement laptop battery she bought on the site exploded and burned her. The company said it shouldn't be held liable because it "did not distribute, manufacture, or sell the product." The court ruled that Amazon was liable, overturning an earlier judgement.

The new policy announcement also comes one month after the Consumer Product Safety Commission (CPSC) filed a lawsuit against Amazon, claiming it did not do enough to warn customers about 420,000 dangerous items sold on its platform, including hairdryers and carbon monoxide detectors. Amazon argued it had complied with the CPSC's requests to warn customers about the items.

While the new policy only applies to the US, an Amazon spokesman told Insider the company is looking to expand it to other countries.

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