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Federal regulators sue Amazon over retail giant’s refusal to recall dangerous products

WASHINGTON - Federal safety regulators filed a lawsuit against Amazon on Wednesday that accuses the retail giant of refusing to recognize regulators’ authority to force the company to recall defective and unsafe products, setting up a fight over how much responsibility Amazon should take for the products it sells on its website.

The action by the Consumer Product Safety Commission comes after months of behind-the-scenes negotiations between regulators and Amazon as the agency tried to convince the company that it needs to follow the CPSC’s rules for getting dangerous products off the market, according to a senior agency official who spoke on the condition of anonymity to comment on internal discussions.

The official said Amazon officials refused to acknowledge that the CPSC has the authority to compel the company to remove unsafe products.

A lawsuit was viewed as a last resort, the official added.

Amazon spokeswoman Cecilia Fan said in a statement that the company offered to expand its capabilities to handle recalls for products sold by Amazon and third parties.

“We are unclear as to why the CPSC has rejected that offer or why they have filed a complaint seeking to force us to take actions almost entirely duplicative of those we’ve already taken,” Fan said.

Amazon founder and executive chairman Jeff Bezos owns The Washington Post.

Amazon’s dominance in the retailing world has presented increasingly difficult challenges for regulators and the courts. Most of the unsafe products identified by the CPSC were made by small, usually foreign companies selling their wares often exclusively on Amazon’s platform. With Amazon handling so much of the traditional retail transaction - marketing, handling, shipping, delivery and returns - the manufacturer seems to fade into the background.

For example, the lawsuit alleges that Amazon sold 24,000 faulty carbon monoxide detectors made by apparently Chinese companies, including one named WJZXTEK. After being alerted by CPSC staff that the detectors didn’t work, Amazon stopped selling them, the lawsuit said. Amazon then contacted consumers with a refund offer. But the company declined to work with the CPSC on a safety recall. “Amazon’s unilateral actions are insufficient to remediate the hazards,” according to the lawsuit.

The lawsuit also provides similar examples involving children’s pajamas that violated flammability standards and nearly 400,000 hair dryers sold without the mandatory devices to protect against electrocution.

Fan said Amazon takes “prompt action” when safety concerns about products sold on the site are raised. The CPSC’s filing notes that Amazon took action on nearly all the products in question after the CPSC’s warnings. Amazon didn’t take similar steps for the remaining products because the agency didn’t provide the company with enough information, Fan said.

In May, Amazon sent a letter to the CPSC offering to create a “Recalls Pledge” that called on “all online marketplaces to execute recalls for products sold in their online store by third party sellers.” The company said it would be the first signatory.

The pledge would not have had the regulatory power of the CPSC, but would have called on online marketplaces to serve as the agency’s point of contact for recalls as well as develop mechanisms to hold unresponsive third-party sellers accountable.

Amazon has emerged as the nation’s largest online retailer, in part by turning its store into an online bazaar where millions of third-party vendors sell their goods.

The company has prioritized for vast selection, allowing merchants to sell on the site with scant vetting, allowing sellers like the ones found by the CPSC to operate. The company has said that, among its screening processes, it uses machine learning technology to identify risky sellers, as well as using investigators to review applications.

But Amazon has aggressively recruited Chinese sellers to make its catalogue of goods so extensive that rivals can’t match it. And those merchants sometimes sell goods that don’t meet standards set by U.S. regulators such as the CPSC.

Some of the products the CPSC cites in its filing appear to be from Chinese manufacturers. And customers who have been injured by products purchased on Amazon that were made in China have discovered that those merchants are effectively judgment-proof because they are outside the jurisdiction of U.S. courts. Some sellers have disappeared, leaving consumers unable to hold them accountable.

Nearly 60 percent of all physical goods sold on Amazon’s e-commerce marketplace come from third-party merchants.

But customers who have purchased defective goods from the site have said that they believed they were buying directly from Amazon, a company they thought wouldn’t sell unsafe products.

The CPSC is not alone in struggling to figure out how to treat Amazon.

In April, a California appeals court found that Amazon could be held liable in that state for burn injuries caused by an allegedly defective hoverboard sold by a third party on the marketplace, even though the e-commerce giant didn’t warehouse or ship the product.

But two months later, the Texas Supreme Count ruled Amazon couldn’t be held liable for the injuries of a toddler, who ingested a battery from an allegedly defective remote control sold by a third party at the site.

The CPSC voted 3-1 sue Amazon in administrative court, asking the company to work with CPSC staff on recall actions.

The agency’s acting chairman, Robert Adler, said the Amazon case showed the agency’s rules needed updating as they were written before Amazon changed retailing - before third-party sellers and online marketplaces came to dominate.

“Clearly the current approach is not sustainable,” Adler said in a statement. “To continue product-by-product is like using an eyedropper to empty the ocean - ineffective, inefficient, and frustratingly insufficient to protect consumers.”