FFMI APPLAUDS STATES TRYING TO PROTECT CONSUMERS BY HOLDING E-COMMERCE PLATFORMS TO THE SAME ACCOUNTABILITY AND TRANSPARENCY STANDARDS AS BRICK AND MORTAR STORES

The coronavirus pandemic has created even more opportunities for fraudsters to target consumers, especially on e-commerce platforms that leave consumers vulnerable to these scams. Counterfeit surgical masks, hand sanitizer and cleaning supplies are just a few products through which consumers have been targeted, and they have been rampant on sites like Amazon and Wish.com.

“When consumers shop for various goods, they should have the same confidence in purchasing a product from an e-commerce platform or third-party marketplace as they do when they make a purchase from a store shelf,” said Robert B. Engel, chief spokesperson of the Free & Fair Markets Initiative.

“E-commerce platforms like Amazon charge consumers membership fees, distribute products through their own distribution network and charge third-party sellers to market products. They can no longer argue that they are simply a passive online platform for sellers and buyers.”

Last year, the Wall Street Journal revealed that Amazon had thousands of banned, unsafe or mislabeled products being sold through its third-party marketplace. And although Amazon has insisted that it takes the issue seriously, language buried within the company’s recent financial disclosure report points to a more troubling reality: “Although we impose contractual terms on sellers that are intended to prohibit sales of certain types of products,” the company says, “we may not be able to detect, enforce, or collect sufficient damages for breaches of such agreements.”

In the absence of federal regulation to protect consumers, some states are trying to pass their own legislation that would require e-commerce platforms to verify third-party seller identities and hold companies like Amazon and Wish.com liable for selling faulty, defective and/or unsafe products.

California Assembly Bill 3262 would require an online marketplace to be held liable for damages caused by defective products to the same extent as a retailer that is not an electronic place or internet website. Similarly, Louisiana Senate Bill 476 would require online marketplaces to verify the identity of each high-volume third-party seller, with penalties for sellers who fail to comply.

As lawmakers and regulators in Washington look for ways to rein in Big Tech, states themselves are proposing clear solutions to address the rampant fraudulent activity on e-commerce platforms and protect consumers from potentially dangerous and counterfeit products. It’s high time for Amazon to be accountable for what is sold on Amazon.