When it as easy as it is to sell and buy on online platforms such as Amazon, it’s only natural for some rogue elements to slip through the cracks from moderators. This is exactly what happened to Amazon, based on information from an investigative report by The Wall Street Journal.
News site Quartz posits this quandary quite perfectly: “Tech companies employ an interesting logic when faced with liability issues. Although you may view online retailer Amazon as a seller, or Facebook and Google as media companies, or Uber as a taxi service—given that you may use them to buy items, access news, and get rides—when the corporations are sued, they commonly claim that the things they offer aren’t actually their responsibility because they’re merely facilitators, technology platforms rather than providers of goods and services.”
It is this very “facilitator” nature that causes quite the tangle between regulators/official bodies and online services such as Amazon.
According to the WSJ report, they found “4,152 items for sale on Amazon.com’s site that have been declared unsafe by federal agencies, are deceptively labeled or are banned by federal regulators – items that big-box retailers’ policies would bar from their shelves. Among those items, at least 2,000 listings for toys and medications lacked warnings about health risks to children.”
Furthermore, WSJ identified at least 157 items for sale that Amazon had said it banned, including sleeping mats the Food and Drug Administration warns can suffocate infants.
Perhaps surprisingly (or not), many of these dubious products were promoted with the “Amazon’s Choice” label, sought to encourage buyer faith. In the grand scheme of things, this badge doesn’t seem to mean much now anymore.
Upon WSJ alerting Amazon, the online platform took down or altered the wording of 57% of the identified products.
In response to the whole debacle, Amazon had this to stay in a blog post: “In 2018 alone, we invested over $400 million to protect our store and our customers and built robust programs to ensure products offered are safe, compliant, and authentic.”
Still, the blog offered a relatively neutral, politically-correct confirmation that they had things under control, and that they are always inspecting and moderating new products and sellers, etc. It doesn’t directly address the issues posed by the WSJ, instead invoking standard “we’ve got this covered/we have our customers’ best interests at heart” rhetoric.
Business Insider (BI) had this to say about the blog post: “Here’s what it means: Third-party sellers are the driving force behind Amazon’s retail business, but if it’s unable to effectively moderate their listings, it could damage Amazon’s reputation.”
BI goes on to highlight that “Third-party merchants accounted for 58% of physical gross merchandise sales on Amazon in 2018. This marked the fourth year in a row where third-party sellers had more sales than Amazon’s first-party retail business, and it’s on an upward trajectory, tracing back to when the segment made up just 3% of physical gross merchandise sales in 1999.”
Naturally, Amazon wants to keep its third-party sellers happy, while keeping legislators content with proceedings. The WSJ report brings to attention a similar loophole to the one being faced by other tech giants such as Facebook. The social media giant is too struggling to wrangle with the excess activity and information on its site, filtering out the harmful from the satisfactory.
Yet, going back to Quartz’s point, companies like Amazon claim they are not to be held reliable as they are, again, just “facilitators” of trade, and not the actual seller. As such, they don’t believe they should be sanctioned for a dubious seller’s misdeeds.
Amazon, however, could have their claim appealed, according to BI: A recent ruling in the US could mean that Amazon is liable for defective purchases made on its marketplace, which might lead to a number of suits against Amazon and it having to regulate its platform more heavily.”
BI continued: “The ruling from the US Court of Appeals for the Third Circuit said that a consumer in Pennsylvania could sue Amazon over an allegedly unsafe product purchased from the e-tailer’s marketplace, differing from previous rulings on the topic. Amazon has asked the court to review the decision, per The WSJ, but this could open the door to a number of suits against Amazon. To avoid the potential deluge, Amazon might need to closely review all of the products sold on its platform, which would likely lead to its product selection shrinking significantly, hurting its performance.
“If all marketplaces face the same issues, the business model itself may become less viable overall, pushing the retail industry away from third-party marketplaces and toward first-party sales.”