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08/10/2021

Amazon to pay up to $1,000 for damages caused by defective products

Dan Berthiaume
Senior Editor, Technology
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In a new policy, Amazon will directly offer customers compensation if a defective product bought from a third-party seller causes property damage or personal injury.

Starting on September 1, the online giant will pay customers for claims of property damage or personal injury under $1,000 caused by defective products.  The policy will cover all products sold on Amazon.com.  (The $1,000 metric accounts for more than 80% of cases, according to Amazon.)

Under the new policy, Amazon's customer service will facilitate property damage and personal injury claims between the customer, the seller, and their insurance provider. Customers can contact Amazon customer service, and the company will notify the seller and help them address the claim. (Previously, if a customer wanted to file a similar type of claim, they had to work with the seller.)

The new policy is an extension of Amazon's A-to-z Guarantee, which it launched more than 20 years ago to ease the return process for products sold and fulfilled by third-party sellers, to protect customers in the event a defective product sold through Amazon.com causes property damage or personal injury, regardless of who sells it.

If a seller does not respond to a claim, Amazon says it will step in to directly address the immediate customer concern, bear the cost, and separately pursue the seller. If a seller rejects a claim Amazon believes is valid, the company may also step in to address the customer concern. In these cases, sellers will continue to have the opportunity to defend their product against the claim. 

When a customer files a claim, Amazon will combine its advanced fraud and abuse detection systems with external, independent insurance fraud experts to analyze the claim. The company will present valid claims to sellers and deny what it finds to be unsubstantiated, frivolous, or abusive claims. Sellers will not have to investigate these claims on their own.

[Read more: Amazon invested more than $700 million in brand protection in 2020]

Amazon will resolve and pay for valid property damage and personal injury claims against sellers under $1,000 as a concession to customers. Amazon will bear these costs and not seek reimbursement from sellers who abide by its policies and hold valid insurance. Sellers will be kept informed at every step of the process.

As part of this effort, the company is also launching Amazon Insurance Accelerator to help sellers buy insurance at competitive rates from select providers. Sellers are not required to use a provider within Amazon Insurance Accelerator, and can continue to obtain insurance from any qualified provider of their choice. 

“We stand behind our customers, sellers, and the hundreds of millions of safe and compliant products offered in our store,” Amazon said in a corporate blog post. “With our expanded A-to-z Guarantee, we’re proud to continue providing customers peace of mind every time they shop in our store and to help our sellers increase sales and grow their businesses.”