In a decision that will be closely watched by the Australian Competition and Consumer Commission (ACCC), Amazon is being told that it holds responsibility for product recalls of not just its own branded items, but for those sold by third-party retailers via its e-commerce platform too.

In a landmark decision, the US Consumer Product Safety Commission (CPSC) said It is not third-party sellers, but Amazon itself who is responsible for properly recalling hazardous that are sold on its marketplace.

The CPSC noted that Amazon failed to adequately notify the public about more than 400,000 recalled products.

The Amazon products, sold between 2018 and 2021, include faulty carbon monoxide detectors, hairdryers that pose an electric shock risk, and flammable children’s pyjamas, according to The Verge.

The CPSC says that Amazon “downplayed the severity of the hazard,” telling affected customers about a “potential safety issue” regarding a recent purchase rather than explicitly labelling it as a “recall.”

In the event that products are recalled, the CPSC wants Amazon to go beyond just blocking the retail of those products on its platform and alerting buyers. The CPSC says that Amazon must follow approved recall procedures that have been put in place to prevent not only those customers from using the recalled products, but from also further giving them away or reselling them.

Some of the other issues pointed out with the way Amazon handles recalls is that its recall notice doesn’t include “easily accessible” pictures of the items to help customers easily identify whether they bought the product.

Also, Amazon is being accused of not incentivising customers to get rid of the recalled products, offering gift cards without requiring customers to return the item or provide proof they destroyed it – something that companies typically do when their own product have been recalled.

Amazon though contends that its recalls process is “effective and efficient.”

“In the event of a product recall in our store, we remove impacted products promptly after receiving actionable information from recalling agencies, and we continue to seek ways to innovate on behalf of our customers,” an Amazon spokesperson told CNN. “Our recalls alerts service also ensures our customers are notified of important product safety information fast, and the recalls process is effective and efficient.”

This isn’t the first time that Amazon has clashed with the CPSC. In 2021, the CPSC sued Amazon to force the online retailer to completely recall thousands of faulty items on its marketplace.

While Amazon argued that it’s not responsible for recalling goods from third-party sellers, the administrative law judge (ALJ) on the case ruled that Amazon is a “distributor” and is responsible for issuing recalls. The decision this week by the CPSC only reinforces that ruling.

Amazon has launched a page dedicated to recalls, allowing users to view product recalls and safety information for items they bought on Amazon. It says though that it plans to appeal the CPSC’s decision.

With the CPSC’s approval, Amazon must now implement a new plan to notify customers about the hazardous products and encourage them to return or destroy the faulty items.

Amazon Australia has grown its annual customer base by 1.1 million people over the 12 months to June 2024, according to new research.

The data by Roy Morgan suggests that 7.9 million Australians aged 14+ shop on Amazon at least once a year, up from 6.8 million in the year to June 2023.

The latest decision in the US, if it plays out in Australia, could apply to other online retailers too such as Temu and Shein.