By Kenneth Rapoza
The uptick in e-commerce sales over the last several months of lockdown policies has been not only a boon to companies like Amazon, but to the hundreds of Chinese companies that sell directly to Americans via American websites. Sometimes the products are fine. Sometimes not so fine.
A Minnesota office of the American Family Mutual Insurance Company representing a couple who bought a solar-powered generator from Amazon.com filed a lawsuit against the e-commerce giant on August 2, citing fire damage to their client’s house. The insurance company is suing Amazon to recover the cost of repairing fire damage to the home. There is no chance the insurer can go after the Chinese manufacturer or its U.S. import partner who has no ties to the product makers.
According to the lawsuit, Amazon “played a direct role in the promotion of the product.”
CPA is fighting for the government to reduce the “de minimis” limit to reduce the volume of imported goods, many of them unsafe or counterfeit, that are flooding into American ports. The current limit, $800, is the highest in the world and benefits online consumer retail operators.
This is far from the first time that a battery or other electronic product came in from China and caused a fire or accident in an American household. China-made hoverboards are a notorious source of such accidents.
In May, The Times of London reported that Amazon would pay compensation to customers affected by dangerous products sold by third-party traders on its website.
In the latest case, a couple purchased a 400-watt solar generator made by a company called Aeiusny in November 2019 through their Amazon Prime subscription. The generator later caused a fire at the home and American Family paid more than $75,000 to repair the damages.
Aeiusny is not one of the companies Amazon promotes on its website when searching for solar generators. Amazon does highlight two portable generators – one by Jackery and another by Bluetti, which is a China brand that tries to mimic the Yeti brand of portable solar power systems.
A 500-watt Aeiusny portable solar generator sells for $239 on Amazon and is manufactured in Guangdong province, one of China’s busiest export hubs.
Amazon has been sued before on these issues. But higher courts have ruled mostly in favor of Jeff Bezos’ online storefront.
In June, the Texas Supreme Court ruled that Amazon was not a “seller” under Texas product liability law because it only controls the transaction and shipping and holds no title to the products sold through its platform.
But in November, California’s highest court ruled that Amazon could be liable for selling defective batteries through, even though the Ninth Circuit sided with the online retailer a week earlier.
In an unpublished ruling, the federal appeals court upheld the dismissal of State Farm Fire and Casualty Co.’s suit over a fire caused by an allegedly defective hoverboard. The Ninth Circuit found that the U.S. District Judge James A. Teilborg properly applied Arizona’s strict liability laws when finding that Amazon only provides services to connect customers to vendors, Law360 reported.
These cases show Amazon’s rock-solid shield of protection against property or physical damage caused by China-made goods promoted and sold on the website. Amazon will help cover, or fully refund the cost of unwanted goods, but customers that want refunds or compensation for damages are often sent directly to the manufacturer.
American consumers quickly discover it is impractical to sue a Chinese manufacturer in a Chinese court over faulty products. In the case of personal damages, like the one caused by the faulty solar-powered generator, Amazon is not the manufacturer and is therefore protected.
This is the price consumers — and insurance companies — will have to pay as the China business-direct-to-American-consumer retail model continues to expand thanks in large part to companies like Amazon.
Whether American Family Mutual wants to pay legal fees to try to recover a $75,000 insurance payout remains to be seen. But they sure have the resources to fight Amazon in court over this and begin holding e-commerce platforms responsible for damaged goods purchased through them.
For American-made alternatives, a Google extension called WeCultivate.US gives consumers on Amazon a chance to see where the brands they are buying are made, or where the seller is located (Hint: half are in China). WeCultivate, partially funded by famous investor and Shark Tank host Mark Cuban, directs consumers to American-made products that compete with those made in China and elsewhere.