Lessons from 100 million! Amazon sellers are sued for sky-high amounts

Sellers must pay attention to product safety issues, otherwise you may face sky-high claims.

The news that an 11-year-old girl was severely burned by a nail polish sold by Temu has attracted widespread attention. As a result, Temu has provided the family with a credit line of £1,500 as compensation.

For Amazon, a cross-border e-commerce giant, it is not uncommon for consumers to claim compensation due to product safety issues. In these accidents, sellers are usually not immune to the consequences. Therefore, Amazon launched product liability insurance two years ago. However, insurance sometimes cannot withstand consumers' exorbitant demands. For example, a seller received an email claiming over 100 million yuan some time ago, and even the highest insurance payment was not enough to cover it.

Amazon sellers panic after receiving sky-high claim forms

Not long ago, an Amazon seller in Guangzhou said that they received a lawsuit for a claim of $15 million (about 108 million yuan). And because the other party also sued Amazon, Amazon froze the seller's store balance to ensure that the seller's account had enough funds to deal with the plaintiff 's lawsuit against Amazon and pay the lawyer's fees .

It is understood that of the $15 million in compensation, the seller was sued for $10 million and Amazon was sued for $5 million . However, if Amazon's email means that the $5 million in compensation will also be borne by the seller, then the total amount of compensation that the seller needs to pay will be as high as $15 million.

Why is there such a sky-high claim?

The reason is that the product sold by the seller caused personal injury. The plaintiff purchased it in December 2020 and was injured when using it in August of the following year.

The seller's store can still sell normally, but the court documents have been sent to them, and the court requires them to respond to the lawsuit. The seller has no experience in handling such matters, and he is very anxious as the deadline for responding is approaching.

When other sellers saw this sky-high claim amount, they were just as surprised as the Guangzhou seller: "What kind of damages require compensation of $15 million? It's ridiculous. They can just rob, but they have to find a reason."

In this case, some people suggested that the store could be abandoned and relocated, but others said that the amount of compensation in the lawsuit is not the amount of the judgment. Before the court makes a judgment, the seller can negotiate with the plaintiff to resolve the issue, and the settlement amount will not be too high. Ennet believes that if the store is very valuable or the amount of funds frozen in the account is large, this solution is feasible.

Some people also analyzed that since the accounts have been frozen, it means that the other party has evidence. However, the plaintiff was injured in 2021 and did not file a lawsuit until 2023. With such a long time interval, the other party’s chances of winning are not very high. Even if the other party wins, he does not have to pay as much as he wrote.

It's almost the New Year and I still have to deal with such things. I feel really bad. However, such situations are not uncommon in the cross-border circle.

There are many similar cases, and the seller is afraid of losing money.

Even if the platform and sellers have strictly controlled the quality of products, it is difficult to guarantee that anything is foolproof, so it is common for consumers to come to them to claim compensation.

Also last year, a seller was sued for tens of thousands of dollars by a buyer. "(At that time) the other party hired a lawyer to send an email directly. At that time ( we ) had already bought insurance , so they contacted the team to handle this matter . A few months later , they called to say that the matter was resolved and the other party's claim conditions were not established . "

In addition, there are also sellers who have encountered high claims like the Guangzhou seller mentioned above.

One of the sellers said that their account was also frozen at the beginning of last year because the products sold in 2020 caused personal injury. At that time, there was US$150,000 in the account and the other party claimed an amount of up to US$500,000.

Another seller also said helplessly that they have also encountered buyers who came to ask for high compensation for pet injuries or property losses. " At first, the customers were very angry and asked for a high amount of compensation. It is difficult for us, a small business, to meet their demands. "

In fact, Amazon's transaction guarantee claim policy stipulates that if Amazon sells defective products that cause customers to suffer unexpected property loss or personal injury, for cases where the claim amount is less than US$1,000 (such cases account for more than 80% of the total cases), Amazon will directly pay the compensation to help customers faster without sellers bearing any costs.

In addition, Amazon has also introduced product liability insurance as a solution for those who exceed this compensation amount, but no matter how high the insurance compensation amount is, it cannot withstand the high demands of buyers. So what should sellers do when faced with sky-high claims?

First, you need to stay calm, then find out how the accident happened and determine who is responsible. If it is indeed caused by product quality, you need to communicate with the other party to see if you can compensate according to the actual situation, or try to compensate as little as possible.

If the seller has purchased product liability insurance and the claim amount is within the insurance compensation limit, you can directly contact them for processing. If the claim amount exceeds the insurance compensation limit and the other party is still holding on to the claim, you can abandon the store if the store value is not high, and take legal action if the store value is high.

Frequent product safety incidents will put Chinese sellers under greater pressure

Over the years, there have been many cases where products sold on Amazon have caused personal injury or property damage.

For example, in 2019, a woman in Pennsylvania, USA, said that the retractable leash she was using while walking her dog broke and hit her, causing permanent blindness in one eye.

In 2016, a Tennessee couple bought a balance bike for their 13-year-old child that caught fire and exploded, burning down their house and injuring three family members. The couple's son and daughter were nearly killed in the fire.

In 2021, a 19-month-old sustained permanent damage to his esophagus after accidentally ingesting a lithium-ion battery that ejected from a knockoff remote control .

Among these accidents, some are caused by problems with the products themselves, while others are caused by improper use by consumers. Although the main responsibility for product safety accidents lies with the manufacturers , it is difficult for sellers and platforms to escape responsibility as long as something happens.

In such incidents, foreign lawyers seem to have a lot of opinions about Chinese sellers. In April 2022, several American lawyers criticized Amazon in an investigative brief, claiming that a large number of products on Amazon's website "are exempt from product liability and personal injury claims because the sellers are located in China."

Under pressure from all sides, Amazon will only become more and more stringent in terms of product safety requirements for Chinese sellers, and the penalties will also become more and more severe. Therefore, when selling on the platform, domestic sellers must first strictly control the quality of their products, and secondly, purchase corresponding insurance to prevent any accidents. In short, try to minimize the occurrence of claims.