Vorys eControl Product Variation Compliance: A New Best Practice for Minimizing Legal Risk
Many manufacturers are mindful that their product descriptions and other listing content on Amazon and other online forums should be accurate and not misleading to avoid consumer complaints, deceptive trade practices claims, or regulatory actions. Indeed, many brands have persons specifically tasked with reviewing product listing content and imagery for ongoing accuracy and compliance. But in this Amazon era there is yet another (and emerging) category to consider from a risk management perspective: product variations.
What is a product variation?
Product variations most commonly occur on the Amazon marketplace. Variations are different product options under a single Amazon product listing. Some examples are (1) a product listing for a dog collar with options to buy different sizes or colors, (2) a product listing for a vitamin with options to buy a 30, 60, or 90-day supply of the product; or (3) a product listing for an electrical tool with different horsepower selections.
Online marketplace platforms’ product variation approach is designed to create a digital shopping shelf that mirrors how the prospective purchaser would shop at a traditional brick-and-mortar retailer; in other words, by finding the desired product and looking to the next product on the shelf or rack for different sizes, colors, patterns, flavors, quantities, scents, horsepower, or voltages.
While most product verticals have at least a few variated product listings, verticals with a higher volume of variated product listings include apparel and accessories, food, vitamins and supplements, tools and parts, and pet supplies. Of the U.S. online marketplaces, Amazon has the most sophisticated platform to offer variations on a product listing, with Walmart as second.
What happens when a product is variated?
When a product listing has variations on Amazon, it means that the products share the same product reviews, ratings, and other designations, such as “best seller” or “Amazon Choice.”
- Example 1: Product X1 has a “best seller” designation on Amazon and is in a variated relationship with Product X2. Product X2 will also display the “best seller” designation even though Product X2 is not actually an Amazon “best seller.”
- Example 2: Product X1 has been sold on Amazon for many years and has hundreds of thousands of reviews and ratings. Company recently launched Product X2 which is highly similar to Product X1. If Company variates Product X2 with Product X1, Product X2 purports to have thousands of ratings and reviews (from Product X1) although Product X2 was just recently launched.
In these examples, it is easy to see how variating products could potentially mislead consumers about the designations tied to a specific product or the rating and review history for a specific product. This creates legal risk in the form of regulatory inquiry or action, consumer complaints, or consumer lawsuits.
How should brands approach product variations?
Brands with variated products on Amazon and other key online marketplaces need to be particularly mindful of their variation practices, carefully considering whether variated product listings are appropriate and accurate as they relate to one another and to ensure that the variations do not mislead or deceive prospective purchasers.
Brands should craft and implement an internal product variation policy and accompanying audit program to (1) have internal rules in place about what types of product variations can be made, (2) regularly review and evaluate product variations for ongoing accuracy and appropriate relationships, and (3) use data and implement procedures to discover and remove “rogue” product listings, which are notorious for problematic variations to the extent that they are variated.
Importantly, even if a product variation is consistent with Amazon’s listing policies (or a product is variated at the suggestion or recommendation of Amazon), it could still be considered to be misleading or deceptive. Therefore, a brand should always make its own independent decision about whether a variation is appropriate and consistent with its internal policy.
Vorys eControl counsels brands through the crafting and implementation of a product variation policy and accompanying audit program, and the brand can use the Vorys eControl’s Brand Analyst team’s data scraping capabilities and variation knowledge to regularly review the brand’s product variations, flagging potentially problematic ones for attorney consideration and brand discussion. This process is not only a new best practice in the Amazon age but a crucial step for minimizing a brand’s legal risk.
If you would like to discuss best practices for managing legal risk in connection with product variations, please contact Vorys eControl partner Jessica Cunning at firstname.lastname@example.org.