Wall Street Journal Investigation Further Underscores Need for Online Marketplace Quality Control Programs

The Wall Street Journal recently reported on its lengthy investigation of the Amazon.com marketplace that revealed the presence of “thousands of banned, unsafe or mislabeled products.”

The Journal reviewed thousands of product listings and hired a federally certified testing company to examine certain items it had purchased from Amazon’s third-party marketplace. It discovered that more than 4,000 products listed on the marketplace were deceptively labeled, banned by federal regulators, or declared unsafe by federal agencies. Specifically, its findings included:

• Of the 4,152 products The Journal identified, 46% were listed as shipping from the Amazon warehouses.
• 116 products were falsely listed as “FDA-approved,” including toys (which the FDA does not approve) and eyelash-growth serums.
• 43 listings for a pain reliever lacked the appropriate FDA labels warning against use on young children.
• 80 listings matched the description of baby products the FDA has warned can cause suffocation and Amazon has said that it banned.
• 52 listings were marketed as supplements with brand names the FDA has identified as containing illegally imported prescription drugs.
• 1,412 listings of electronics either falsely claimed to be certified by a safety-labeling company or contained insufficient information to verify a certification.
• 4,510 balloons lacked required choking-hazard warnings.
• As compared with listings for the same toys on Target.com, 2,324 toy listings lacked choking-hazard warnings found on Target’s listings.

The Journal noted that while Amazon does have policies in place to prevent the listing of unsafe or mislabeled products, numerous products nonetheless evade detection. The Journal attributed these quality issues in part to the massive growth of the third-party marketplace in the last decade. It cited that Amazon’s third-party sales “have exploded—to nearly 60% of physical merchandise sales in 2018 from 30% a decade ago.” In 2001, third-party sellers made up only 6% of Amazon’s physical merchandise sales. The article also noted that Amazon had 2.5 million merchants on the marketplace at the end of 2018, according to estimates from Marketplace Pulse.

The Journal’s investigation further confirms the need for brands to take proactive steps on their own to protect their reputation and product quality on online marketplaces. By enforcing quality controls and carefully monitoring the sale of their products, brands can ensure that only authorized sellers are selling online and only according to the brand’s quality policies for online marketplace sales.