Amazon is paying consumers up to $1,000 for defective product claims

The retail giant will take matters into its own hands if sellers fail to address consumer complaints.

What you need to know

• Amazon has updated its returns policy to help consumers more easily file complaints about defective products.
• The company will step in to directly pay valid claims if the seller concerned is unresponsive.
• The expanded policy will take effect beginning September 1.

Amazon typically addresses consumer complaints about defective products by directing customers to third-party sellers, essentially avoiding any sort of liability. Soon, the retail giant will directly handle the resolution of customer complaints relating to property damage and personal injury.

The company has updated its two-decade-old A-to-Z guarantee to make it easier for consumers to be compensated if they've been harmed by a third-party product sold through Amazon, assuming the claim is valid. The A-to-Z guarantee is Amazon's returns policy that aims to protect consumers from defective products.

Starting September 1, customers can directly address their concerns to Amazon, and the company will notify the seller concerned about the claim. Of course, the online retailer will verify the complaints using a mix of its abuse detection system and independent fraud experts. If proven to be valid, the claim will be forwarded to the seller. The company has also introduced its new Amazon Insurance Accelerator to help sellers choose the right insurance policy from trusted providers.

Amazon vows to directly bear the cost of claims less than $1,000 without pursuing the seller. The company noted that this represents more than 80% of cases. In situations where valid claims for higher amounts go unanswered or rejected, Amazon may step in to directly compensate the affected consumer and seek separate reimbursement from the seller. The rejection can also be appealed if customers believe their claim has been wrongly denied, while sellers can also defend their product against invalid claims.

The revised policy provides an extra layer of protection for consumers who may have suffered injury or property damage due to faulty products sold by third-party sellers. In July, the U.S. Consumer Product Safety Commission sued Amazon over defective products sold on its online marketplace, including substandard children's sleepwear garments, 400,000 hairdryers, and some of the best carbon monoxide detectors.