Amazon to Pay up to $1,000 in Damages for Defective Items

Amazon will soon start paying customers up to $1,000 if a defective item sold through its site by a third-party merchant causes property damage or personal injury.

The new policy will come into effect on September 1, 2021, and is designed to give shoppers on the online marketplace greater confidence when placing orders with third-party sellers.

In a message about the move posted on Tuesday, August 10, Amazon said that it will pay customers directly for claims under $1,000, noting that these account for 80% of all such cases.

While the change is likely to be welcomed by Amazon’s vast number of online shoppers, there may be occasions where a customer claims an amount exceeding the company’s $1,000 limit. In such cases, Amazon said it “may” step in to pay claims for higher amounts “if the seller is unresponsive or rejects a claim we believe to be valid.”

Up until now, customers wanting to file a claim related to an item bought from a third-party seller had to go through the merchant, but Amazon hopes that working directly through its own personnel for small claims will make the process less stressful and more efficient.

“Customers can contact Amazon Customer Service, and we will notify the seller and help them address the claim,” Amazon explained. “If a seller does not respond to a claim, Amazon will step in to directly address the immediate customer concern, bear the cost ourselves, and separately pursue the seller.”

It added that it will not seek reimbursement from sellers who stick to its policies and hold valid insurance. To help sellers, the company has also launched Amazon Insurance Accelerator that offers assistance in finding liability insurance at competitive rates.

To protect itself from any nefarious shoppers who may put in an invalid claim, Amazon said it will deploy its fraud and abuse detection systems with external, independent insurance fraud experts to carefully examine each claim that comes its way.

The e-commerce giant said that the move to settle smaller claims by itself “will save time, money, and effort for both customers and sellers.”

Amazon’s new approach to claims will launch in the U.S. at the start of next month, with other countries to follow.

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