Amazon Will Now Pay Customers for Defective Products

Amazon.com Inc. announced Tuesday a new plan to pay customers who suffer injuries or other damages from defective products others sell on the platform. 

Starting Sept. 1, Amazon will pay out valid claims of up to $1,000 at no cost to sellers, but can intervene if sellers are unresponsive.

The move "better protects Amazon customers and sellers," according to the company, but it also better protects Amazon itself.

The new policy follows years of consumers suing the e-commerce giant over defective or dangerous products purchased from online



sellers.  The policy is designed to reduce that litigation, although courts have tended to side with Amazon and agree that sellers are responsible for the goods they provide.

One state appellate court in California said last year that Amazon could be liable for goods it stores and ships using its Fulfillment by Amazon program. 

Tuesday's announcement also included Amazon Insurance Accelerator, a group of insurance providers that sellers can use if they want to.

There is an update to policy requiring them to get product liability insurance.