Amazon will pay customers $1,000 in compensation for defective items

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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 take effect on September 1, 2021, and is designed to give shoppers in the online marketplace greater confidence when placing orders with third-party sellers.

In a letter about the move, Amazon said it would pay customers directly for claims under $1,000, noting that these represented 80% of all such cases. While the vast number of online shoppers at Amazon will likely welcome the change, there may be occasions when a customer demands an amount that exceeds the company's $1,000 limit. In such cases, Amazon said it may step in to pay higher claims if the seller is unresponsive or rejects a claim we believe to be true.

Until now customers wanting to make a claim for an item purchased from a third-party seller have had to go through the merchant, but Amazon hopes that working directly through its employees for small claims will make the process less stressful and more efficient.

Amazon explained, Customers can contact Amazon Customer Service, and we will notify the seller and help them process the claim. If a seller does not respond to a claim, Amazon will step in to directly address the customer's immediate concerns, bear the cost ourselves, and follow up with the seller separately. It would not ask for payment from sellers who adhere to her documents and have valid insurance. To help sellers, the company has also launched an Amazon Insurance Accelerator that offers help finding liability insurance at competitive rates.

To protect itself from any nefarious shoppers who may make an invalid claim, Amazon said it will deploy fraud and abuse detection systems with third-party, independent insurance fraud experts to carefully examine every claim that comes its the way.

The e-commerce giant said moving to settle small claims on its own would save time, money, and effort for both customers and sellers.