On August 10, 2021, Amazon announced a major update to their A-to-Z Guarantee policy that changes what is required of Amazon sellers.
These changes take effect September 1, 2021, and will have a major impact on:
In this article, we’ll break these changes down into an easy to understand outline, so that Amazon sellers of every level understand what is required of them and what they should expect. There is also an FAQ at the end.
Note: While it is our honor to be a resource for you on your Amazon journey, please always remember that blogs are not legal advice. If you find yourself in a dispute with Amazon or a customer, and are in need of legal advice, please contact your lawyer.
Let’s dig into the updates…
If a customer submits a property or personal injury claim against a seller (related to a defective product), Amazon will pay claims they find to be valid if the claimed value of the damages is less than $1000.
Most importantly – they will not pursue sellers or seek reimbursement, as long as the seller has valid insurance.
The Takeaway: If you have insurance, Amazon is covering the cost of claims brought against you if the value is under $1000.
Customers will no longer be required to contact sellers directly if they believe a defective product caused personal or property damages.
If a seller has this concern about one of your products, they will contact Amazon, and Amazon will then communicate with you, the seller, after they perform an investigation.
One of the benefits of having Amazon be the intermediary (especially when they are also covering the costs of claims under $1000) is that Amazon has vast resources committed to investigating claims. If a customer is submitting a fraudulent claim, Amazon will invest resources into verifying this claim so that you don’t have to spend the time or money to do it yourself.
Some sellers have remained skeptical of this, citing painful experiences with Seller Support or Amazon’s history of putting customer satisfaction above seller needs as reasons to not trust Amazon’s fraud investigation. Keep in mind that Amazon would be doing itself a disservice by blindly approving every claim, even if the initial
One important thing to be aware of is that this new process empowers Amazon to make high-stakes decisions if a seller is not responsive.
If you don’t respond, Amazon will be allowed to step in on your behalf.
Read that sentence again as it is critical to understand.
If you don’t respond to Amazon regarding a customer claim, they may take it upon themselves to address the claim on your behalf. If they suffer a financial burden in doing so, Amazon will then pursue you themselves.
If you reject a claim, but Amazon disagrees with you and thinks the customer is right, Amazon may continue to pursue the matter with you, but you’ll continue to have the ability to defend yourself against the claim.
It is always best to take every claim seriously and to make every effort to respond in a timely and factual manner.
The Takeaway: Amazon will take care of the research and customer communication should a claim arise, all claims should be addressed promptly, factually, and with the appropriate details. The claims won’t “just go away,” and if you’re unresponsive, Amazon has the right to make decisions about the claim without you.
Before the September, 2021 update, sellers were required to carry product liability insurance when they reached $10,000 in sales for three consecutive months.
Now, sellers must have product liability insurance when they reach $10,000 in sales for a single month.
Because this will affect so many sellers who have not yet been required to purchase insurance, Amazon has created the Amazon Insurance Accelerator. The AIA is a marketplace of insurance carriers who have been pre-vetted by Amazon. The goal is to make obtaining insurance quick and easy (Amazon isn’t taking a cut from any AIA policies).
The Takeaway: You need product liability insurance. The restrictions on insurance are now much tighter, and Amazon has even provided a resource to make it easy for sellers to purchase insurance.
Below are Frequently Asked Questions about Amazon’s insurance requirements and A-to-z updates for 2021.
The new process pertains only to property damage claims or personal injury claims caused by a defective product. If a claim is related to damages or injuries from the use of a product that is not defective, this process does not apply.
Yes, you need product liability insurance to sell on Amazon, and you need to name Amazon as an “additional insured.” Click here to see Amazon’s guidelines on acceptable insurance (requires you to be logged into Seller Central).
The sooner, the better. An e-commerce business is just as “real” as a brick and mortar business. It’s important to protect yourself, your brand, and your assets, by acquiring commercial liability insurance. It typically isn’t expensive, and a little investment now can save you from bankruptcy later.
As long as you have insurance, Amazon will not charge you for any claims under a $1,000 value. Further, Amazon will not contact your insurance provider for these claims. They won’t seek reimbursement in any way.
You can use your existing product liability insurance, so long as it meets Amazon requirements. You do not have to use a policy obtained via Amazon Insurance Accelerator.
No, there are no referral fees or commissions – Amazon is trying to make insurance easy to obtain.
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