Regulators on the US Consumer Product Safety Commission (CPSC) are increasing their scrutiny on e-commerce platforms concerning their role in distributing hazardous products. Recently, two of the commissioners released a joint statement asking staff to evaluate Shein and Temu, following reports of these platforms listing dangerous baby products for sale. Commissioners Peter A. Feldman and Douglas Dziak noted concerns about the sites’ ability to sell harmful products and their growing popularity in the US due to low-cost goods sourced from numerous Chinese vendors.
This move comes on the heels of the CPSC’s July decision involving Amazon.com Inc., where the agency affirmed that Amazon is a “distributor” under the Consumer Product Safety Act and thus responsible for recalling defective products. The decision pertained to over 400,000 defective items sold by third-party vendors through Amazon’s Fulfilled by Amazon program.
The increased attention toward e-commerce platforms highlights a broader regulatory trend to address perceived gaps in safety oversight as online purchasing continues to grow. According to former CPSC Chair and current Cooley LLP partner Elliot Kaye, regulators feel immense pressure to act on these gaps. However, there remains ambiguity over the CPSC’s authority to regulate foreign platforms like Temu and Shein, compelling commissioners to seek clarity on enforcement challenges related to these entities.
E-commerce platforms are under particular scrutiny due to the “de minimis” rule, an amendment to the Tariff Act of 1930, which exempts shipments under $800 from import duties. This exemption has notably benefited international e-commerce entities by keeping prices low, although it has been criticized by American retailers. A 2023 House select committee report estimated that Shein and Temu are responsible for over 30% of packages shipped under this rule, primarily from China to the US.
Changes to this exemption have been proposed by some members of Congress, and the European Union is considering a similar course of action which would significantly impact Chinese e-commerce platforms.
CPSC commissioners believe that the platforms must understand their responsibility to ensure the safety of products sold. Public statements by the commissioners, such as Feldman’s remarks at a trade association summit and Dziak’s statement to a House subcommittee, underscore the agency’s growing focus on holding e-commerce platforms accountable. While the CPSC remains committed to consumer safety, these developments suggest that legal and regulatory changes may be necessary to address the complexities introduced by international e-commerce. More detailed insights on this unfolding situation are available in the full report.