Can the Playing Field Be Leveled?

supplements

You take great pride in the quality and selection of the products provided in your store. You responsibly do all you can to provide safe products to your customers and vet each supplier and the products offered. Imagine a change in your business model that allowed anyone with a product to walk into your store and place it on the shelf for sale. You would only review the item at the cash register after the purchase was complete based upon feedback from the purchaser. No interaction with the seller’s quality process or even authority to sell the product would be required. Your customers would be assigned the task of quality assurance by telling you they don’t like the product. Of course, your store would have to have almost unlimited shelf space so that everyone who wants to sell their product could do so. If the product sold in your store caused harm to anyone, you could decline the complaint and blame the “real” seller who put the product on the shelf. The injured customer would be required to seek remedy for the injury by trying to track down the individual that put the product on the shelf. Sometimes that discovery is possible, sometimes it is not, but it is not your problem. You have just created the brick and mortar equivalent to Amazon. The problem is almost none of the leniencies afforded the world’s largest e-commerce company are afforded to you. 

Recent actions both within Amazon and in U.S. Courts could level the playing field slightly. 

In 2015, a young Pennsylvania woman came home from work and grabbed a retractable dog leash that she bought on Amazon from the seller The Furry Gang and took her dog for a walk. As dogs sometimes do, the dog lunged forward. The leash broke and snapped back towards her, shattering her eyeglasses and leaving her permanently blind in her left eye. The complaint filed in Pennsylvania Court Oberdorf v. Amazon clearly details the entire Amazon “sales” process. The original Pennsylvania Court heard the case and sided in favor of Amazon. On July 3, 2019 an appellate Court reversed the ruling in favor of the injured young woman. The original decision relied on four major points to determine Amazon did not qualify as a seller. One of the points was that Amazon was not the only party in the sales distribution that could be held liable. Amazon contended Oberdorf could sue The Furry Gang for damages. The problem was that neither the injured woman nor Amazon could find The Furry Gang.

Amazon contends that, just as every item offered at an auction house can be traced to a seller who may be amenable to suit, every item on Amazon’s website can be traced to a third-party vendor. However, Amazon fails to account for the fact that under the Agreement, third-party vendors can communicate with the customer only through Amazon. This enables third-party vendors to conceal themselves from the customer, leaving customers injured by defective products with no direct recourse to the third-party vendor. There are numerous cases in which neither Amazon nor the party injured by a defective product, sold by Amazon.com, were able to locate the product’s third-party vendor or manufacturer.

In this case, Amazon’s Vice President of Marketing Business admitted that Amazon generally takes no precautions to ensure that third-party vendors are in good standing under the laws of the country in which their business is registered. In addition, Amazon had no vetting process in place to ensure, for example, that third-party vendors were amenable to legal process. After Oberdorf was injured by the defective collar, neither she nor Amazon was able to locate The Furry Gang. (Oberdorf v. Amazon)

The primary issue at play here is the product liability laws have evolved over the past 100 years in a mostly pre-internet world. We are now in a post-internet world and the laws have not kept up. In recent months two Courts have decided in Amazon’s favor to shield themselves from product liability damages caused by products sold by third-party sellers. However, in one of those cases, the Court declined an important element of immunity Amazon previously held strongly in its defense. While the overall case favored Amazon, the Judge stated the Communications Decency Act, designed to protect computer service providers from liability as a publisher of speech, “does not protect them from liability as the seller of a defective product.”

In 2014, 18-year-old prom king and “A” student Logan Stiner ingested one tablespoon of caffeine powder purchased in bulk from Amazon and died as a result. More deaths occurred and FDA finally advised the industry to cease sale of the powder in 2018. At the time of the FDA warning, it was reported over a dozen caffeine powders were still being sold on Amazon. If a product on your store shelf was directly linked to the death of a healthy 18-year-old, would you continue to carry anything even similar to the product, for another four years? What would your customers think about you if you did? 

Trust Transparency Center (TTC) reported on the Department of Justice filing against Confidence USA in which the FDA had issued multiple warning letters over a period of 8 years repeatedly citing some the same infractions. In 2018, Trust Transparency Center tested many products including one by Confidence USA and found the Confidence USA product had no active ingredients. While TTC did not name specific names, publicly we offered to meet privately with Amazon to discuss the results. The information regarding multiple product test failures was shared directly with Amazon and through our website blog with no response from Amazon. As of this writing, the Confidence USA brand is still offered on Amazon. It could be argued that no one has ever become ill because they ingested a placebo with no active ingredient, but it is doubtful your store would turn a blind eye to an allegation of a falsely labeled product. 

CPG giant Proctor and Gamble convinced Amazon to take the unprecedented action of sending an email to its customers warning of counterfeit probiotics being sold by third party resellers. Smaller retailers have long claimed this action was ongoing and harmful. News sites throughout the country heralded warnings about “fake supplements sold on Amazon.” Proctor & Gamble’s Personal Health Care Division issued a statement “Amazon has taken action against the third-party suppliers of that counterfeit product and have removed their ability to supply products in Amazon stores.” The issue remains that third party sellers which previously sold counterfeit P&G products are not likely to cease selling other counterfeit products. Too often the dietary supplement community is falsely alleged to be unregulated. No amount of regulation can stop the harmful effects of counterfeiting and only the store gatekeepers have the ability to police their supply chain. 

As brick and mortar retailers, you have the ability to demonstrate the ability to protect your customer in a way no online seller can. Communicate to your customers:

  1. Your store knows the suppliers and visibly see every product when the item is placed on the shelf.
  2. Your personnel are trained to know and explain the benefits and safe use of the products you sell.
  3. If a customer has a complaint or concern about the product you are here to answer the question live and in person.
  4. You monitor the news and pay attention to industry happenings. Warnings or concerns are evaluated, and the customers safety and value come first, not when the FDA finally takes action.
  5. You do not have unlimited shelf space to provide unlimited product selection, and that is a good thing. There are tens of thousands of dietary supplement brands online and hundreds of thousands of total brands online with many millions of reviews from unknown reviewers. Provide the confidence that your review can mean so much more.
  6. Convenience and price are meaningless if you potentially risk safety and confidence. 

Selling against online retailers can seem like the losing team playing uphill on an uneven field, but taking the steps above puts you in a position to win. 

 

Note: The views and opinions expressed here are those of the author(s) and contributor(s) and do not necessarily reflect those of the publisher and editors of WholeFoods Magazine.

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Scott Steinford, Founder, Trust Transparency Center
Scott Steinford has built a career of leading, learning and mentoring. Through immersion in many aspects of the supplement and pharmaceutical industry Scott has worked to redefine and improve business practices within the healthcare industry with an emphasis on transparency. His experience ranges from entry level to CEO and positions include organizations representing ingredient supplier, ingredient manufacturer, retail brand, private equity, M&A due diligence expert and trade organizations. Scott has a Pre-Law Bachelor’s Degree from the University of Texas at Arlington and a Master’s of Science Degree in Law from Champlain College. Scott currently is Executive Director for the CoQ10 Association and President of the Natural Algae Astaxanthin Association (NAXA) and Managing Partner of Trust Transparency Center; a boutique consulting organization dedicated to assisting companies seeking to improve both their internal and external trust transparency. Scott’s prior experience includes CEO of Doctor’s Best and maintained a pivotal role with a variety of ingredient manufacturers including Eisai, Kaneka and was a founder of ZMC-USA.

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