What Amazon Sellers Should Know About California’s Proposition 65

What is California’s Proposition 65?

California’s Proposition 65 is officially known as The Safe Drinking Water and Toxic Enforcement Act of 1986. The law is intended to warn California consumers when they may be exposed to chemicals known to the state to cause cancer or reproductive harm. Sellers of consumer products to California residents – including ecommerce sellers – must comply with the law. In most cases, specific warnings must be provided to California consumers about their exposures to these chemicals. There are now more than 1,000 chemicals on the Proposition 65 list. More are added every year.

Who Is Enforcing Proposition 65?

Although the California Attorney General can enforce the law, you almost always will be targeted by private lawyers and law firms. Proposition 65 empowers them to test consumer products and issue 60 Day Notices on their own. The most common law firms pursuing Amazon sellers are: Brodsky & Smith, California Citizens Protection Group LLC, Center for Environmental Health, The Chanler Group, Ecological Alliance LLC, Shefa LMV LLC, and others. These “bounty hunter” lawyers have made millions of dollars in settlements, keeping most of the money for themselves.

What happens if Amazon and I receive a Proposition 65 Notice for one of my products?

This happened to 749 Amazon sellers in 2020 – a 12% increase from the year before. The bounty hunter lawyers will buy a product on Amazon, test it for Proposition 65 chemicals, and send a 60-Day Notice to both the seller and Amazon. On average, Amazon receives about three of these notices every week. Roughly 8 – 10% of all Proposition 65 notices involve a product on Amazon.

Amazon reviews each Proposition 65 notice and makes an initial decision. If it appears to Amazon that you may be selling a dangerous product or banned substance on its platform (mercury for example), they will most likely delete the listing. If the issue is a more common substance (like phthalates) in a product that is not ingested or applied to skin, Amazon is less likely to delete or suspend the listing immediately. Rather, they will remind you of your duty to comply with Proposition 65 and direct you to their content about providing warnings:

Amazon will also encourage you to resolve the complaint with the bounty hunter lawyers, as you have a duty to indemnify Amazon if they are named in a Proposition 65 lawsuit. If you do not address Amazon’s concerns, your product listing can be suspended and that will seriously affect your seller trust rating. In some cases, your selling privileges may be suspended while Amazon conducts a safety review of your product.

Prop 65 says I am exempt if I have less than 10 employees. Do I still have to comply with the law?

Many third-party sellers on Amazon are small businesses with just a few employees. Unfortunately, although you have less than 10 employees and are, therefore, exempt from Prop 65, Amazon has more than 10 employees and the TOS you signed is a contract requiring you to indemnify Amazon. It all washes back to YOU, the seller!

To be sure, Amazon has successfully made arguments in court that it is immune from Prop 65 because it is just an online platform that facilitates transactions between independent sellers and buyers. However, those arguments have not yet been decided definitively in Amazon’s favor. The bounty hunters who make test buys from Amazon almost always sue both the seller and Amazon when they file Prop 65 lawsuits.

In other words, Amazon expects you to play it safe and comply with the law regardless of the number of employees you have. They expect you – the seller – to do the lab tests, decide if a warning is necessary, know which warning to use, and tell Amazon what’s being done to provide the warning.

What if I’m not based in California or I am outside of the U.S ? Do I still need to comply?

If you are selling products into California on Amazon, the law potentially applies to you.

How much does it cost to settle a Prop 65 Complaint?

First, your California attorney should negotiate a settlement. This is not something non-attorneys should try to do on their own.

The price of private settlements varies greatly. However, in Prop 65 cases that involve consumer products sold on Amazon, most attorney-negotiated settlements are in the $10,000 to $20,000 range. The bounty hunters often pocket 90% of the settlement. The settlement will require you to comply with the warning law or reformulate your product within a certain time frame.

However, if the matter does not resolve within 60 days and a lawsuit is filed, the average settlement cost jumps to $40,000 – $90,000 range. This does not include your own attorney’s fees to defend the lawsuit, pay court costs, etc.

The key to minimizing Prop 65 expense is having a competent lawyer licensed in California to defend you. Your attorney can investigate and respond promptly to a Prop 65 Notice. Amazon sellers should not try to settle Prop 65 cases on their own.

What can I do to avoid any problems with Proposition 65? Should I just put the warning on everything?

Prop 65 only requires the warning when one of the 900 “chemicals that are known to cause cancer” is present. You should not just indiscriminately slap a warning label on everything. In fact, Amazon discourages this kind of “over warning.”

Instead, the best practice is to have your products tested periodically using a reputable third-party lab. Keep a record of the test results. Your supplier(s) should be just as invested in Prop 65 compliance as you are, so if you have many different products and suppliers, start discussing your expectations about documenting Prop 65 compliance.

If your test results are positive for low-levels of one or two of the chemicals, you should use different materials or eliminate components so that nothing tests positive for Prop 65 chemicals. Only if that’s not possible should you resort to using the “safe harbor” warnings on your product packaging and on Amazon’s site.

Being proactive can save you tens or even hundreds of thousands of dollars in attorney fees and settlement costs – not to mention the damage to your listings and seller reputation with Amazon. Worse yet, if Amazon gets a 60-Day Notice of a Prop 65 violation, they may decide to suspend your listing (or even your selling privileges!) while they investigate the allegations and make sure your products are safe.

If you have received a Proposition 65 Notice of Violation, do not wait to contact Ted Luymes Ted@TedLawFirm.com for a free initial consultation.