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Alibaba Group Holding Ltd Agrees Not To Sell Recalled Goods To US Consumers

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Chinese e-commerce giant Alibaba has agreed to block the sales of recalled products to the U.S. consumers. It has signed a deal with the Consumer Product Safety Commission (CPSC) and announced a detailed plan to prevent recalled products from reaching the U.S. consumers. CPSC has already signed similar agreements with Amazon, eBay and other online marketplaces, but the agreement with Alibaba was the agency’s first with a foreign website.

‘Will hold Alibaba’s feet to the fire’

Alibaba has become a household name in the U.S. following its blockbuster IPO. American retailers fear that its entry will destroy the U.S. small businesses. They have urged the government to provide a “level-playing field” by closing the tax loophole for online retailers. Under the terms of the deal, CPSC will give Alibaba a list of products deemed unsafe or illegal for the U.S. consumers. The Chinese company will prevent those products from shipping to customers in the U.S.

The deal is not technically enforceable. But CFSC chairman Elliot Kaye will use his influence to make sure that Alibaba complies with the terms of the agreement. Kaye told The New York Times that the agency was going to hold Alibaba’s feet to the fire, and won’t hesitate to push the online retailer in case it fails to uphold its end of the agreement.

Alibaba already monitors the sales of recalled items

CPSC will start with a list of 15 items that are recalled in the United States, and will slowly expand the list. Negotiations for the deal began in November. Alibaba revealed last month that it spent more than $160 million since early 2013 to identify and prevent the sale of counterfeit goods on its platforms. The company already has a team to monitor the sales of banned items.

Earlier this week, Kaye had a talk with Craigslist CEO Jim Buckmaster about the steps the company could take to protect the safety of users. Kaye had earlier called Craigslist’s failure to prevent the sale of recalled products “morally irresponsible.”

Alibaba shares fell 0.32% to $96 in pre-market trading Friday.

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