Finalist: Staff of The Wall Street Journal

Just like tech companies that have struggled to tackle misinformation on their platforms, Amazon has proven unable or unwilling to effectively police third-party sellers on its site

By Alexandra Berzon, Shane Shifflett and Justin Scheck

Many of the millions of people who shop on Amazon.com see it as if it were an American big-box store, a retailer with goods deemed safe enough for customers.

In practice, Amazon has increasingly evolved like a flea market. It exercises limited oversight over items listed by millions of third-party sellers, many of them anonymous, many in China, some offering scant information.

A Wall Street Journal investigation found 4,152 items for sale on Amazon.com Inc.’s site that have been declared unsafe by federal agencies, are deceptively labeled or are banned by federal regulators—items that big-box retailers’ policies would bar from their shelves. Among those items, at least 2,000 listings for toys and medications lacked warnings about health risks to children.

The Journal identified at least 157 items for sale that Amazon had said it banned, including sleeping mats the Food and Drug Administration warns can suffocate infants. The Journal commissioned tests of 10 children’s products it bought on Amazon, many promoted as “Amazon’s Choice.” Four failed tests based on federal safety standards, according to the testing company, including one with lead levels that exceeded federal limits.

Of the 4,152 products the Journal identified, 46% were listed as shipping from Amazon warehouses.

After the Journal brought the listings to Amazon’s attention, 57% of the 4,152 listings had their wording altered or were taken down. Amazon said that it reviewed and addressed the listings the Journal provided and that company policies require all products to comply with laws and regulations.

“Safety is a top priority at Amazon,” says a spokeswoman. Amazon uses automated tools that scan hundreds of millions of items every few minutes to screen would-be sellers and block suspicious ones from registering and listing items, using the tools to block three billion items in 2018, she says.

“When a concern arises,” she says, “we move quickly to protect customers and work directly with sellers, brands, and government agencies.”

Amazon declined to make executives available for interviews.

Christy Stokes blames her son’s death on a fraudulently labeled helmet bought on Amazon. Albert Stokes trusted Amazon’s quality control, she says, when he picked a motorcycle helmet with an Atlanta Falcons logo for his girlfriend to buy for his 23rd birthday in 2014. It was listed on Amazon as certified by the U.S. Transportation Department.

On June 3, 2014, Mr. Stokes was riding his red Kawasaki in rural Missouri when a Ford Ranger pulled out. He crashed into it, and his helmet came off. A friend phoned his mother to alert her. “When I came up over the hill on the interstate,” she says, “there was my son laid out on the highway.”

The coroner declared Mr. Stokes dead at the scene, a day before he and his girlfriend planned to find out their unborn baby’s gender. His mother sued Amazon, claiming the helmet was flawed. Amazon in court argued it didn’t sell the helmet but merely listed it on the seller’s behalf. It settled for $5,000 without admitting liability. It declined to comment on the case.

The National Highway Traffic Safety Administration said last month that the helmet wasn’t DOT compliant and that it had been recalled. It was still listed, and as DOT compliant, last month until the Journal inquired about it, after which Amazon took it down.

Within two weeks of Amazon’s removing or altering the first problematic listings the Journal identified, at least 130 items with the same policy violations reappeared, some sold by the same vendors previously identified by the Journal under different listings. Amazon said it then “removed these items and refined our tools to prevent them from being offered in our store.”

“There are bad actors that attempt to evade our systems,” Amazon said of products in violation of its policies that appear on the site, adding that “should one ever slip through, we work quickly to take action on the seller and protect customers.”

Platform control

Amazon’s struggle to police its site adds to the mounting evidence that America’s tech giants have lost control of their massive platforms—or decline to control them. This is emerging as among the companies’ biggest challenges.

Amazon, Facebook Inc., Twitter Inc., Alphabet Inc.’s YouTube and others are under scrutiny over how they wield their dominance in booming internet markets while their forums are used for fraudulent listings, offensive content and misinformation—including some spread during America’s 2016 elections.

Some lawmakers have begun calling for more regulation of the companies. Courts have begun challenging the firms’ interpretation of their legal protections, and regulators are scrutinizing them. Tech companies say they aren’t illegal monopolies and have generally pledged to address issues such as misinformation and privacy.

Amazon’s legal defense in safety disputes over third-party sales is that it is not the seller and so can’t be responsible under state statutes that let consumers sue retailers. Amazon also says that, as a provider of an online forum, it is protected by the law—Section 230 of the Communications Decency Act of 1996—that shields internet platforms from liability for what others post there.

This is similar to a common stance taken by internet companies faced with complaints about content or services offered on their platforms. Courts and regulators have largely agreed—until recently.

Last month, the U.S. Court of Appeals for the Third Circuit held that a Pennsylvania customer could sue Amazon over an allegedly unsafe product. The court said Amazon could be considered a seller under Pennsylvania law, in part because the company had no vetting process to ensure that third-party sellers were accessible and available for consumers to sue if they were harmed by an item, leaving consumers with no recourse in many cases. The court also held Amazon had considerable control over third-party sellers and could prevent sales of unsafe items. Amazon has asked the appeals court to review the decision.

‘Trust us’

Last year, the Environmental Protection Agency fined Amazon for letting people sell unregistered pesticides. Amazon agreed, without admitting wrongdoing, to pay a fine and set up new systems to stop such sales. Earlier this year, Washington state’s attorney general and Amazon filed a settlement in state court over state allegations that the company allowed school products on the platform that contained lead and cadmium above federal and state limits. Amazon didn’t admit wrongdoing.

Amazon tells customers, on its payments site: “We want you to buy with confidence anytime you make a purchase on the Amazon.com website.”

On its site aimed at third-party sellers, it says customers “know and trust us, and that trust extends to you.”

Third-party sellers are crucial to Amazon because their sales have exploded—to nearly 60% of physical merchandise sales in 2018 from 30% a decade ago, Amazon says. The site had 2.5 million merchants with items for sale at the end of 2018, estimates e-commerce-intelligence firm Marketplace Pulse.

Amazon doesn’t make it easy for customers to see that many products aren’t sold by the company. Many third-party items the Journal examined were listed as Amazon Prime eligible and sold through the Fulfillment by Amazon program, which generally ships items from Amazon warehouses in Amazon-branded boxes. The actual seller’s name appeared only in small print on the listing page.

Customers “could end up in the part of the product pool where who knows where this came from,” says Bill Pease, a chief scientist at safety-labeling company UL LLC, who is working with large retailers on setting up new product-safety systems. “And most people don’t know that.”

Amazon’s overriding corporate philosophy of offering ever more options is clashing with internal efforts to make sure product listings won’t harm buyers, the Journal found in interviews with former employees and others close to Amazon’s safety practices, and from internal records.

The Amazon spokeswoman says: “Our mission is to be Earth’s most customer-centric company. We strive for that goal by building the best shopping experience for customers, with unbeatable prices, selection and convenience—but not at the expense of our customers’ safety and this insinuation is simply wrong.”

To test the effectiveness of Amazon’s safety practices, the Journal analyzed listings on Amazon between May and early August, and hired a federally certified testing company to examine certain items bought on Amazon. Among the findings:

•116 products were falsely listed as “FDA-approved” including four toys—the agency doesn’t approve toys—and 98 eyelash-growth serums that never undertook the drug-approval process to be marketed as approved.

•43 listings for oral benzocaine, a pain reliever, lacked advised FDA labels warning against use on children under 2.

•80 listings matched the description of infant sleeping wedges the FDA has warned can cause suffocation and Amazon has said it banned.

•52 listings were marketed as supplements with brand names the FDA and Justice Department have identified as containing illegally imported prescription drugs.

•1,412 electronics listings falsely claimed to be UL certified—indicating they met voluntary industry safety standards—or didn’t provide enough information to verify the claim.

•The Journal analyzed 3,644 toy listings for federally required choking-hazard warnings. Regulators don’t provide databases of toys requiring the warning, so the Journal compared the Amazon listings with the same toys on Target.com and found that 2,324, or 64%, of the Amazon listings lacked the warnings found on the Target listings.

•In addition to the 4,152 items, the Journal initially found 4,510 balloons lacking required choking-hazard warnings listed.

U.S. Public Interest Research Group, a consumer-advocacy organization, in 2018 reported that a large portion of Amazon balloon listings lacked the warning. That Amazon hasn’t fixed the problem “shows that Amazon has decided not to put safeguards in place to ensure that kids are protected from one of the largest choking hazards from toys,” says Adam Garber, who co-wrote the report. “You can’t tell me they can’t come up with a system to require companies to include the necessary hazard labels based on what they’re selling.”

Warnings were added to most listings and a small number were removed after the Journal sent Amazon a list of balloon listings that didn’t include the correct language.

Weeks later, the Journal identified an additional 2,208 balloon listings without choking hazard warnings; those, too, now have appropriate warnings or were taken down. Amazon declined to comment on the balloons.

Including the balloons, 83% of the 10,870 total listings the Journal presented to Amazon were taken down or altered. Amazon didn’t alter the UL listings. The Amazon spokeswoman says electronics are often rebranded by multiple different sellers that may not be searchable in UL’s database.

The Journal’s analysis didn’t include safety risks of counterfeit products, which some consumers have reported receiving through Amazon. Items disguised as name brands may contain dangerous materials or lack proper warning labels. Amazon says it “strictly prohibits counterfeit goods.”

‘Choice’ toys

Dozens of products the Journal identified as dangerous or mislabeled had the Amazon’s Choice designation, which many consumers take to be Amazon’s endorsement. The company’s website says Amazon’s Choice reflects a combination of ratings, pricing and shipping time.

One was the toy musical-instrument set Darice Taipalus bought her son in March when he was 16 months old, she says. The Texas database developer says she assumed everything on Amazon met safety standards, until the Journal contacted her.

The Amazon listing said the set was “made of high quality nontoxic material, safe and reliable for little children” and claimed approval from the FDA. Journal-commissioned testing showed the set’s xylophone contained nearly four times the lead the federal government allows in children’s products. According to the testing company, the set also failed tests based on federal requirements for determining sharp points.

“He’s a toddler,” Ms. Taipalus says. “Everything goes in his mouth.” She says she threw the set away after hearing the Journal’s testing results.

Amazon initially didn’t take the product down after the Journal informed it of the test results, saying a Chinese entity that goes by the name Ailuki had previously provided a test report showing there were no detectable lead levels. It subsequently took the set down in the U.S. and says it is asking Ailuki for more documentation.

Ailuki sent the Journal a test report it said it had commissioned that stated there were no detectable lead levels. It didn’t respond to further requests for comment.

Another musical-instrument set failing the Journal’s tests, made by a company calling itself Innocheer and listed as in China, likely contributed to a New York City child’s lead poisoning, according to city health officials. The city in May 2018 began tracking down contaminated products including the set bought on Amazon, a New York health-department spokesman says.

Subsequent testing showed the set’s bright-yellow maracas contained 411 times the lead legally allowed, health-department documents show. After a federal recall last fall, Amazon pulled the listing and notified customers of the recall, the company says. “We execute recalls as soon as we are aware of them,” it says.

The set later appeared online with red maracas, stating the instruments were lead-free. In the Journal-commissioned tests, conducted after the recall, the maracas didn’t contain lead but other instruments in the set failed sharp-point tests. Innocheer couldn’t be reached for comment. Amazon has taken the set down in the U.S., saying it is requesting additional compliance documentation.

Third-party strategy

In its early days, Amazon operated a lot like big-box stores, largely in direct control of its supply and distribution chains. Customers got products directly from Amazon or a known retail partner such as Toys “R” Us. In 2001, third-party sellers made up 6% of Amazon’s physical merchandise sales, company data show.

The same year, the company articulated a core philosophy that helped spur the growth of third-party sellers. According to published company histories, founder Jeff Bezos and other officials scribbled an image of a “virtuous cycle”: It depicted how third-party vendors would want to sell to Amazon’s customers and would add more products at less expensive prices, attracting even more customers and more sellers.

As smaller retailers joined Amazon’s marketplace, the company seemed unprepared to police them, some former employees say. In 2011, a team of three oversaw safety for the entire site, which essentially consisted of managing recalled products, say some of them, including Rachel Johnson Greer, a former employee who managed Amazon’s safety systems until 2015 and now advises third-party Amazon sellers.

The main enforcement effort on product safety was rudimentary and involved running an Excel spreadsheet script to identify products recalled by the consumer-safety commission and manually then remove them, Ms. Greer and the other former employees say.

Many risky products got through, and the third-party marketplace became “a giant disaster zone,” says Ms. Greer. “It was absolutely insane.” Ms. Greer says she worked initially with an engineer and legal intern to develop a machine-learning tool to automatically take down restricted products. It scanned third-party-item descriptions for certain keywords, growing smarter as the team refined what to target, she says.

The safety team grew rapidly alongside the artificial-intelligence tool, with hundreds of people across several departments and countries. But product volume was growing, and many products continued to slip through, she and other former employees say.

At one point in 2013, some Amazon employees began scanning randomly selected third-party products in Amazon warehouses for lead content, say people familiar with the tests. Around 10% of the products tested failed, one says. The failed products were purged, but higher-level employees decided not to expand the testing, fearing it would be unmanageable if applied to the entire marketplace, the people familiar with the tests say. Amazon declined to comment on the episode.

“Amazon will always default to allowing more stuff to be available to the customer,” says Ms. Greer. In 2017, she ordered baby products, children’s toys and food-related products from Amazon that came up high in search results but had false certification claims, such as claiming FDA approval, and sent them to federally certified laboratories for testing. She says that, at the time, she estimated 80% of Amazon’s third-party sellers didn’t comply with federal, state or industry safety and labeling standards and that the vast majority of the issues were not having proper warnings and labels.

The Amazon spokeswoman calls Ms. Greer’s analysis “wrong and baseless” and says Amazon doesn’t sacrifice product safety in favor of selection. Ms. Greer says she stands by her analysis.

Amazon doesn’t do its own testing for product safety, according to documents the company filed in the Washington-state case. It does sometimes randomly buy certain high-end jewelry and send it out for testing to make sure third-party sellers aren’t peddling fake jewels, according to its publicly posted procedures. The Amazon spokeswoman says the jewelry spot tests are one of various programs the company does to “ensure customers receive the compliant products they expect.”

Amazon openly encourages anyone to sign up and start selling right away unless something in their registration or initial posting triggers the automated tools to flag them for more vetting.

In contrast, Walmart Inc. requires all products on store shelves be tested at approved labs, company documents show. Target says it requires suppliers of store-branded products to undergo additional inspections and testing beyond government standards.

Target and Walmart have created online marketplaces for third parties to sell directly to consumers. Target’s site, launched earlier this year with several sellers, is invitation-only. Walmart had around 22,000 sellers at the end of 2018, according to Marketplace Pulse. It requires an application that can take days for approval, and only a fraction of merchants applying make it through the vetting, says a person familiar with Walmart’s policy.

The Journal didn’t analyze products sold on Walmart and Target shelves or websites.

Magnet problem

A persistent problem for Amazon has been magnetic toys. Amazon and other big retailers banned sets of high-powered magnetic balls and cubes in 2012 after reports of thousands of children ending up hospitalized for swallowing them. Inside the body, the magnets can snap together and rupture abdominal tissue. The Consumer Product Safety Commission, or CPSC, has called them a “substantial product hazard.” Retailers still selling them generally allow them on store shelves only when marketed for adults.

Amazon’s policy said it prohibited “Products that include large quantities of magnetic balls or cubes, such as:” then listed eight brands. But knockoffs of the toys slipped through. The Journal found nearly 80 that appeared to match listings of the banned toys. About 40 of these listings were removed after the Journal contacted Amazon. Roughly 30 still remain that appear to match descriptions of prohibited products originally described on Amazon’s compliance pages.

Danny Puskarcik, who worked in product compliance at Amazon until early this year, says the magnets issue “was an extremely high priority,” seen as so serious that employees sought to enforce the policy very broadly. “The idea was to catch all powerful magnets,” he says. “Get rid of them. Destroy them.”

Creed Cameron, an Amazon manager for restricted products until 2017 and no longer at the company, says his team never found a good way to handle the magnet problem. Taking down the cheap, mass-manufactured products, he says, was “like trying to stop a bullet.”

After the Journal contacted Amazon about the knockoffs, the spokeswoman said that despite the wording of the policy—and the experiences described by the two former workers—the company intended to ban only the specific magnet-toy brands listed. Other magnet toys, including ones identical to the banned toys but sold under different names, were supposed to be allowed on the site, she said.

Amazon then changed the wording of the policy to ban the specific brands. The spokeswoman declined to comment on why Amazon has banned some brands but not others.

Amazon’s policy of banning only some brand-name products “makes no sense,” says Alan Schoem, a lawyer who has represented one of the banned brands and is a former CPSC official. “You’d think they’d want to be a little more careful.”

When Amazon does take down listings for banned items, the same products sometimes reappear under new accounts, the Journal found.

The EPA has announced a ban starting in November on consumer products containing methylene chloride, which the agency has linked to cancer and sudden death from toxic fumes. Amazon late last year said it would purge paint strippers using the chemical by March, but there were still dozens of them for sale then. When an advocacy group named Safer Chemicals, Healthy Families identified the products, Amazon took them down.

More such paint strippers popped up and were removed only after the group flagged them. “They clearly need to do a better job of setting up a system to police their supply chain,” says Mike Schade, a campaign director for the nonprofit. Amazon declined to comment on the paint strippers.

Neither Amazon nor federal regulators have made public attempts to measure the scale of the site’s safety issues, but at least one state has done so for one product category. This year, the Washington state attorney general’s office examined school supplies and found 35 out of 41 Amazon products tested contained amounts of cadmium, lead or both above federal or state limits, state documents show.

Discount stores that the state studied also had a similar ratio of problem products, while other retailers in the test didn’t, says Kelly Wood, one of the state attorneys involved in the case.

After the state notified Amazon, the company conducted tests in a warehouse and found that four of 45 tested items had hazardous levels of lead or cadmium, including a unicorn necklace whose pendant-backing makeup was 35% cadmium, more than 8,500 times the legal limit in Washington, state documents show.

Washington state asked Amazon to provide documentation for the children’s products showing they had passed safety tests outlined in the company’s internal policies. Amazon told the state the company may request certificates for certain high-risk products, and that any seller is required to provide them when asked, but that it didn’t have any for the products identified by the state.

Even after Amazon, prompted by the state, went to retailers and asked them directly for the compliance documents and certifications, it didn’t receive documents back, the company said, according to documents obtained by the state.

“They weren’t really checking that these products were tested prior to putting them up on their website,” says Mr. Wood.

The Amazon spokeswoman says the company “worked with our selling partners to verify that the school supplies and children’s jewelry in our store are safe and enhanced our processes to verify the safety of these products moving forward. We welcome ongoing collaboration with the Attorney General and other agencies to promote customer safety.”

Mr. Stokes’s helmet

Amazon customers the Journal contacted who bought products that didn’t meet safety standards say they had assumed they were buying from Amazon directly or that everything on the website passed safety standards.

That includes Ms. Stokes, whose son died in the motorcycle accident wearing a helmet falsely claiming DOT compliance. She sued Amazon, the Ford Ranger driver and Ivolution, the Corona, Calif., company that sold the helmet, in Missouri state court, alleging that the truck driver was at fault for the accident and that the helmet had a faulty strap. The driver settled. The case against Amazon and Ivolution was moved to federal court in the Western District of Missouri.

Ivolution owner Ricky Zhang in court statements said another man had bought 103 helmets from him and sold them on Amazon and that Ms. Stokes didn’t prove the accident was related to the helmet. His company bought products from China to resell on Amazon, according to the legal documents. It was so small he couldn’t afford legal representation, he said in court.

The judge ordered Ivolution to pay $1.9 million to Mr. Stokes’s family, which says the company hasn’t done so. Mr. Zhang didn’t respond to requests for comment.

Amazon attorney Monte Clithero says the company, which settled the case for $5,000, denies any responsibility. “Basically, a third party was using Amazon as a bulletin board to advertise the product and sell.”

On July 1, 2019, the National Highway Traffic Safety Administration said Ivolution had recalled the helmet—it said 4,071 were on the market or sold. An agency test in April 2018 had found the helmet cracked open on contact.

On July 29, the helmet model and eight other helmets that failed federal safety tests in 2018 were still listed for sale on Amazon. Amazon removed them after the Journal pointed them out.

A week later, the Journal found a listing for the helmet model Mr. Stokes wore was listed on Amazon by a different vendor, labeled as out of stock. There were also listings for four other helmets Amazon had taken down after the Journal notified it that the products had failed federal safety tests.

Amazon then took those down.

— Lisa Schwartz and Fanfan Wang contributed to this article.

—Additional design and development by Angela Calderon, Joel Eastwood, Jessica Kuronen, and Allison Pasek

Dumpster divers say it’s easy to list discarded toys, electronics and books on the retailer’s platform. So we decided to try.

By Khadeeja Safdar, Shane Shifflett and Denise Blostein

Just about anyone can open a store on Amazon.com and sell just about anything. Just ask the dumpster divers.

These are among the dedicated cadre of sellers on Amazon who say they sort through other people’s rejects, including directly from the trash, clean them up and list them on Amazon.com Inc.’s platform. Many post their hunting accounts on YouTube.

They are an elusive lot. Many The Wall Street Journal contacted wouldn’t give details about their listings, said they stopped selling dumpster finds or no longer listed them as new, didn’t respond to inquiries or stopped communicating. Some said they feared Amazon would close their stores.

So the Journal set out to test whether these claims were true. Reporters went dumpster diving in several New Jersey towns and retrieved dozens of discards from the trash including a stencil set, scrapbook paper and a sealed jar of Trader Joe’s lemon curd.

The Journal set up a store on Amazon to see if it could list some of its salvaged goods for sale as new.

It turned out to be easy.

Amazon’s stated rules didn’t explicitly prohibit items salvaged from the trash when the Journal disclosed the existence of its store to the company last month. The rules required that most goods be new and noted that sellers could offer used books and electronics, among other things, if they identified them as such.

“Sellers are responsible for meeting Amazon’s high bar for product quality,” an Amazon spokeswoman said. Examples the Journal presented to Amazon of dumpster-sourced listings “are isolated incidents,” she said. “We are investigating and will take appropriate action against the bad actors involved.”

She declined to comment on the Journal’s store.

Late last week, Amazon said it updated its policy to explicitly prohibit selling items taken from the trash, adding to its list of unacceptable items any “intended for destruction or disposal or otherwise designated as unsellable by the manufacturer or a supplier, vendor, or retailer.”

Control issues

Amazon exerts limited control over its third-party marketplace, which connects buyers with millions of merchants around the world. The company has said it isn’t liable for what these merchants sell, saying in court cases Amazon itself isn’t the one selling the products listed by third parties.

“We had an internal saying: Unless the product’s on fire when we receive it, we would accept anything,” said James Thomson, who helped oversee the Fulfillment By Amazon program—under which Amazon handles logistics for third-party sellers—before leaving in 2013. He is now a consultant to brands with Amazon accounts. In his view, he said, “Ultimately consumers are the police of the platform.”

The Amazon spokeswoman said Mr. Thomson’s “statements are demonstrably false.” Mr. Thomson said he stood by his assertions.

Wade Coggins, near Beaverton, Ore., said he finds items to sell on Amazon and eBay in store clearance sections, abandoned storage units and dumpsters. He said he has salvaged cardboard boxes, bubble wrap and peanuts from trash bins to package his orders.

Blemishes need to be cleaned off, he said, adding that some people shrink-wrap items to make them look more legitimate. “When you send stuff in to Amazon,” he said, “it needs to look brand new.”

Mr. Coggins identified one Amazon store and said he had another that he declined to disclose. The Amazon spokeswoman said the company couldn’t find evidence of a second store.

To list items under Amazon Prime—the subscription service offering quick, free delivery—third-party sellers send them to an Amazon warehouse where the retailer handles packaging, delivery and returns. Shipping boxes or labels often include Amazon branding. Sellers can also ship directly to customers from their homes and warehouses, qualifying for a Prime designation if they enroll in a program called Seller Fulfilled Prime.

Amazon merchant David Gracy, 49, who among other things resells new merchandise purchased from stores and brand closeouts, said his business partner in 2016 salvaged items from dumpsters including a batch of humidifiers and keyboards in Austin, Texas. Mr. Gracy’s Amazon store sold such items for more than a year under Amazon Prime, he said. He said he hasn’t sold dumpster finds since then.

He said he wouldn’t be comfortable selling certain salvaged items, such as food, on the site, but “Amazon’s not going to ask ‘Where’d you get it from? Did you get it from a dumpster?’ ”

‘DJ Co’ opens shop

Amazon said it requires sellers to provide government-issued identification and uses a “system that analyzes hundreds of unique data points to identify potential risk” and “we proactively block suspicious businesses.”

The Journal applied to open an Amazon store in September by submitting a reporter’s driver’s license and bank statement. Two days later, “DJ Co” was open for business.

An email arrived declaring: “Welcome to Fulfillment by Amazon.” The Journal signed up for a $39.99-a-month account and paid additional fees, such as for storage.

Late one night several days before the store opened, reporters with flashlights and blue latex gloves visited Clifton, Clark and Paramus, N.J., scouring dumpsters behind outlets such as a Michaels craft store and a Trader Joe’s grocery.

The bins were a humid mess of broken glass and smashed boxes, a stench of rot in the air. Several products were in original packaging, some soiled with coffee grounds, moldy blackberries or juice from a bag of chicken thighs.

Among items the reporters retrieved were a stencil set, a sheet of scrapbook paper and the lemon curd. The curd jar showed an expiration date of May 2020.

The Journal cleaned and packed the three items—bubble-wrapping and taping the curd jar—and mailed them to an Amazon warehouse in Pennsylvania in September and October. The Journal completed Amazon’s documentation requirements by specifying the items’ universal product codes, the numbers next to bar codes on most products.

Amazon didn’t ask about the inventory’s origins or sell-by dates.

The Journal’s dumpster finds were soon up for sale with an Amazon Prime logo, available to millions of shoppers, including the listing for “Trader Joe’s Imported English Authentic Lemon Curd 10.5oz” at $12.00.

After a later dumpster dive, the Journal was able to go through almost all of the listing process with salvaged breath mints, sunflower seeds, marmalade, crispbread, fig fruit butter, olives, a headband and a Halloween mask—stopping just short of shipping them to the Amazon warehouse, which is required for an item to appear for purchase on the site.

To list a sunscreen lotion, Amazon asked for a safety-data sheet. Attempts to list a protein powder, a pea-powder dietary supplement and a face sheet mask—all from the dive—elicited a request from Amazon for proof of purchase.

A Trader Joe’s spokeswoman, Kenya Friend-Daniel, said the grocer doesn’t approve of its products’ sale on Amazon and that its policy is to discard an item only if it isn’t fit for sale. Michaels spokeswoman Mallory Smith said: “We do not approve of the sale of Michaels products by unauthorized third party sellers.”

Amazon urged speed over precision, penalizing workers who didn’t hit productivity requirements, he said. Workers sometimes changed expiration dates for expired products in the computer, he said, so they wouldn’t be expected to perform a complicated disposal process—a shortcut noted by several warehouse employees in a discussion reviewed by the Journal in a restricted Facebook group for Amazon workers.

The Amazon spokeswoman said workers have the authority to sideline unacceptable products and that Amazon employs “multiple checks and balances in the inventory and picking process to ensure quality control standards are upheld.” Regarding worker-productivity requirements, she said “performance is measured and evaluated over a long period of time.”

Jesse Durfee said he has used Amazon to sell toys, videogames, electronics and trinkets from dumpsters including bins behind Michaels and GameStop stores. The 26-year-old in Torrington, Conn., said one of his favorite places to find things to list on Amazon is his town dump. He said he lists his dumpster finds as used and declined to identify his storefront, saying he fears other sellers might try to sabotage him.

In a 2017 YouTube video, he tests out television remote controls he said he found in a dumpster and tells viewers they can wash off corroded battery compartments with baking soda and water.

He said he opened his Amazon store six years ago after realizing it was more lucrative to resell inventory than work as a photographer. “I started with dumpster diving because I had no money to buy inventory,” he said, and branched into buying at thrift stores and discount-store clearance sections for items to sell on Amazon.

“I’ll go to pawnshops, I’ll go dumpster diving,” he said. “I’m one of those people who does everything.”

Negative comments

Some sellers on Amazon’s internal discussion boards have voiced concerns about garbage showing up on the site. One, in a post titled “Dumpster Divers Overrunning Beauty Category,” wrote of items in bad condition that resulted in complaints directed at the poster and other sellers in the category.

The Amazon spokeswoman said the seller’s characterization of the category as being overrun “is wrong and baseless.”

To see if Amazon customers shared such concerns, the Journal analyzed about 45,000 comments posted on Amazon in 2018 and 2019. It found nearly 8,400 comments on 4,300 listings for foods, makeup and over-the-counter medications with keywords suggesting they were unsealed, expired, moldy, unnaturally sticky or problematic in some other way.

About 544 of the 4,300 products were promoted as Amazon’s Choice, which many consumers take to be the company’s endorsement. Amazon’s website says the label reflects a combination of factors such as ratings, pricing and shipping time.

Among the 4,300 listing the Journal reviewed, 241—including generic ibuprofen, Sun Chips and an Amazon’s Choice face lotion—had at least five reviews from different customers suggesting the item was used or expired.

One reviewer said lipstick arrived with no packaging, marred and mildewed. Five reviewers said they received a protein bar sprouting white fungus, one writing: “My daughter has eaten a handful of them and called me into the kitchen today to show me that there was MOLD on the bar she had eaten half of!!!!!!”

Last year, Eileen Anastassopoulos bought her son’s favorite grape-flavored applesauce from an Amazon third-party seller, she told the Journal. The squeezable packets had expired seven months before, said the 39-year-old mother, who left a review with a photo showing its November 2017 “best before” date to warn others.

Amazon sent a new shipment after she complained, she said, but “if I wasn’t a diligent person checking expiration dates I could have had an issue with my son.” The Journal couldn’t identify her seller but did find another seller of the same applesauce that received recent reviews alleging the sale of expired or damaged products.

The Amazon spokeswoman said the company investigates product reviews and takes corrective actions as needed. Of those the Journal identified, she said, “the product reviews where customers expressed issues with quality represents less than 0.01% of orders on those products.”

She said Amazon uses “a combination of artificial intelligence and manual systems to monitor for product quality and safety concerns in our store” and that if a product fails its guidelines, Amazon will “take appropriate action against the seller, which may include removal of their account.”

Amazon customers don’t always have total control over whom they buy from. A default setting in an Amazon account known as “commingling” can mean customers think they are buying from one merchant but end up getting the product from another—if, say, another seller’s product is in a warehouse closer to the buyer.

The spokeswoman said the process “allows Amazon to efficiently process, fulfill, and ship customer orders.”

Returns for sale

One class of third-party Amazon merchants buys inventory from liquidation companies, which sell bathtub-sized cardboard boxes on pallets full of products typically removed from big retailers’ shelves or warehouses, or full of returned goods. The products often arrive in the boxes uninspected and piled loose.

Heather Hooks, 40, said she has sold thousands of goods on Amazon from liquidators, mostly returns such as Lego sets, Tylenol pills, Hanes undergarments and Maybelline makeup. She estimated that about 75% of the products she buys out of liquidation are flawless and said she sells those on Amazon as new. The rest she sells on eBay and other sites, she said, labeling their condition.

Sellers say eBay has fewer restrictions on what can be listed as used. An eBay Inc. spokesperson said the site requires sellers to describe listings accurately, including whether items are used or damaged.

Ms. Hooks, who lives near St. Louis, said she makes more than $20,000 a year on Amazon selling this way and profits from a YouTube account, where she chronicles her business. Her storefront boasts hundreds of items, including toys, candy, toiletries, makeup and clothes. Amazon temporarily banned her from selling about three years ago, she said, because a brand complained she was listing its product as an unauthorized seller.

“I’m extremely picky now,” she said, saying she inspects each product to see if seals are broken or parts are missing. “Even if it has a ding on the box, I won’t send it.”

Of dumpster diving, she said: “That’s not my scene,” but “some people think liquidation is a little bit like that.”

On Amazon’s internal discussion board, one seller complained Amazon itself was reselling returned goods. This seller, who lists earrings, wrote in a May 2018 post that Amazon said it sometimes repackages products that customers have returned and mixes them back with inventory if warehouse workers approve. This merchant wrote of asking Amazon to stop reselling the merchant’s returned earrings but said the company justified it by saying the items were inspected at the warehouse.

“I hope one day I don’t have to panic,” the merchant wrote, “every time someone returns a pair of earrings in fear that Amazon will ship it out to the next person, along with any unhygienic diseases that may be attached to it.”

The Amazon spokeswoman said the company subjects all returns to a rigorous inspection “and all items reintroduced to inventory as new meet the same high standards as what a vendor or seller sends us directly.”

Some Amazon sellers said they buy discarded Amazon returns from liquidators and then relist them on Amazon. Amazon said it works with liquidators and that items complying with its policies are allowed for sale on Amazon.

The lemon curd

The three dumpster finds the Journal sent to the Amazon warehouse stayed on the DJ Co store for only a few seconds—the Journal immediately bought them so nobody else could.

All came back with a return address of an Amazon warehouse in Kentucky. The stencil set was bent. The paper arrived in good condition. Both arrived in Amazon packaging, not the packaging in which the Journal sent them.

The Trader Joe’s lemon curd came back in the box the Journal packaged it in to send to Amazon, still in the same bubble wrap and tape. The only thing Amazon appeared to have done was to affix its own shipping label atop the Journal’s.

DJ Co remained open until late last week, though not stocked.

On Friday, Amazon said it updated its policy to ban items from the trash. The spokeswoman said: “Sourcing items from the trash has always been inconsistent with Amazon’s high expectations of its sellers and prohibited by the Seller Code of Conduct on Amazon, which requires that sellers act fairly and honestly. We’ve updated our policy to more explicitly prohibit this type of behavior.” Asked how it will enforce the new rule, Amazon said it expanded its existing verification efforts, including increased documentation spot checks.

On Saturday, the Journal received an email from Amazon:

“Your account has been closed due to violations of our Seller Policies and Seller Code of Conduct. Specifically, we have learned that your have offered products that were sourced in a manner that does not meet Amazon’s high bar for customer trust and safety.”

—Jim Oberman and Lisa Schwartz contributed to this article.

—Product photographs by F. Martin Ramin/The Wall Street Journal, styling by Anne Cardenas

After a deadly 2013 factory collapse, most big U.S. apparel companies agreed to steer clear of dangerous plants in Bangladesh. Not Amazon.

By Justin Scheck, Jon Emont and Alexandra Berzon

DHAKA, Bangladesh—After a 2013 factory collapse killed more than 1,100 people in Bangladesh, most of the biggest U.S. apparel retailers joined safety-monitoring groups that required them to stop selling clothing from factories that violated certain safety standards.

Amazon.com Inc. didn’t join.

According to a Wall Street Journal investigation, the site today offers a steady stream of clothing from dozens of Bangladeshi factories that most leading retailers have said are too dangerous to allow into their supply chains.

A yellow gingham toddler top embroidered with flowers was among those clothes, listed on Amazon for $4.99 by a New York City retailer. The Journal traced the top to a factory in Chittagong, Bangladesh, that has no fire alarms and where doors are of a type managers can lock and keep workers in. A laborer at the factory, 18-year-old Nasreen Begum, said she spends 12-hour days there stitching shirts with 300 others. “You’re trapped inside until the time you complete the orders,” she said.

The Journal found other apparel on Amazon made in Bangladeshi factories whose owners have refused to fix safety problems identified by two safety-monitoring groups, such as crumbling buildings, broken alarms, and missing sprinklers and fire barriers. U.S. retailers such as Walmart Inc., Target Corp., Costco Wholesale Corp. and Gap Inc. have agreed to honor bans imposed by those two groups, to have their supply chains inspected and to disclose to the groups the factories that supply them.

The Journal found clothing including pants, sweaters, clerical robes, fishnet body stockings and other items, that originate from blacklisted factories and end up on Amazon.

Amazon has become a major player in apparel, a force with which other retailers must compete in a market where customers often seek the lowest price. It may have overtaken Walmart last year as America’s No. 1 clothing seller. Amazon dominates the rapidly growing online-retail market.

Here, as throughout Amazon’s business, the giant retailer runs its platform without many of the constraints that big U.S. companies apply to their products and stores, sometimes in ways that can put customers and workers in danger.

That is particularly true for Amazon’s third-party marketplace, made up of millions of individual sellers. Many are anonymous and aren’t subject to some of the oversight Amazon applies to its own brands and to items it sells directly.

The Journal in August revealed that thousands of products listed on Amazon are deemed unsafe by federal agencies, are deceptively labeled or are banned by regulators—items that many retailers’ policies bar. They included items such as unsafe children’s toys and recalled motorcycle helmets. Amazon took down some of those listings after the Journal’s reporting. Several members of Congress called on Amazon to better police its site.

An Amazon spokeswoman said at the time that “safety is a top priority” and that the company uses automated tools to weed out suspicious sellers.

Asked about its practices in clothing, the company removed some listings the Journal identified from banned Bangladeshi factories, including the yellow top, and said it was reviewing the others. A spokesman said Amazon inspects factories that supply its own brands to ensure they are in line with international safety standards similar to those of the safety-monitoring groups. The Journal didn’t find Amazon-owned brands made in banned factories.

Of the banned factories the Journal found with apparel on Amazon, some of the clothing items they produced were for sale by Amazon directly. Most—more than two-thirds—were being sold by third-party sellers using Amazon’s marketplace platform.

The spokesman said Amazon doesn’t inspect factories making clothing that it buys from wholesalers or that comes from third-party sellers. Instead, it expects those wholesalers and sellers to adhere to the same safety standards.

Amazon’s agreement with third-party sellers doesn’t explicitly say they must meet those standards.

“If we become aware that a product is from a factory that may not meet our supply chain standards,” the spokesman said, “we will remove the product from our store.”

The company’s control of its site is under scrutiny by some Congress members who are calling for more regulation of the company. Other U.S. technology giants that have lost control of their platforms—or decline to control them—face similar pressures. Amazon consumer chief Jeff Wilke, at the WSJ Tech Live conference Tuesday, said Amazon might need to spend billions of dollars to police products on its site to preserve customer trust.

Ethical lines aren’t clear-cut in the global garment-supply chain, which remains a murky network in which clothes pass from factories through traders around the world. Even signatories to one of the safety groups have offered items that come from unsafe factories.

Some garments the Journal found on Amazon were also listed on Walmart.com, mostly by third parties on the online marketplace Walmart developed after Amazon’s third-party market grew rapidly. The Journal found garments from one banned factory listed online by Target.

Walmart spokeswoman Marilee McInnis said the company was looking into the items for sale directly by Walmart and talking to the companies that supplied them. Target removed its listing after the Journal pointed it out, and declined to comment.

Meanwhile, Sears and Kmart, whose previous parent company was a member of a safety-monitoring group, have resumed importing from banned factories, shipping records show. A new postbankruptcy ownership structure under financier Edward Lampert didn’t continue as a member of monitoring groups. A spokesman for Sears and Kmart didn’t respond to questions about the company’s sourcing policies.

Blacklisted pants

Clothing sellers formed two safety groups in Bangladesh after the 2013 Rana Plaza collapse. The factory complex, which manufactured clothing for several Western brands, killed more than 1,100 when it fell and injured many more, some of whom were stuck under the rubble for days. One worker the Journal interviewed a year after the accident survived by sawing off her arm. Together, the groups have blacklisted more than 300 factories.

One group, Amsterdam-based Accord on Fire and Building Safety in Bangladesh, has mostly European members. The other, Dhaka-based Alliance for Bangladesh Worker Safety, attracted mainly U.S. members, such as Walmart, Target, Costco, Gap and Nordstrom Inc. Alliance members were expected to abide by Accord’s blacklist.

Alliance transferred operations this year to a group with less stringent rules, Dhaka-based Nirapon, which neither issues a blacklist nor publicizes the safety performance of factories members use. MD Yazdani, communications manager for Nirapon, said it facilitates third-party inspections for factories that make clothes for members and that Nirapon sends out its own inspectors to review a portion of those.

As of 2017, 11 retailers accounted for more than 50% of U.S. clothing sales, Morgan Stanley reported last year. Of those, three didn’t join the safety-monitoring groups—T.J. Maxx parent TJX Companies Inc., Ross Stores Inc. and Amazon. TJX said it orders very little clothing from Bangladesh. Ross Stores didn’t respond to requests for comment.

To trace how Amazon lists clothes from factories the monitoring groups banned, the Journal used records from a global-shipping-records database, information on Amazon.com, factory-inspection reports from the safety-monitoring groups and interviews with dozens of people in the New York and Bangladesh garment industries.

The Journal reviewed shipping records from Panjiva, a division of S&P Global Inc. that collects them, for 122 banned factories that appeared to be still in operation. Since being banned, 67 of those had sold to wholesalers whose wares appear on Amazon, records show.

The Journal was able to link products on Amazon to codes or product descriptions in shipments from 51 of those factories. Of those 51 factories, 16 shipped items that were sold by Amazon directly and 35 shipped items that were listed on Amazon.com by third parties.

Of the 122 factories, 33 had sold to wholesalers whose wares were on Walmart.com. The Journal linked specific listings on Walmart.com to codes or product descriptions of 22 factories. Items from seven of those factories were sold directly by Walmart; the rest were sold by third parties on Walmart’s marketplace, which numbers about 22,000 sellers.

Many listings on Amazon.com and Walmart.com don’t show product codes, nor do many bills of lading in shipping records, making them difficult to trace. And the Journal could count records only for shipments sent directly to the U.S., not those traveling first through other countries.

Among clothes the Journal found on Amazon from banned factories were pants from Klarion Designs Ltd., a Chittagong maker that Accord blacklisted in 2017 after the group waited two years for the owner to remove locking doors and fix damaged walls. The Journal in August found 11 styles of Klarion-made pants on Amazon.com for $18.95 to $44.95, some sold directly by Amazon and others by third-party sellers.

One shipment of women’s cargo pants left Chittagong on the ship CMA CGM Elbe, shipping records show, landing on Aug. 14, 2018, at Oakland, Calif., for wholesaler Amtai International Ltd. Amtai sold the pants to Amazon, which then listed them directly under the brand name White Sierra, according to shipping records and Amazon listings.

Amtai has imported 15 tons of pants from Klarion since the Accord ban. The records don’t show how many tons were later listed online. Klarion’s owners didn’t respond to requests for comment. Amtai Vice President Larry Tsui declined to comment. Amazon took down the listings after being contacted by the Journal.

Accord and Alliance documentation says they inspected many of Bangladesh’s thousands of garment factories, usually giving them a year or more to address problems before a ban. Of the 1,794 inspected factories detailed on Accord’s online database, its records show it has declared about 8% ineligible.

Companies joining Alliance and Accord agreed to legally binding conditions. They included the requirement that the companies abandon factories that didn’t meet the groups’ standards and agree to enforcement by an independent arbitrator.

Under Accord’s terms, two unions brought two fashion companies to arbitration and scored settlements in 2017 and 2018, one of them valued at about $2.3 million; the companies’ names weren’t disclosed. The unions claimed the companies weren’t doing enough to ensure factory safety.

Fashion foray

Amazon began advertising itself as a place to buy clothing in 2012, pitching its Amazon Fashion clothing site. By 2017, its share of U.S. clothing sales was 7.9%, just behind No. 1 Walmart, estimated Morgan Stanley analysts, up from less than 1% in 2006. They predicted last year that Amazon was on track to pass Walmart as No. 1.

Much clothing on Amazon comes from Bangladesh, among the world’s largest clothing exporters. Amazon publicizes little information about its supply chain, offers few details about how it enforces safety and doesn’t require third-party sellers to disclose the factories where products come from. Many listings don’t identify the country where the products were made, so it typically isn’t possible for consumers to tell if sellers are buying wares from Bangladesh.

Many of Amazon’s most popular listings for clothes are marketed under little-known brand names, according to an analysis of the best-selling women’s clothes on the site by data firm Marketplace Pulse. That best-selling list changes often: An average of 3.5 new brands, many of them obscure, appear on the list every day. The list of best-sellers recently has included such anonymous-sounding brands as XMYIFOR, from a seller based in China, Marketplace Pulse said. XMYIFOR in an email confirmed it is a China-based brand.

On Tuesday afternoon, 85% of those listings were from little-known brands.

Where Amazon itself is an item’s seller, the company lays out general requirements for its suppliers in a webpage titled “Responsible Sourcing”: Factories need alarms, emergency plans and other measures to prevent workplace deaths. The Amazon spokesman said it works with suppliers to make sure they “are continuing to make progress under the Accord’s requirements,” adding that it has conducted more than 150 audits since last year of Bangladeshi factories supplying Amazon-owned brands.

Amazon doesn’t have any explicit rules governing factory conditions spelled out in its standard contracts with third-party sellers beyond an agreement that no item be produced by a child or a convict or through forced labor, and that any entity in the supply chain follow local labor laws. A link on the website with guidelines for third-party sellers directs them to a document that explains there are specific supply-chain rules for Amazon’s suppliers.

“The standards require selling partners to consistently monitor and enforce those standards in their own operations and supply chain,” the Amazon spokesman said.

Amazon’s early push in apparel came at about the time Western companies were pulling out of Bangladesh or joining Alliance or Accord in response to public outrage over the 2013 Rana Plaza collapse and a 2012 factory fire near Dhaka that killed more than 100 workers.

“It was a hard time for factories,” said Nazrul Islam, a director of the Bangladesh Garment Manufacturers and Exporters Association. Alliance in 2017 suspended his factory, Zisas Fashion Ltd., for violations including cracked walls and failing to install a water supply for firefighting. Mr. Islam denies it was suspended, despite Alliance documents showing it was.

Many owners reinforced sagging beams, unblocked fire exits and installed alarms. Others closed factories. Some, like Mr. Islam, kept going without bringing their factories up to the safety group’s standards. Among those listing Mr. Islam’s clothing is Amazon.

Amazon had decided against joining the safety-monitoring groups early on because it wasn’t yet buying directly from Bangladeshi factories, some former employees said. More important, it didn’t feel obligated to police the suppliers of its third-party sellers.

Mr. Islam in July said 95% of his production now goes to a New York company, Amerex Group LLC, including fleece-lined “London Fog” jackets it had listed on Amazon for $20 to $40 this spring. According to shipping records, Mr. Islam’s factory has sent 25 shipments to Amerex since the 2017 ban, including seven this year, as recently as August.

Amerex President Ira Ganger said his company has no further production planned for Zisas. Amazon removed the listings after being contacted by the Journal.

Alliance banned HKC Apparels Ltd.’s Chittagong factory in 2017 after giving it three years to fix sagging structural beams in the seven-story building, and to add sprinklers and special walls to prevent a fire in one location from igniting the rest of the space. Rakibul Alam Chowdhury, chairman of the RDM group, HKC’s parent company, said he didn’t own the building and that while he made some safety improvements, the landlord wasn’t willing to make changes Alliance demanded.

Shipping records show that HKC’s clothing shipments to Alliance members stopped but that business continued to come in from clients including Stormtech Performance Apparel, a British Columbia seller of ski jackets and other outdoor gear that didn't join Alliance.

The Journal found a Stormtech jacket for sale on Amazon this spring that Mr. Chowdhury said matched a jacket HKC’s factory made. He said he stopped shipping to Stormtech in 2017. Records show that, in 2018, Stormtech imported about 23 tons of anoraks, polo shirts and other clothes valued at more than $480,000 from HKC.

Stormtech eventually told Mr. Chowdhury it would no longer use his plant, for violating company standards, said Mr. Chowdhury and Stormtech’s supply-chain chief, Georgeta Navodarszky.

Shannon Ward, Stormtech’s director of marketing, said her company started buying from HKC before it was banned and stopped buying from it last year, adding, “We strongly support efforts to improve safety for workers at our supplier’s facilities, and will continue to ensure that we maintain the highest standards for our suppliers.”

Amazon took down the jacket listing after being contacted by the Journal.

The yellow gingham toddler’s top on Amazon came from Riverside Apparels, a Chittagong factory where a supervisor, Mohammed Bahar, said conditions are definitely worse than at the safety-monitoring groups’ approved factories.

“In a noncompliant factory,” he said, “you don’t get paid on time, you don’t get a bonus like other factory workers and you don’t get medical leave.”

Riverside owner Md. Golam Kibria referred questions about the factory to its director, his son Rifat Bin Kibria, who said he was aware of the problems noted in the ban—among them, columns that are too weak to hold up the building. Since joining the company within the past two years after completing a business degree in London, he said, he has been trying to shift production to a new factory.

The Journal traced the toddler top, through shipping records and interviews in Bangladesh and the U.S., to a New York City wholesaler, Trendset Originals LLC. Trendset sold the shirt to a local store, Cookie’s, which listed it on Amazon and Walmart. The Journal also found two other shirt styles from Riverside on Amazon.

Trendset spokesman Josh Nass said, “The company has always operated in good faith with the highest ethical standards. It has only dealt with the factory in question through a conduit who it faults for not having performed proper due diligence.” The company has stopped doing business with the middleman moving forward, he said.

Cookie’s Vice President Al Falack said: “Each vendor that we work with pledges to us that they only use factories that are safe and humane. The allegation that one of our vendors is using a factory known to be unsafe is appalling to us and we will be taking action on this vendor. The vendor has re-pledged to us that they will not be using any unsafe factories moving forward.”

Amazon has been expanding its efforts to encourage listings directly from suppliers in Bangladesh, some factory directors said, with company representatives attending seminars to teach factory owners how to sell on the website without middlemen.

Md. Belayet Hossain, managing director at Fabin Apparels Ltd. in the outskirts of Dhaka, said Amazon wrote in 2016—the year Accord blacklisted his factory—asking what products Fabin made and whether he would be interested in selling on the site. Mr. Hossain said he has struggled to survive since the Accord ban by trying to sell T-shirts to companies that ignore the bans. Still, he turned Amazon down: “I don’t know how to operate that kind of business.”

Faiaz Rahman, director of Urmi Group—a Bangladeshi manufacturing group with factories that aren’t blacklisted—said that when he began selling activewear in the U.S. directly on Amazon in February, Amazon didn’t ask for safety-certification information. Amazon did ask for the information, though, when he joined a separate program to sell clothing in a partnership with Amazon that gives Amazon the right to buy the brand.

“Amazon is just the platform,” he said. “Anyone can sell anything.”

—Karan Singh, Shane Shifflett, Raffaele Huang and Sky Chadde contributed to this article.

Courts are starting to challenge the idea that big tech companies are mere platforms connecting buyers and sellers

By Alexandra Berzon

On Jan. 9, 2016, Nashville teen Matthew Fox was upstairs playing videogames while his parents, Brian and Megan Fox, were out getting supplies for his birthday party.

Downstairs in the living room the self-balancing scooter Matthew had received for Christmas caught fire.

Flames tore through the red brick house. Matthew’s older sister, Hailey, jumped out a second-story window and crashed into their father, who had just returned home. Mr. Fox climbed a ladder to reach his son and was knocked off when Matthew jumped out of a window.

The three escaped with a twisted ankle for Hailey, broken bones in the elbow for Mr. Fox and cuts, stitches and nerve damage for Matthew, according to family statements in court depositions.

The Wall Street Journal obtained government investigation reports for that and 56 other hoverboard fires, explosions and similar issues from the end of 2015 to the first few months of 2016, household disasters that were a bleak feature of that Christmas season. Together the fires caused at least $2.3 million in property damage and a handful of minor injuries.

Almost half of the hoverboards, including the Foxes’, were purchased on Amazon—the most by far of any retailer during that period.

What followed were at least 17 lawsuits against Amazon.com Inc. from insurance companies and families, including the Foxes, relating to problems with hoverboards largely shipped from unknown factories in China. Around half of those legal battles are still active.

The cases are testing a longtime argument made by Amazon and other internet companies, one that underpins the modern tech industry. We are just operating a platform that connects buyers and sellers, the argument goes. It’s up to the sellers who use our site to make sure that they meet proper safety standards.

A similar argument is made by ride-sharing companies, online babysitting services and social-media platforms.

“It’s a national consumer question that needs to be settled,” said Darren Penn, an attorney in Atlanta representing a man named Irvin Love who got severe burns on his face, head, shoulders and arm when a hoverboard he bought on Amazon burned up. “You are providing a service to consumers. You have to do it in a reasonable and nonnegligent manner.”

The issue comes at a critical moment for the web retailer, as it faces rising concerns from legislators and the public about the sale of dangerous, banned and counterfeit products.

The hoverboard cases have produced a trove of documents, including thousands of pages of depositions by Amazon executives and internal emails. Those documents, along with government investigation records and interviews with former employees and other experts, show that Amazon took steps to stem the safety problems, including by temporarily removing all listings after reports of dangers emerged and by sending emails to previous buyers noting safety issues. That prompted praise from regulators.

The inside look nonetheless shows the vulnerability in the vast scale and relatively anonymous structure of Amazon’s platform. Amazon had around 60,000 listings of different hoverboards at various times in 2015, one of the company’s safety employees said in a deposition, from thousands of sellers, many offering no indication of where the products came from.

An Amazon spokeswoman said that with limited data at the time “and with our customers in mind,” the company acted. She called the Journal’s reporting on what had occurred misleading. “Amazon acted on feedback from customers to proactively stop sales, notify customers about safety concerns, and offer full refunds,” she said, and noted that it prohibits counterfeit products.

In court cases, Amazon has argued it isn’t a seller and isn’t liable under some state product-safety laws.

Hoverboards from a range of manufacturers and retailers were involved in fires, government investigators found, and were later recalled due to a risk of overheating batteries. One problem early on was that the hoverboards were being made and shipped on a large scale before testing standards had been established. In many of the Amazon fire-related incidents, government investigators couldn’t figure out who made or imported the devices—information that helps facilitate safety measures such as recalls.

Most of the big box stores that sold hoverboards then, such as Target and Walmart, listed them from among a handful of companies, such as the Indiana-based Swagway LLC. Swagway voluntarily recalled its boards in July 2016.

Amazon has faced other problems with fast-moving phenomena, with hundreds or thousands of knockoffs offered by anonymous manufacturers and sellers: fidget spinners that consumer advocates found had high lead content, solar eclipse-viewing glasses that didn’t meet safety standards and high-powered magnetic toys that were found by the Consumer Product Safety Commission to be a danger to children, according to former Amazon employees.

Elliot Kaye, a commissioner at the Consumer Product Safety Commission, said hoverboards were the harbinger. The combination of the flea-market-style model coupled with a new product, “made hoverboards unique and certainly was an indication of a change and a new challenge that I’m still not sure the federal government is equipped to address,” Mr. Kaye said.

The first complaints

Customers began complaining to Amazon about explosions, fire, heat, smoke or similar hoverboard concerns as far back as April 2015, with more concerns coming that August, September and October, according to an internal investigation report viewed by the Journal. Amazon’s own safety systems didn’t flag the problem at first.

It was only after hearing news reports in November that Damon Jones, then manager of product safety at the e-retailer, began overseeing an investigation that involved using a software tool called Heartbeat to scour customer reviews for keywords suggesting certain dangers, such as fires and explosions, according to court records.

Initially the tools didn’t pick up any evident problems, according to court records. The tools were designed to look for dangers in a specific product listing, not a broad category of products.

After further research, including talking to other Amazon employees and with government officials investigating incidents that had been reported to them separately, the safety team began to see that fire and explosion issues had shown up in some consumer complaints, the documents show.

One of Mr. Jones’ discoveries was that many of the boards were arriving to customers in boxes that said “Smart Balance Wheel.” Many had the model number 650X245X230, making them seem like they were all the same brand and model. But in fact the boards inside weren’t identical, and the manufacturers were a mystery in most cases.

Government investigators were rarely able to figure out who was making the boards as well. Their investigations were initiated by consumers, news reports and fire departments, according to the reports; none was first described as being reported to the government by Amazon itself.

One successful search unfolded like a detective novel. The board, bought on Amazon, had caught fire on Nov. 20 in a bedroom in Torrance, Calif., causing one man to be taken to the hospital for smoke inhalation and minor burns, according to investigation reports.

A CPSC investigator named Kathy Bellenfant first tried to find the company listed on the box. That address turned out to be a UPS store in Baldwin Park, Calif., with no record of the seller. After repeated calls to UPS’s 800 number, Ms. Bellenfant turned up an address for the store that shipped the board: a nondescript office building in suburban Los Angeles.

The owner of the store, Tsz Sum Tam, said that according to the manufacturer, “They do not feel the scooter is defective,” Ms. Bellenfant wrote. Mr. Tam eventually handed over documentation showing the hoverboard was made by a factory in China called Guangzhou Fordigi International Co.

According to shipping records, the factory sent the hoverboards exclusively to One Stop Electronic and an affiliated company, which sold them on Amazon.

Mr. Tam couldn’t be reached for comment. Guangzhou Fordigi didn’t respond to requests for comment.

The issues also seemed spread out among various listings, with no one or two sellers being the only problem.

“It certainly was outside our experience at Amazon,” Mr. Jones said in a 2017 legal deposition. “The fact that it was spread across so many manufacturers, so many brands, so many components, there—there was no precedent for this kind of event in the product safety community.”

Amazon ultimately discovered that 17 customers had complaints in the U.S. concerning hoverboard fire and explosion risks, while five similar complaints covered other products with large lithium batteries, such as electric scooters, according to internal investigation documents.

Late on Dec. 10, the company’s head of retail in North America, Doug Herrington, sent an urgent note to Jeff Wilke, Amazon’s head of consumer products, according to court documents: The company was about to take the unusual step of temporarily removing all hoverboards.

“We are concerned that these reports might be indicative of a safety issue of these products across Chinese manufacturing,” Mr. Herrington wrote, noting that 245,000 hoverboards had been sold on the site in the previous 30 days. He noted that at least a quarter of those hadn’t been delivered yet, and that many of those that had been delivered likely hadn’t been opened yet because they were holiday gifts.

He added there wasn’t enough information to issue a recall of the products already sold, but they would give charging and riding tips to buyers in “a non-alarmist way.”

Mr. Wilke responded, “Wow. Tough decision, but the right one. Please keep me posted. Let’s make sure we assume our email will be headline news.”

Amazon’s letter to consumers, sent Dec. 12, made no mention of fires. It told consumers there had been news reports of safety issues and said they could contact customer service to initiate a return if they wanted.

“With only 17 isolated, unverified complaints across thousands of hover board products and brands, we messaged customers to provide factual, informative, ‘non-alarmist’ guidance,” the Amazon spokeswoman said. “It would have been irresponsible to incite ‘alarm’ or panic based on such limited data.”

Helen Walter, who had bought one as a Christmas present in 2015 for her grandson in Kentucky, said as part of a court filing she didn’t remember getting the letter. She did recall in the filing that soon after Dec. 12, the company that had sold her the hoverboard sent an email through Amazon reassuring her the product was safe, according to court records.

“We have sold thousands of them all over the world, we never hear any safety issue from our clients so far,” a person identified as Icy wrote on behalf of the Amazon seller Cool5Pix.

More than a year later, the hoverboard went up in flames.

Cool5Pix is no longer listed as a seller on Amazon and couldn’t be reached for comment.

About $41.1 million was refunded to customers by the end of January—about 19% of all the boards sold on the site. Amazon removed 13,100 listings from 4,900 sellers, more than half from China, according to an internal company report. A few weeks later the company reinstated just 173 listings from 11 sellers that had provided additional certification documents.

Executives at the company also began working on procedures for recalling and issuing refunds to customers, along with other new safety processes, according to internal documents.

Many in the product safety world praised Amazon’s actions at the time. Mr. Kaye, who was then chairman of the CPSC, said in a January written statement he wanted to “commend Amazon for voluntarily stepping up, providing a free remedy and putting customer safety first.” He encouraged other retailers to stop selling boards and issue refunds.

The actions, however, didn’t stop many of the boards that had come in through Amazon’s platform from remaining in customer homes.

On Christmas day, Amazon’s Mr. Jones said he periodically checked customer reviews: He noticed complaints of smoke, burning smells and sparks, but no fires, documents show.

In February 2016, the CPSC issued an open letter to hoverboard manufacturers and retailers telling them that any board not tested to the UL safety standards, which had just come out, was defective. That effectively meant that all hoverboards on the market were problematic. Amazon again delisted hoverboards for a period.

It took another six months before official recall notices for specific models went out through the CPSC. The commission is involved in overseeing recalls, but the notices are generally made voluntarily by manufacturers, importers or sellers. That is difficult when those entities are hard to find or outside the U.S. None of the recall notices mentioned the hoverboards listed on Amazon that had 28 fire-related safety mishaps investigated by the CPSC.

Hoverboard fire issues continued to come up at the CPSC as some of the problems they saw shifted more to other internet retailers, according to people familiar with investigations. The CPSC has reported more than 200 incidents after the time period studied by the Journal. A CPSC spokesman said the agency continues to investigate hoverboard fires.

Amazon rules now require sellers to apply in advance to sell hoverboards and submit documentation for testing to UL certification. The Journal found that most of the current listings don’t contain enough information for consumers to verify that certification.

In an analysis of listings on the site in November, the Journal identified around 3,000 hoverboards for sale by 631 different sellers. Of the listings, 489 claimed to be UL certified. Just 97—about 20% of the listings—disclosed basic information, such as the name of the manufacturer, needed to verify the certifications.

The suits

For years, internet giants such as Amazon, Facebook Inc., Twitter Inc. and Alphabet Inc.’s YouTube have said that they aren’t responsible for what happens on their platforms, frequently citing a provision of the 1996 Communications Decency Act that says internet providers aren’t responsible for what people say on their sites. Courts have often agreed.

In product-safety suits against Amazon, some have argued that its central role in sales makes it like a bricks-and-mortar store, accountable for the safety of what is on its shelves under certain state laws. Amazon has said it isn’t a seller, and therefore isn’t responsible under those laws.

Recent court decisions have challenged that idea. Over the summer, a federal appeals court in a case not involving hoverboards said that a customer could sue Amazon for providing an unsafe product under state liability laws. Amazon appealed and the larger court agreed to reconsider it, with a hearing scheduled for next year. Some of the hoverboard cases were on hold awaiting the outcome, but are now moving forward again.

Several other hoverboard lawsuits, including the case from Mr. Love, argued that Amazon was negligent for listing a product it knew could catch on fire. Amazon responded that Mr. Love’s case hadn’t presented enough evidence that Amazon knew about the fires before the sale on Nov. 22.

After one court dismissed Mr. Love’s case, the Court of Appeals for the 11th Circuit said he could continue trying to make his case.

In the Fox family’s case, Megan Fox purchased the hoverboard for her son from a seller named W-Deals on Amazon. The listing said little about the company or where the board was made, like a lot of the listings she and her husband had looked at.

“When we bought this, we believed we were buying it from Amazon,” Mr. Fox said.

The Foxes’ hoverboard arrived in a “Smart Balance Wheel” box from China in time for Christmas.

After the Jan. 9 fire, the house was uninhabitable and most of their possessions were destroyed. The family would not rebuild.

The Foxes sued W2M Trading Corp., the company Amazon said was behind W-Deals, as well as Amazon. Kevin Ma, who was named as being the registered agent for W2M in court filings, didn’t respond to any of the Fox family’s attempts to serve him court papers.

Five other hoverboards from W-Deals had also gone up in flames, according to CPSC investigation reports and court documents in the Fox case. An email from W-Deals in February 2016 sent through the Amazon Marketplace told consumers to “dispose of the item effective immediately” and “Use at your own risk.”

The Journal couldn’t reach Mr. Ma.

Later, an engineer hired by the Foxes examined their hoverboard’s scorched remains and a new version of the same board, and concluded the battery likely caused the fire, a determination Amazon didn’t dispute. The battery had been advertised as Samsung but was actually made by a company in China called HOPcell, the examiner found.

Reached by phone, a HOPcell representative said, “It’s nonsense.”

The family said in its lawsuit against Amazon that the e-retailer had violated state product liability laws by selling an unsafe product. The court disagreed, contending that Amazon didn’t have enough control over the product to be considered the seller.

The family also argued that Amazon had assumed a duty to warn the Foxes about the dangers of the hoverboard. Amazon was negligent because it omitted the extent of its knowledge about the fires in its Dec. 12 letter to customers, the family argued.

That argument was also initially rejected by a federal-district court, but the Court of Appeals for the 6th Circuit in June said that the Foxes could move forward with trying to make that claim.

After the fire, the Fox family learned that the friends who recommended the W-Deals board had also seen their hoverboard catch fire. The friends hadn’t thought to mention it because they didn’t know it was part of a pattern, said Mr. Fox’s attorney, Steve Anderson.

“They didn’t think it was that big a deal,” Mr. Anderson said. “They thought it was isolated.”

—Shane Shifflett, Lisa Schwartz and Fanfan Wang contributed to this article.

The retailer attaches the badge to some items with safety concerns, that make false claims or whose listings appear to have been manipulated

By Shane Shifflett, Alexandra Berzon and Dana Mattioli

Americans searching for last-minute Christmas gifts on Amazon.com will get lots of results that include “Amazon’s Choice” products. Many shoppers will assume that is a dependable stamp of approval.

It isn’t.

Amazon attaches the badge to countless legitimate listings, but also to products regulators have raised safety concerns about, that make false claims or whose listings appear to have been manipulated by sellers to get the endorsement.

Amazon sometimes gives the badge to items that violate its own policies. One is the energy supplement Redline Microburst, which calls itself a “fat burner” and which last week carried an Amazon’s Choice designation, even though Amazon rules explicitly prohibited sales of Redline-brand products.

Amazon has awarded the badges in recent months to a sexual-enhancement drink the Food and Drug Administration said contained Viagra, which is a prescription-only medication, and to five cellphone chargers claiming Apple Inc. certification that weren’t certified brands.

Amazon discloses little about the mechanics behind its Choice badge. Algorithms make most of the decisions, some former Amazon executives said. An Amazon executive in a September letter to U.S. senators said it uses “tools, including algorithms.” An Amazon spokeswoman declined to comment on the algorithms, saying the company considers product popularity, availability, customer reviews, pricing and other factors.

Sellers say they covet the badge because it can boost sales. For merchants marketing low-price knockoffs and illicit products, it offers a sheen of quality.

The spokeswoman said Amazon doesn’t tolerate policy violations such as fake reviews, counterfeits and unsafe products, and will remove Amazon’s Choice badges for products “that may not meet our high bar.” Amazon said it reviewed and addressed the problematic items identified by The Wall Street Journal. It updated or removed some of them.

Amazon’s website had listed Redline among prohibited brands of dietary supplements. After the Journal began inquiring about the Redline products’ Choice status, Amazon updated its list of prohibited products to include only specific Redline-branded supplements. Microburst is no longer among the banned items.

An Amazon’s Choice badge appeared in October on another Redline product, Xtreme, which the label said contained N-methyltyramine. The FDA includes that substance in an advisory list of ingredients it says it is still studying but has determined may not be legal to put in dietary supplements based on a preliminary evaluation. The Xtreme listing with the Amazon’s Choice badge was taken down after the Journal pointed it out to Amazon. There were Xtreme listings without the badge on Amazon on Sunday.

Jack Owoc, chief executive of Redline-products maker Vital Pharmaceuticals Inc., based in Florida, said the company is removing the questionable ingredient from future products, which are sold on Amazon only by other merchants.

To get a better picture of what gets the Amazon’s Choice badge, the Journal between August and December looked at 54,400 listings that included top listings from among 10 of Amazon’s most-popular categories—clothing, electronics and supplements among them—as well as results of spot checks that searched for brand names and prohibited items.

Of those, 27,100 proved to be Amazon’s Choice items, most with four-star-or-better ratings. The label appeared even more often for products such as supplements in the sports-nutrition category: 84% of about 1,000 listings with four-star-or-better ratings earned the badge.

Among findings from the 27,100 Amazon’s Choice listings:

* The badge favored Amazon’s own products. The AmazonBasics brand had the most Amazon’s Choice badges, 540, of any brand identified by the Journal.

* The Journal identified dozens of products that fail to meet safety standards, banned items, and listings falsely claiming official safety certification. A children’s musical instrument claiming FDA approval was Amazon’s Choice for customers searching for “noisy toys for 2 year old,” although the FDA doesn’t approve toys.

* Amazon’s Choice items came up when using some search terms for controlled substances such as steroids and marijuana products. A search for “psilocybin,” a hallucinogenic illegal in the U.S., offered “smart shrooms” with the badge.

* Nearly 1,600 listings showed signs of being manipulated by sellers attempting to obtain the badges—appearing to have tricked Amazon’s algorithm by promoting keywords that were highly specific, were misspelled to capture customers’ mistyping or contained brand names of other items.

Amazon launched Choice in 2015 so customers could shop through voice-activated devices such as its Amazon Echo speaker, which at the time didn’t have a screen for buyers to see listings.

The company chose “Choice” because it thought it wouldn’t imply as much backing as “Amazon Recommends,” said a former executive involved in the decision, adding: “We chose it carefully to try to signal that this is a great product, but this is not something that we endorse.”

Amazon developed an algorithm to determine its Choice assignments based on specific keywords. A customer could state “toothpaste,” say, and the speaker could add the Amazon’s Choice result to the shopping cart.

Amazon’s Choice status is valuable to sellers because it can quickly garner a 25% bump or more in sales, said Brandon Young, a Florida-based Amazon seller who said he sells toys and other products and who teaches classes on Amazon selling. Many merchants pore over Amazon’s sales and search data to figure out how to game the Choice status, say Amazon sellers and consultants who advise them.

“Amazon’s Choice is just free advertising,” said Ilia Belov, a dietary supplement-seller based in Austin, Texas.

A big reason “Amazon’s Choice” gets onto problem products is that an industry of sellers, consultants and software developers has sprung up to help game the algorithm, say sellers and consultants.

In one tactic, sellers send links in social-media messages to consumers urging them to click and make a purchase, sometimes offering reimbursements. Those links are associated with keywords that aim to trick Amazon’s algorithm into thinking the product is more popular than it is and can help result in an Amazon’s Choice badge, sellers and consultants say.

Some sellers urge consumers to post high ratings, a factor in the badge math. The Journal ordered HempBri capsules, whose labels say they contain “hemp extract” and another supplement sometimes used to treat arthritis. The Amazon’s Choice product arrived with a card directing the buyer to a Facebook chat bot that asked if the buyer liked it. After the Journal replied affirmatively, the bot offered to put money in the buyer’s PayPal account if the buyer wrote a review.

The Amazon spokeswoman said the company is “relentless in our efforts to protect the integrity of reviews” and has prevented millions of attempts to leave inauthentic reviews. She didn’t address questions about the HempBri capsules, which were still listed as Amazon’s Choice on Sunday.

The capsules were one of 10 listings—among the 27,100 Amazon’s Choice products—that implied they had an ingredient not allowed by Amazon or that used information that could mislead customers into thinking they included such ingredients, such as photos of marijuana plants or marketing testimonials that mentioned the banned ingredient. These products are listed for as much as $100 an ounce with promises to alleviate pain, anxiety and stress—claims and price points often associated with cannabidiol, or CBD, which is banned by Amazon. The more-common hempseed oil often sells for under $1 an ounce.

“It’s a shame because consumers just don’t know how to tell the difference between these products,” said Erica Stark, executive director of the National Hemp Association. The Journal couldn’t identify the company behind HempBri.

Amber Naturalz, a Tooele, Utah, pet-products maker, this summer learned that a counterfeit of one of its herbal supplements had the Amazon’s Choice badge. Terri Sutherland, an employee at the company, said the fake’s seller undercut the legitimate listing’s price, driving orders to the illicit seller—which, she speculates, helped get the badge.

Ms. Sutherland ordered the fake and enlisted a chemist to test it. The ingredients, she said, were completely different from the authentic product’s.

The counterfeit was removed from the site after she notified Amazon.

“My concern,” she said, “was people buying things on Amazon that can be ingested and it isn’t the right product.”

The e-commerce platform has included banned, unsafe, mislabeled products. One reason: It wooed China’s manufacturers to sell directly to the U.S.

By Jon Emont

It looked like Amazon.com Inc.’s yearslong quest to build a shopping business in China was a bust in July when it folded a big part of its local business.

In fact, Amazon’s China business is bigger than ever. That is because it has aggressively recruited Chinese manufacturers and merchants to sell to consumers outside the country. And these sellers, in turn, represent a high proportion of problem listings found on the site, according to a Wall Street Journal investigation.

The Journal earlier this year uncovered 10,870 items for sale between May and August that have been declared unsafe by federal agencies, are deceptively labeled, lacked federally-required warnings, or are banned by federal regulators. Amazon said it investigated the items, and some listings were taken down after the Journal’s reporting.

Of 1,934 sellers whose addresses could be determined, 54% were based in China, according to a Journal analysis of data from research firm Marketplace Pulse.

Amazon’s China recruiting is one reason why its platform increasingly resembles an unruly online flea market. A new product listing is uploaded to Amazon from China every 1/50th of a second, according to slides its officials showed a December conference in the industrial port city of Ningbo.

Chinese factories are squeezing profit margins for middlemen who sell on Amazon’s third-party platform. Some U.S. sellers fear the next step will be to cut them out entirely.

Tony Sagar began noticing the China effect around 2015. His company, Down Under Bedding in Mississauga, Ontario, had sold goose-down duvets on Amazon since 2014—these days, for $699 for a queen-size version. Then Chinese competitors hit, listing goose-down duvets for sometimes a sixth his price. He bought one and had it tested: Inside was inexpensive duck down.

The Journal in October bought a duvet from the same Amazon seller claiming “100% Fill With Goose Down” and had it tested. The result matched Mr. Sagar’s: duck feathers.

“They’re claiming they’re selling a $500-$700 duvet based on false specifications, so people say, ‘$120, it’s a good deal!’ ” Mr. Sagar said. “Amazon is making a direct push for these factories in China.”

In response to this article, an Amazon spokesman said, “Bad actors make up a tiny fraction of activity in our store and, like honest sellers, can come from every corner of the world. Regardless of where they are based, we work hard to stop bad actors before they can impact the shopping or selling experience in our store.”

Amazon said it took enforcement action on the duvet seller and that its products were no longer for sale on the site. The seller’s listings appeared to be gone from Amazon’s U.S. site as of last week.

Mr. Sagar’s discovery came as Amazon was expanding a campaign it started around 2013 urging Chinese businesses to sell directly to consumers abroad. An Amazon sales director, Alicia Liu, at a 2017 conference told Chinese business people she was leading a team in China, drawing on her previous experience cutting out middlemen in Walmart Inc.’s supply chain.

“We help factories directly open accounts on Amazon and sell to U.S. consumers directly,” a video shows her telling them. “This is our value.”

A wave of Chinese merchants have joined Amazon’s millions of third-party sellers worldwide, who collectively represent more than half of Amazon’s physical gross merchandise sales.

Among the 10,000 most-reviewed accounts on Amazon’s U.S. site whose locations could be determined in October, about 38% were in China, Marketplace Pulse calculates, compared with 25% three years ago.

The Amazon spokesman said 38% “is a significant exaggeration of the real percentage of the top ten thousand’’ and that the methodology is flawed, citing what it said were problems with the way in which the analysis used seller review counts to estimate the percentage. Marketplace Pulse said it stood by its analysis.

Site control

How Amazon exercises control of its site has come under scrutiny from some in Congress, where some lawmakers are calling for more regulation of the company. That is part of a growing backlash in Washington over how tech companies run their platforms.

Amazon’s third-party marketplace, which connects merchants and buyers around the world, is crucial to the company’s growth. At the same time, even though it has become a source of fake or dangerous goods, Amazon has denied it is liable for what’s sold there, saying in court cases that it neither makes nor sells the products in question.

In its annual Securities and Exchange Commission filing this year, Amazon disclosed for the first time that counterfeits and fraudulent products are a risk factor. It said Amazon may be “unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods,” among other issues.

Amazon said it recruits sellers in many countries and that these merchants are central to its goal of offering customers good selection at good prices. Amazon said it requires products to comply with applicable laws and regulations. It said that in 2018 it blocked more than three billion suspect listings for various forms of abuse.

Consumers and businesses with safety and intellectual-property grievances have found it hard to hold Chinese sellers accountable—in part because Amazon doesn’t require its sellers to provide their locations to the public on its U.S. site.

The Journal identified sellers as being in China from their pages on Amazon’s site in Mexico, where regulations require sellers to list their locations on Amazon—a method Marketplace Pulse also uses.

New sellers from China are hurting merchants that have built Amazon businesses offering products they import from Chinese factories, said Amazon seller Bernie Thompson. His Plugable Technologies in Redmond, Wash., lists electronics products made in China. Since about five years ago, Chinese manufacturers selling on Amazon have priced him out of some product categories, he said—some of them his own suppliers and others who game Amazon’s rating system, he said.

“Amazon is trying to disintermediate everyone they can, and get products as directly as possible to consumers,” he said. “In a way, they’re a perfect partner for China Incorporated to engage with to take them around the world.”

The Amazon spokesman said: “Independent retailers in the U.S. are enjoying record sales in our store.” Amazon said more than 75% of the 10,000 top sellers by gross sales in its U.S. store were America-based as of 2018 and that the company spends more recruiting U.S. sellers than sellers from any other location.

Global recruiting

In China over the past six years, Amazon has made its site more accessible to Chinese speakers, created special programs that address Chinese sellers’ logistical needs and sent

At the 2017 conference, Ms. Liu, who said she had spent over a decade purchasing for Walmart, told Chinese sellers that when she joined the industry in 2004, around 90% of her suppliers were trading companies and that by 2017, around 80% were the factories themselves. Ms. Liu said the same logic applied to Amazon, the video shows.

“Let’s cut out the middleman,” said Geoffrey Stewart, an Amazon employee in Shenzhen, at an April trade event in Hong Kong in a video the Journal viewed. “We think that will enhance margins for our manufacturing partners and it will delight customers.”

Amazon said Ms. Liu’s and Mr. Stewart’s comments didn’t mean Amazon was less committed to helping sellers everywhere. Ms. Liu, who no longer works at Amazon, didn’t respond to LinkedIn messages, and the Journal couldn’t determine where she now works. Amazon said Mr. Stewart wasn’t available for comment. Walmart declined to comment on Ms. Liu’s assertions.

Amazon seller Zhao Weiming said the site “is the most cost-effective way to sell into the United States.” The Guangzhou businessman experimented several years ago listing gadgets on Amazon before settling on cosmetics and essential oils, he said, establishing factories to produce them under the name Lagunamoon. He said his company earns $50 million a year on Amazon.

Listings for some popular Lagunamoon essential oils claimed they were U.S. Food and Drug Administration approved, until the Journal raised the matter with Amazon and Mr. Zhao in early November. An FDA spokesman said essential oils wouldn’t meet the agency’s definition of an approved product, although it was possible some component—a dye, say—might be approved.

Mr. Zhao said FDA requirements are complex and he didn’t want to use tens of thousands of words to explain.

Amazon said it was investigating the case and would take proper action. It said sellers are prohibited from listing products that improperly claim to be FDA cleared or FDA approved, or improperly include the FDA logo. At least one Lagunamoon essential-oil listing that cited FDA approval had that claim removed after inquiries from the Journal.

Concerns at Amazon about Chinese listings arose several years ago in its China team, which noticed that as local sellers flocked to the platform, it saw increasing patterns of fraud, counterfeits and unsafe products, said former Amazon employees in China.

Washington state’s attorney general’s office said Amazon agreed to pay $700,000 as part of a legally binding agreement after an investigation revealed dozens of products marketed toward children had excessive lead and cadmium. The products were made in China, the office said, some sold by China-based third parties. Amazon didn’t admit wrongdoing.

“Customer safety is Amazon’s top priority,” said the Amazon spokesman. “We work closely with our selling partners to verify that the school supplies and children’s jewelry in our store are safe.”

Bogus brushes

Cheap Chinese counterfeits drove Kevin Williams, a Utah seller of water-powered cleaning brushes on Amazon, to lay off six employees this year—most of his U.S. staff, he said. He and his co-founder developed their patented Brush Hero product, made in the U.S. and U.K., in 2015 after finding it difficult to clean their vehicles, selling them on Amazon for $34.99.

Poorly made copies began appearing in 2018 on Amazon, eventually listing for as low as $9.99, some claiming to be the Brush Hero brand, he said. Buyers, unaware they were fake, trashed Mr. Williams’s products on his Amazon page, he said. When he complained to Amazon, he said, it told him to order the alleged counterfeits and test them. Amazon removed brushes he proved counterfeit, he said, but it could take weeks for them to arrive for testing, and new counterfeits kept popping up.

He dropped prices to $19.99, which “pulled out the rug from us from a cash-flow perspective” he said. A retailer declined to give him a large contract. “He said, ‘What the heck, your Amazon reviews are terrible,’ ” said Mr. Williams, who calls his company “walking dead.”

Amazon said that it acted on infringement cases where Brush Hero provided adequate information and that it has introduced programs for sellers to fight counterfeits, including one called Project Zero that uses automation to scan Amazon stores and remove suspected counterfeits.

Counterfeits and inauthentic reviews “have all gone through the roof with the rise of Chinese sellers,” said Chris McCabe, an investigator for Amazon until 2012, now a consultant helping Amazon sellers counter illicit competition.

Inauthentic reviews for listings from China can trick Amazon’s algorithm into boosting products, people outside Amazon familiar with the activities said. A search for “travel pillows” in August presented products with names such as MLVOC offered by sellers whose names matched those of Amazon accounts registered in southern China.

The Journal ordered MLVOC-brand pillows from sellers named Corki and Kingstyle Supplies, and got gift cards offering a free pillow if the buyer emailed an address—the same address for both sellers. A “Gift card team” responded, asking the buyer to give a five-star review for which it promised an Amazon gift card. Of one MLVOC pillow’s roughly 2,000 reviews, about 86% have five stars.

Amazon policy forbids making inducements for positive reviews. Amazon said it investigated and took action, eventually reinstating Kingstyle and Corki. Amazon said in some cases it will reinstate seller accounts after violations if the sellers provide corrective action plans, though the accounts would be blocked after further infractions.

In response to a query sent to the email address given by Corki and Kingstyle, a respondent wrote: “I can’t share the company information.” The sellers didn’t respond to requests for comment sent through Amazon’s platform.

Travel-pillow seller Teri Mittelstadt, co-founder of HiGear Design Inc. in California, said counterfeits and review manipulation from China have hurt sales. Her patented Travelrest pillows, which attach to airline seats to prevent slipping, were among the top-selling travel pillows on Amazon for seven years starting in 2008, she said, but now rank in the 20s or lower.

“The person who gets hurt the most is the consumer who buys the product. They think they are buying a product with all these great reviews,” she said.

Amazon said Travelrest’s sales on Amazon have steadily grown year-to-year since 2015. Ms. Mittelstadt said her sales growth has slowed significantly over the past two years and that this year her sales are down on Amazon’s U.S. site.

Strategy shift

Starting in the mid-2000s, Amazon’s attempt to build an online retail business in China was thwarted by local competitors like Alibaba. Early this decade, it began experimenting with the new strategy, and employees “realized that global selling is much bigger” than selling in China, a former Amazon manager said.

At a Shenzhen trade fair in early 2013, no one had heard of Amazon, said Steven Chen, who says Amazon dispatched him to recruit Chinese sellers. He left Amazon in 2015 and operates an e-commerce consulting business.

Amazon employees distributed Chinese-language tutorials on opening Amazon accounts to prospective new sellers, people familiar with the company’s strategy said. Interns in Beijing phoned vendors on Chinese e-commerce sites to invite them to join Amazon.

Chinese sellers’ products often took weeks to ship across the Pacific and arrive at buyers’ addresses. So Amazon offered a logistics system, “Dragonboat,” which for a fee brought goods made in China and elsewhere to Amazon fulfillment centers in the U.S.

American buyers could receive purchases within 48 hours in Amazon boxes, said a former high-level Amazon China employee and a Chinese seller who used the service.

By 2015, Amazon’s website was functional for sellers in Mandarin. Its team responsible for signing up and assisting Chinese sellers expanded to 120 people in 2016, said the former high-level employee. Other employees built relationships with businesses such as Chinese logistics-services providers and translator services, asking them to encourage clients to establish Amazon accounts.

It is often hard to tell that an Amazon seller is based in China, as is the case with the Amazon page of Lagunamoon, the essential-oil and cosmetics provider. It shows no indication the products are Chinese and gives no store address. Lagunamoon’s Mr. Zhao said that is because the U.S. doesn’t require it.

Amazon seller Molson Hart in Texas is suing 73 sellers, many located in China, in Texas federal court, for trademark infringement on products like his Brain Flakes interlocking plastic disk set. He has been selling the Chinese-made toys on Amazon since 2014, and counterfeits started appearing in 2015, he said.

After he filed suit, he couldn’t hunt down the Chinese companies. “I know who did it,” he said, “but I can’t serve them.”

Amazon said it has worked closely with brands to support criminal referrals against counterfeiters in China and anticipates working with brands to jointly pursue litigation in the U.S. and China.

Amazon buyer Irvin R. Love Jr. of Georgia bought a hoverboard on Amazon in November 2015 that caught fire and burned down his home, according to a suit he filed February 2018 against Amazon, the seller and others, in Georgia federal court. In an amended complaint this year he alleged that Amazon was negligent for not removing the hoverboard from its website before Mr. Love’s purchase. Amazon argued in a legal filing that it doesn’t owe damages because it didn’t design, manufacture or sell the hoverboard.

Mr. Love also sued the seller, Panda Town, which his lawyer, Darren Penn, said appeared to be a Chinese company, based on sales information. Mr. Penn said that he can’t locate the seller and that Amazon declined to provide its location.

Cross-border e-commerce has made it harder to police unsafe products entering the U.S., he said. “When you had the traditional importer and customs and brokers—and all those procedures are followed—you provide a couple of layers of protection that you don’t when you’re talking about an internet market.” The case is in discovery, and Mr. Penn declined to make Mr. Love available for comment.

Amazon said it has provided information about the seller to the plaintiff, consistent with its policy on such matters. Panda Town doesn’t appear to list on Amazon anymore, and the Journal couldn’t locate a company by that name.

‘Not normal’

Product safety on Amazon and other online marketplaces isn’t assured, because Amazon doesn’t require all third-party sellers to test products to prove they are compliant with regulations, said Sebastien Breteau, chief executive of QIMA, an inspection, certification and audit company that is an Amazon vetted service provider.

“It’s not normal that a factory with 200 people manufacturing baby monitors in Dongguan can ship products directly to consumers in Minnesota or in Europe through a marketplace,” he said. “The day the regulator makes them responsible, then we’ll have proper compliance programs.”

Amazon said sellers create their own product listings and are required to comply with all relevant laws and regulations when listing items for sale in Amazon stores.

Mr. Thompson, the electronics seller, said Chinese factories have steadily pushed him out of lower-end goods such as USB cables, pricing at less than he can. The Chinese sellers often boost their product rankings by arranging large purchases of their own products and leaving positive reviews for themselves, he said—a tactic he said he learned about while attending an independent Amazon-seller event featuring a China-based sales consultant in Hong Kong several years ago.

He now counts on selling higher-end products like $199 docking stations for displays and charging electronic devices, he said, but “there really isn’t much upper end left for us.”

Amazon said competition is a part of business and some more-mature product categories can be particularly competitive. The spokesman said its goal is to quickly remove abusive reviews and that over the past month “over 99% of the reviews read by customers were authentic.”

Chinese sellers were seen as too valuable to give up, despite warning signs, a former Seattle-based Amazon employee said. “There were crazy things, hundreds of listings created every hour,” the person said, adding that when U.S. vendors complained, staff told them, “We don’t control third-party selection. It’s not us, it’s an open-end platform.”

Goose-down test

Mr. Sagar, the goose-down-duvet seller, said an employee posing as a customer last year contacted Rosecose, the Chinese seller of the down duvet on Amazon, offering proof its product was deceptively listed. A Rosecose representative apologized and said its suppliers could be to blame, offering to refund the lab-test costs, according to messages the Journal viewed.

The employee last year also sent an email to Amazon with the test results showing the duck down, he said. Rosecose kept listing duvets, Mr. Sagar said.

The Journal bought a duvet on Amazon from Rosecose in October and sent its own test results to Amazon late in the month. Early this month, Rosecose was still selling duvets on Amazon as “100% Fill With Goose Down,” including a king-size option listing for $129.99.

The Wall Street Journal verified Rosecose was based in China by visiting its page on Amazon’s Mexican site, which listed its location. Rosecose didn’t respond to inquiries sent through Amazon and no one picked up calls to a phone number associated with the brand.

Amazon said it took down Rosecose listings Nov. 4. They appeared to be gone from the U.S. site early last week, but some still appeared on Amazon’s Canada site until after the Journal pointed them out to the company.

—Shane Shifflett, Stella Yifan Xie and Lekai Liu contributed to this article.

—Illustration by Jessica Kuronen/WSJ