By: Sean McNulty
Online retailer Amazon will ship just about anything to your house – including foods like peanut butter, whey powder, cat food, sour patch kids, and beef jerky just to name a few. The Food and Drug Administration has taken notice and wants Amazon to register their fulfillment center in Lexington, Kentucky as a food facility subject to inspection and regulation. Amazon disagrees that they should have to do so.
Amazon versus the FDA – The Showdown of Epic Federal Registration
According to MarketWatch, federal records indicate that Amazon has left their Lexington warehouse unregistered for more than a decade. Federal inspectors have visited the facility repeatedly during that time, and the FDA sent Amazon a letter requesting that they voluntarily register their facility.
Amazon’s position is that they do not need to register because they are not in the business of making or processing food. Therefore, they claim they are not manufacturers of food. They argue that their business is a retail outlet akin to a grocery store, which would exempt them from federal registration. The FDA contends that Amazon is not selling food directly to customers, and therefore, is distinct from a grocery store. The FDA isn’t buying it.
In 2008, 2010, 2013, and 2017, the FDA made visits to the warehouse and requested that Amazon register the facility, according to Marketwatch. The untitled letter was sent after the 2008 visit. So far, FDA officials have opted against stronger regulatory action, and the warehouse remains unregistered.
The Food Safety and Modernization Act of 2011 sets out rules for who has to register with the federal Food and Drug Administration. The relevant bit from that long and complicated piece of legislation was excerpted by website The New Food Economy: it’s any “food facility” that’s “engaged in manufacturing, processing, packing, or holding food,” provided that they’re not selling that food directly to customers. If they’re a restaurant, farm, or grocery store that sells food directly to customers, then they are subject to a different set of regulations.
The FDA can take action against companies that don’t follow their rules, including revoking their right to sell and make goods. They do not have to take action, however, and often choose to let violators off the hook. The New Food Economy reports that almost one in four significant food safety violations saw no hard penalties from the FDA. In most cases, they issued warnings instead, asking companies to voluntarily clean up their act.
Given the FDA’s record, this makes a certain amount of sense – the agency is traditionally cautious about disrupting commerce with onerous regulations or retributive fines and is somewhat slower to impose new rules or enforce existing ones than comparable regulatory organizations like the European Union’s Food Safety Authority or Britain’s Food Standards Agency. Their reticence to act has raised fears about lax enforcement, however, and the United States Office of the Inspector General issued a report in 2017 that highlighted several cases of the FDA failing to follow through with severe violators.
A Failure to Pull a Known Contaminated and Recalled Product
That’s not to say that Amazon is a severe violator. But their record is not spotless. A 2017 report revealed that Amazon continued to sell potentially unsafe soy nut butter some six months after a federal recall – and a nationwide outbreak of E. coli O157:H7. The FDA traced an E. coli outbreak that sickened more than 30 people across twelve states back to the I.M. Healthy brand soynut butter and soynut butter coated granola. They ordered parent company The SoyNut Butter Company and its third party contractor Dixie Dew Products of Erlanger, Kentucky to recall that line of products on March 4th of 2017, along with several other foods that used soy as a peanut butter substitute. In this case, the federal government wasn’t shy about legal action. They suspended Dixie Dew Products’ food facility license on March 27 of last year, according to Food Dive. The SoyNut brand subsequently folded, filing for federal bankruptcy two months later. Dixie Dew Products remains unlicensed to make any food products at this time.
Amazon reportedly continued to sell I.M. Healthy soy butter on their website until they were publicly called out by reporters in September of 2017. And rightfully so. A food science professor at the University of California at Davis ordered and received a $50 shipment of the butter within 24 hours that Labor Day weekend. Amazon pulled the product from their website after reporters published their expose and the FDA started asking questions.
The sale of I.M. Healthy branded products months after a federal recall would appear to be in violation of Amazon’s stated recall policy. It may also be against the law. The 2008 Consumer Product Safety Improvement Act prohibits the sale or resale of recalled products.
So, What’s Next?
Amazon’s spats with the FDA have not deterred the company from expanding their foothold in the food distribution business. They acquired organic grocery chain Whole Foods for $13.7 billion dollars in June of 2017. That move sent stocks for competing chains like Walmart and Kroger tumbling. Brick and mortar grocery stores were already in tumult, according to TheStreet; mid-market pressures have led to the collapse of a number of grocery chains over the past several years. And their empire only continues to expand.
The online retail giant is not always at odds with the FDA, either. Some of the names of Amazon’s payroll have previously worked with the regulatory agency. Former FDA chief health informatics officer Taha Kass-Hout joined Amazon’s experimental products team in March of 2018, according to NBC News. He’ll be part of their secretive health care products division, which the company hasn’t said much about so far. They’re likely developing products to help consumers access their health records through the cloud. Apple and Google reportedly have similar initiatives in the pipeline. One source who spoke to NBC speculated that Kass-Hout might also help Amazon navigate various aspects of the regulatory process.