Product Liability for DTC Brands: When You're the Importer, You're the Manufacturer

Why Importing a Product Makes You the Manufacturer

Sourcing a product from an overseas factory and putting your brand name on it feels like retail. Under U.S. law, it functions like manufacturing. The moment you import a product and sell it into the American market, two independent bodies of law — tort doctrine and federal consumer safety regulation — treat you as though you built the thing yourself.

The doctrinal foundation is the apparent manufacturer rule, codified in the Restatement (Second) of Torts § 400: anyone who "puts out as his own product a chattel manufactured by another is subject to the same liability as though he were its manufacturer." Your private-label logo on the box is not just branding — it is a legal representation that you stand behind the product's safety. The Restatement (Third) of Torts: Products Liability § 1 extends that liability to any seller or distributor in the chain who puts a defective product into commerce, regardless of who fabricated it.

Federal regulators say the same thing explicitly. The Consumer Product Safety Commission's regulations at 16 CFR § 1009.3 state that an importer is "at least, in a strategic position to guarantee the safety of imported products" and assigns importers the same responsibilities as domestic manufacturers. When something goes wrong, the CPSC does not pursue the Shenzhen factory — it names the U.S. importer as the responsible party.

That is exactly what happened in 2026 when Airova recalled 191,390 Aroeve-brand air purifiers sold on Amazon, Temu, and TikTok Shop for overheating and fire risk. The CPSC named Airova — the U.S. importer — as the responsible party, not the Chinese factory that made the units. This outcome is the rule, not the exception: Consumer Federation of America data shows that 66% of the 376 CPSC recalls in 2025 involved products sourced from China, with 92% of those tied to major online platforms. The foreign factory is rarely reachable in a U.S. courtroom — which means if it cannot be served or is judgment-proof, you bear the full exposure alone.

The Three Defect Types and What Each Means for an Importer

Product liability claims against importers fall into three categories under the Restatement (Third) of Torts: Products Liability § 2. Each reaches you differently, but all three can reach you fully.

A manufacturing defect exists when a specific unit departs from the product's intended design — a bad weld, a contaminated batch, a missing safety component. Liability here is strict: it does not matter whether you exercised every possible precaution or never set foot in the factory. If the unit that left the supply chain was defective, you are on the hook as the importer who put it into commerce.

A design defect applies when the entire product line is flawed — when the foreseeable risks of harm could have been reduced by a reasonable alternative design. This is where white-label and private-label importers face a particularly sharp exposure: the apparent manufacturer doctrine means your brand name on the product makes you legally equivalent to the designer, even if you accepted the design wholesale from your overseas supplier and changed nothing. In Bilenky v. Ryobi Technologies (Virginia, 2016), Ryobi was held strictly liable for a lawn tractor bearing its name that was manufactured entirely by Husqvarna. Your situation — branding a product you did not design — maps directly onto that outcome.

A failure-to-warn defect (sometimes called a marketing defect) arises when foreseeable risks could have been reduced by adequate instructions or warnings on the product. Of the three categories, this one is the most within your control. Your packaging, your insert cards, your product listing copy, and your labeling are all things you author before the product reaches a customer — and courts look at all of them.

CPSC Reporting Obligations and the Cost of Getting Them Wrong

Discovering a safety problem with your product does not start a negotiation — it starts a clock. Under 15 U.S.C. § 2064(b), every manufacturer, importer, distributor, and retailer must immediately notify the CPSC when they obtain information that "reasonably supports the conclusion" that a product creates a substantial product hazard or an unreasonable risk of serious injury or death. The statute names importers explicitly.

What "immediately" means in practice is defined by 16 CFR § 1115.14: you have 24 hours from obtaining the information. The regulation is direct about what you cannot do with that time — you cannot wait to confirm the defect with certainty before reporting. An internal investigation is permitted, but it cannot run longer than 10 working days. If your quality team is still "gathering data" at day eleven, you are already in violation.

The penalties for delay are not theoretical. CPSC civil penalties reach $120,000 per knowing violation and cap at $17.15 million for a related series of violations. In its fiscal year 2023 enforcement cycle, the CPSC collected over $52 million in civil penalties — a 64% jump over the prior year. The agency is not levying nominal fines to make a point; it is scaling enforcement to the size of the harm delayed.

Two recent cases show exactly how this plays out. In November 2024, furniture company Bestar agreed to a $16.025 million civil penalty after the CPSC found it had documented 35 wall-bed incidents — including one death and 15 injuries — between 2014 and 2022 without reporting. In 2023, BJ's Wholesale Club paid $9 million after arguing it could rely on the product's manufacturer to handle reporting. The CPSC rejected that defense outright: your reporting obligation is independent, and it does not transfer to your supplier.

What Your Supplier Agreement Is Worth (and What It Isn't)

Most DTC founders assume their factory contract provides a backstop — if a product injures someone, the indemnification clause routes the liability back to the supplier. That assumption does not survive contact with how Chinese civil judgments actually work. Chinese courts and arbitrators typically limit damage awards to direct costs: a refund, a repair, or a replacement. They rarely enforce U.S. court judgments at all. The practical result is that your indemnification clause is a contractual right with no realistic enforcement mechanism behind it.

The insurance angle is equally hollow. Being named as an additional insured on your Chinese manufacturer's domestic product liability policy provides nothing — Chinese policies routinely exclude claims arising outside China. A U.S. customer injured by your product cannot recover under a policy that was never designed to cover that risk.

The fix is specific: require your manufacturer to carry product liability insurance issued by a U.S.-admitted carrier — one that is domiciled in the United States and financially capable of responding to a domestic claim — and require that policy to name your company as an additional insured. A Chinese domestic policy with your name on it is not a substitute.

Even a well-drafted contract with enforceable indemnification has a structural ceiling: it runs only between contracting parties. Supplier warranties and indemnification obligations do not affect an injured consumer's rights in tort. The plaintiff pursues you — the importer — directly, and the contract does not appear in that lawsuit except as a potential contribution claim you might bring later. Your contract is not a shield against the injured party; it is, at best, a mechanism to seek reimbursement after you have already been held liable.

That reframing changes how you should build your supply contracts. Inspection rights, quality control audit provisions, and compliance obligations tied to U.S. safety standards matter most not as leverage tools but as an evidentiary record of due diligence. Courts and juries look at what you did before the product reached a customer. A contract that documents your quality oversight creates a record that can reduce damages — or, in some cases, shift punitive exposure — even when it cannot redirect the underlying liability to your overseas supplier.

Insurance and Compliance: What a DTC Brand Needs

Standard commercial general liability (CGL) insurance covers bodily injury and property damage caused by your products after sale — but the baseline policy has two gaps that catch importers off guard. First, if you source from overseas, most standard admitted carriers (Travelers, Chubb, Hartford) will decline to write product liability coverage for imported goods at all. You will need to go to the Excess & Surplus (E&S) lines market, where annual premiums for imported product liability typically run $3,000–$15,000 or more depending on your product category and revenue, with recommended limits of $1 million to $5 million per occurrence.

Second, your CGL policy will not cover a recall. The sistership exclusion (ISO Exclusion N) is standard language in CGL forms that expressly removes coverage for withdrawal, recall, inspection, repair, replacement, and disposal costs when a product is pulled due to a known or suspected defect. Recall expenses — the logistics of pulling product from shelves, replacement costs, and crisis communications — require a separate product recall insurance policy. For a DTC brand that sells through Amazon, Shopify, or retail channels, a recall without that coverage means absorbing those costs out of pocket.

On the regulatory side, if you sell products for children, you carry a specific compliance obligation under the Consumer Product Safety Improvement Act (CPSIA). 15 U.S.C. § 2063(a) requires every importer to issue a Children's Product Certificate (CPC) — and as the importer, you are the responsible party for that certificate. The CPC requires third-party testing at a CPSC-accepted laboratory and, starting in 2026, eFiling with Customs and Border Protection (CBP) at the time of import. Non-children's products require a General Conformity Certificate (GCC) instead, but the importer obligation is the same.

• E&S lines product liability insurance — $1M–$5M per occurrence; required if standard carriers won't write your product category
• CGL with products-completed operations (PCOO) endorsement — baseline coverage for post-sale bodily injury and property damage; industry minimum $1M per occurrence
• Separate product recall insurance — covers recall logistics, replacement costs, and crisis communications not covered by CGL
• CPC or GCC compliance — third-party lab testing and CBP eFiling for every product you import