A California appeals court just ruled that Amazon is legally liable for defective products sold on its site by third parties


#1

According to Yahoo Business…

"Amazon was hit with a legal defeat this week after a California appeals court ruled that the company can be held legally liable for defective products sold on its site by third-party sellers.

In a unanimous decision issued Thursday, Judge Patricia Guerrero of the Fourth District Court of Appeals wrote that “under established principles of strict liability, Amazon should be held liable if a product sold through its website turns out to be defective.”

The decision overturned an earlier ruling from a trial court in favor of Amazon’s motion for a summary judgment, though the company can still appeal to the state’s Supreme Court. Amazon did not immediately respond to a request for comment.

The case concerned a replacement laptop battery that Amazon customer Angela Bolger purchased from a Hong Kong-based company called Lenoge Technology, which went by “E-Life” on Amazon’s online marketplace. Bolger alleged in her lawsuit that “the battery exploded several months later, and she suffered severe burns as a result,” for which she argued Amazon should be held responsible.

Amazon had argued that it wasn’t liable because “it did not distribute, manufacture, or sell the product,” and that Lenoge was the seller.

But the court disagreed, finding that Amazon played such an outsized role in the transaction that it bore the responsibility for the defective battery.

Guerrero wrote that Amazon "placed itself between Lenoge and Bolger in the chain of distribution… accepted possession of the product… stored it in an Amazon warehouse… attracted Bolger to the site… provided her with a product listing… received her payment… shipped the product in Amazon packaging… controlled the conditions of Lenoge’s offer for sale… limited Lenoge’s access to Amazon’s customer information… forced Lenoge to communicate with customers through Amazon… “and demanded indemnification as well as substantial fees on each purchase.”

“Whatever term we use to describe Amazon’s role, be it ‘retailer,’ ‘distributor,’ or merely ‘facilitator,’ it was pivotal in bringing the product here to the consumer,” she concluded.

The court also didn’t buy Amazon’s statement that it should be protected under section 230 of the Communications Decency Act of 1996, which shields internet companies from legal repercussions for content published by third parties on their sites.

It determined that section 230 didn’t apply because Bolger’s claims “depend on Amazon’s own activities, not its status as a speaker or publisher of content provided by Lenoge for its product listing.”

Pending the results of a possible appeal, Thursday’s ruling potentially opens up the online retail giant to significant legal exposure from other customers who could bring similar lawsuits for faulty or damaged products. It could also force Amazon to adjust its policies to more tightly regulate third-party sellers.

The number of third-party sellers on Amazon has grown substantially in the past several years, and they now account for more than half of the products listed on the site. That has also led to a spike in defective, counterfeit, unsafe, expired, and even illegal or prohibited listings.

Amazon listing review site Fakespot found that, over a recent 10-day period, 2,766,693 products on Amazon and 417,616 sellers were “unreliable,” concluding from that sample that "15% of Amazon sellers are unreliable and should be avoided.""

Hence the need for Feedback.


Flagging...what is that all about?
#2

yay! I can dump my liability insurance! woo hoo!


#3

Give me a break, so many sites just attacking Amazon… purely for the reasons of making money themselves.

Wrong over last 12 months - at least in some categories - active seller numbers down by a third! (Although I don’t know how Amazon calculates “active” - if say active in last 12 months, then all those sellers are “active” - even though I know they are not now.


#4

…as well as what items can be FBA-eligible, I suspect. They will restrict more, charge more, require insurance without any minimum sales (h/t @Iowa-Guy), etc.

Amazon will also turn to some Vendors even more, particularly for items with any increased potential for danger.


Expanding A-to-z Guarantee to protect customers and sellers (US)
A ruling deals a major blow to amazon! amazon has fought off product liability lawsuits for years. but it appears they are down for the count!
#5

E-Life I think just came back on Amazon under a new name
eLifeDirect
They are on “My Special List” so they probably tried to threaten me.

@NSFE4 Amazon still allows “Liquid Fire” to be sold FBA and Amazon took a $300,000 liability hit on that…
And the PDP has this on it
“Statements regarding dietary supplements have not been evaluated by the FDA and are not intended to diagnose, treat, cure, or prevent any disease or health condition”

There is way too much hazmat being shipped to FBA. I bet in about 10 years we are going to see some bad cancer clusters from all the Cadmium, Lead, etc.


#6

This may have interesting consequences for the buy box.
If Amazon directs a buyer toward a particular seller, that would seem to increase their liability.

If this judgement holds all the way through an appeal to the Supreme Court, Amazon may have to get rid of the buy box.

Or maybe they will keep the buy box, but try to shove the liability on to the seller. I dread the day when Amazon asks me for documentation to prove that my books can’t explode.


#7

I agree that if this is upheld by a supreme court appeal that this is going to be huge and have many far ranging implication to amazon and us the third party sellers.

I think amazon will think long and hard about allowing Chinese sellers to sell batteries an amazon, and especially FBA.

Similar to when the airlines/postal service slapped amazon with a huge fine for allowing air shipment of Li-Ion batteries. You should see the rule book for that now, it’s a mile long and utterly confusing in how detailed it is.


#8

Yes, Amazon is going to do a lot of thinking about Chinese products, batteries or otherwise.

Their first conclusion is that they can’t do without. If they let some Chinese company ( Alibaba?) sell every product that might have liability issues, they lose a huge chunk of their inventory. Anything battery powered is gone, as are all medicines, auto parts, health products, supplements, foods, and toys. That is a huge loss, hundreds of millions per year.

So if Amazon wants the products, but not the liability, they are going to have to transfer the liability to the 3rd party sellers. You think that Amazon has ridiculous documentation requirements now? You ain’t seen nothing yet. ( I’m not joking when I said upthread that Amazon will make me prove that my books can’t explode. )

These documentation requirements will put a lot of pressure on small China-to-US sellers. There will be a burgeoning market in forged insurance paperwork and foreign based insurance companies that disappear into the ether when the first big claim hits.

Eventually Amazon will shut that down by issuing a list of approved insurance companies, and they will have ways of checking directly with them to bypass attempted forgeries - much like they check directly with some manufacturers now.

So, my fellow sellers, it is time to get your paperwork in order. Get approved soon before the approval process becomes crippling.


#9

but this will all be show. It will look like amazon is checking and double checking but in reality it will be enough to say to regulators that they are checking (without really doing so) because the regulators won’t/don’t have the time or resources to check on amazon either.


#10

After reflecting on this a bit more…

The way that Amazon handles customer complaints may have to change too. We have all read about - or experienced! - the AZ that is opened, decided against the seller, and closed without the seller ever having been notified.
( For any seller or Amazon employee who has been living in a monastery or under a rock recently, a litany of problems of this type is here: A to Z claim granted without any notice. Did not show up on seller home page at all ever )

If Amazon wants to minimize the claims of liability against it, it will have to openly and forcefully compel the customer to contact the seller first.


closed #11

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