Appeals court says Amazon can be held liable for defective third-party products

Polycount

Posts: 2,517   +549
Staff member
In context: Amazon is one of the largest online retailers in the world, due in no small part to its massive number of third-party sellers. Amazon's own products are decent enough in many cases, but its these unaffiliated companies and users that truly keep the platform afloat. Unfortunately, third-party sellers might also become a serious liability for Amazon moving forward.

According to a ruling filed by an appeals court in California's Fourth District, Amazon can be held liable for facilitating the sale of defective products on its platform, even when said items are sold by third-party companies.

For a bit of context, Amazon was sued by Angela Bolger after she purchased a replacement laptop battery from Lenoge Technology (operating under the alias E-Life on Amazon). Bolger used the battery for several months before it exploded, causing her to suffer "severe burns."

Amazon responded by requesting summary judgement in the case. Given that it did not distribute, manufacture, or sell the defective battery, Amazon argued that it should not be responsible for any damage it may cause.

The court that oversaw the case agreed with Amazon's view on the matter and granted the company's motion. However, Bolger appealed the decision, and that appeal has also been granted now.

"As a factual and legal matter, Amazon placed itself between Lenoge and Bolger in the chain of distribution of the product at issue here," The appeals court claims. "Amazon accepted possession of the product from Lenoge, stored it in an Amazon warehouse, attracted Bolger to the Amazon website, provided her with a product listing for Lenoge’s product, received her payment for the product, and shipped the product in Amazon packaging to her."

"...Under established principles of strict liability, Amazon should be held liable if a product sold through its website turns out to be defective," The court continues. "Strict liability here “affords maximum protection to the injured plaintiff and works no injustice to the defendants, for they can adjust the costs of such protection between them in the course of their continuing business relationship."

Amazon has vowed to appeal the new decision, with the following reasoning (via a statement sent to The Verge):

The court’s decision was wrongly decided and is contrary to well-established law in California and around the country that service providers are not liable for third party products they do not make or sell.

It remains to be seen whether or not Amazon's appeal will be successful, but if it isn't, Bolger's victory could set a fascinating precedent for online marketplaces in the future.

If Amazon can be held accountable for the poor quality assurance practices of its third-party sellers, the company may tighten restrictions on the types of products that can be sold on its website. Alternatively, it may introduce new product curation systems to weed out defective items. In either case, we look forward to seeing how this situation plays out, and we'll update you if any new information comes to light.

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silversea

Posts: 15   +31
I'm not so sure this is as detrimental to amazon as it could be to online retail in general.
I agree this can definitely hurt online retail but Amazon will also take a hit, they will immediately change the way they sell third party products and also put safeguards into place to protect themselves from more lawsuits especially if this person wins her case the flood gate will swing open so to speak, Amazon won't be the only one look at Walmart they also sell third party products on their website the same as Amazon only difference is Walmart does not stock third party products that I know of and in the end who is going to pay and or end up suffering the consumer, everything always gets past down some one has to pay in the end ALWAYS, I only mentioned 2 but there are other online retailers that operate much the same way and they to will end up doing business differently to avoid problems.
 
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hk2000

Posts: 146   +75
TechSpot Elite
This will not stand! It's ridiculous to expect the seller of a product to pay for damages caused by an obvious manufacture defect. The manufacturer is the only one who in the end should be held responsible.
 
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kiwigraeme

Posts: 89   +44
Probably result it some extra disclaimer forms where Amazon is only responsible if knowingly continues to sell a dodgy third party product- so no 1 click buy ( which I would never use anyway )
 

PurpleYoda

Posts: 126   +85
So is it down to the fact Amazon fulfilled the order by storing the item and then shipping it to the buyer? If you go to some real life market to buy some groceries and end up buying say a bad fish that will make you very sick and you even end up in a hospital loosing couple of days of work in the process, surely you won’t have claims against the market but rather the fishmonger that sold you the said bad fish in the first place? So is it down to the fact Amazon accepted the items to store and ship that makes this different and justifies this ruling in the eyes of that court?
 

Phyrino

Posts: 22   +26
Amazon is going to establish themselves here in Sweden now.
They are going to have some problems with this.
Because the law is quite simple. If you buy something from a store (physical or digital), then they are responsible for the products and pretty much everything has a 2 year legal warrant. and that is something that cannot be negotiated away. Even if you sign a contract, the law supersedes.
Me, as a customer, only have to deal with the store.
If there is a manufacture error, then you return it to the store, and the store has deal with the manufacturer.
It's awesome!
 

candle_86

Posts: 515   +383
Amazon is going to establish themselves here in Sweden now.
They are going to have some problems with this.
Because the law is quite simple. If you buy something from a store (physical or digital), then they are responsible for the products and pretty much everything has a 2 year legal warrant. and that is something that cannot be negotiated away. Even if you sign a contract, the law supersedes.
Me, as a customer, only have to deal with the store.
If there is a manufacture error, then you return it to the store, and the store has deal with the manufacturer.
It's awesome!
And that's why on eBay I don't ship internationally, I won't be held to international standards.

This will affect Amazon sellers, at a minimum I'm sure they will require us to get some sort of liability insurance to sell. I agree with Amazon's stance to a degree, but if the item is merly sold on Amazon but not stored in their fulfillment center it should not be liable. This would be skin to buying a product at a flea market then holding the owners of said flea market responsible instead of the stall vendor.
 

brucek

Posts: 498   +575
TechSpot Elite
I already have a lot of trouble getting anyone to ship any battery to me in Hawaii. This precedent will probably further lessen the number of willing shippers and sellers. Amazon will survive just fine because it sells millions of other products. Meanwhile consumers ultimately need a way to get these goods.
 

psycros

Posts: 3,187   +3,373
Ah, California, once again achieving nothing except raising prices for all. Amazon will just add a section to the checkout process that makes customers agree to never seek damages from them for any third-party purchases. They'll also increase transaction costs on anything handled by Amazon's warehouses, which will naturally be passed on to consumers.
 
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Solitaire888

Posts: 11   +4
Ah, California, once again achieving nothing except raising prices for all. Amazon will just add a section to the checkout process that makes customers agree to never seek damages from them for any third-party purchases. They'll also increase transaction costs on anything handled by Amazon's warehouses, which will naturally be passed on to consumers.
Nah. Wouldn't even need to go that far. Add it to the ToS. Send a mass email notifying everyone.
 

Alfatawi Mendel

Posts: 60   +116
"The court’s decision was wrongly decided and is contrary to well-established law in California and around the country that service providers are not liable for third party products they do not make or sell." (Amazon)
As the appeal explained...The item WAS sold by Amazon, via it's website. The money was collected by Amazon. Stored and processed in an Amazon warehouse. And delivered by Amazons delivery partners in Amazon packaging.
This can only be a good thing for consumers - to be protected against shoddy, dangerous goods and corporate malfeasance.
 
To extend this to all retailer, if you walk in to Home Depot and buy an item, Home Depot is liable because they were the vendor? I buy an oven, and for some reason the thing has a fault and starts a fire that burns down my house. Home Depot is liable because they sold a faulty product? Makes no sense. If this becomes the norm retailers will just close shop.
 

Deevo324

Posts: 31   +23
Amazon is going to establish themselves here in Sweden now.
They are going to have some problems with this.
Because the law is quite simple. If you buy something from a store (physical or digital), then they are responsible for the products and pretty much everything has a 2 year legal warrant. and that is something that cannot be negotiated away. Even if you sign a contract, the law supersedes.
Me, as a customer, only have to deal with the store.
If there is a manufacture error, then you return it to the store, and the store has deal with the manufacturer.
It's awesome!
It's the same in Australia. Isn't it nice to live in a country with proper consumer laws!
 

Deevo324

Posts: 31   +23
I wish we would cut ties with California. Put them in their place and see how long it takes for them to settle down.
It never ceases to amaze me how Americans love shooting themselves in the foot. You should consider that if California was an independent country it would be the fifth largest economy on Earth. I doubt they would care all that much, and they would better off financially without the drag of supporting poorer states. You on the other hand would be paying a lot more taxes to make up the shortfall. Be careful what you wish for!
 
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Deevo324

Posts: 31   +23
To extend this to all retailer, if you walk in to Home Depot and buy an item, Home Depot is liable because they were the vendor? I buy an oven, and for some reason the thing has a fault and starts a fire that burns down my house. Home Depot is liable because they sold a faulty product? Makes no sense. If this becomes the norm retailers will just close shop.
It works like this in civilised countries: your insurer pays you out right away. They recover their money from Home Depot's insurers and they in turn recover their money from the manufacturer's insurers, without you having to wait possibly years for compensation. You'd be a mug if you didn't think that was a good thing. Consumers rule!
 
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