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.