California appeals court finds Amazon responsible for 3rd party sellers products
theverge.com
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Sellers of new products are in general strictly liable for harms those products cause to consumers. "Strictly liable" means that the consumer doesn't need to prove who was at fault (the seller vs. the distributor vs. the manufacturer, etc.). If you buy something new and it hurts you (assuming it isn't your fault) you can sue the seller. The seller can sue the manufacturer/distributor/etc. (or bring that party into the suit against them) and indeed, the contract between Amazon and third-party sellers includes a clause that these sellers will indemnify Amazon.
There are a few reasons for this general setup. Sellers are good "insurers" in that they typically sell a variety of products to a lot of people, and can thus spread risk reasonably well. Sellers generally know where they get their products, so they can pursue that party for the liability; consumers aren't in as good a position to do so.
Amazon wants to not be a seller, so as to avoid liability.
The actual decision [0] explains this concept in a bit more depth, starting on page 9.
[0] https://law.justia.com/cases/california/court-of-appeal/2021...
It is indisputable Amazon is in the supply chain of these products, and of course of a case by case basis their role(s) for each product is different, including, but not limited to: at minimum promoting the products on their online marketplace, facilitating the purchase of the products (potentially conducting the transaction itself via Amazon gift cards), storing/warehousing product, shipping/delivering product, in some instances they are the wholesaler of product, etc...
They should be thankful for the time they had escaping obvious legal liability and the opportunity to get a decade+ head start on any new marketplace that wants to compete and will have to contend with these legal risks. Amazon will fight it to tooth and nail to the end, and then start with appeals, they could spend billions a year and lose but it would be worthwhile because the simple number of dangerous products on their marketplace some of them resulting in death.
So I would imagine that yes, you could.
Strange question, in USA, the is fact you can sue anyone for anything in a civil suit. It's up to a court to decide whether your case has merit or not.
I once worked on a case where the client was hit by a bus operated by the County (so a local government in a particular state), the suit was not entirely barred but there was a cap on damages which would not otherwise exist if say it were a bus being operated by a private company (which would of course generally have a commercial insurance policy as well). It has been almost 10 years but at the time I think the cap was $200,000. Interestingly there is/was a mechanism to request the state (I think the state legislature) waive the damages cap on a case by case basis, but unless your firm was politically connected and donated to political campaigns good luck with that.
This is true. But at the same time Amazon tries very hard to hide any information about the customer from the seller. If the order is fulfilled by FBA, the 3rd party seller has the name of the customer and that's it. Amazon also can facilitate email exchange through their server, but most customers do not see it (getting into spam?) or ignore it. So in practice, you rarely have a reliable channel to communicate with your "customer".
Compare to eBay - you have all the info for the customer, can follow up, resolve issue, etc. On eBay there is no confusion about who is "the seller".
I understand why Amazon is doing that - theirs customers probably hate idea of dealing with individual sellers and instead prefer the uniformity of dealing with Amazon. But then the position that Amazon is not "the seller" kinda weak.
So is amazon a marketplace or a seller. Hard to decide. I think courts should also give importance to how amazon markets itself.
EBay, always, marketed itself as a marketplace. There was never a confusion about whether it's a "store" or a "marketplace".
From the Amazon banners/ads/and other marketing material, I always get the sense that Amazon tries to market itself as a "store" and not as a "marketplace".
With that and the _hiding/obscuring_ of third party seller information on the amazon website, I think courts should treat Amazon as a seller/store more than a marketplace.
> consumer doesn't need to prove
> who was at fault
IANAL
AIUI 'Strict liability' means that the consumer doesn't even need to show that any party was at fault. The bad thing happened, and the seller/whoever will be held liable even if all of their actions were perfectly reasonable.
For most torts, you have to show intent or negligence. But for strict liability torts, the outcome is enough.
Seller rating on Amazon are also useless. At least eBay you can see what it is you’re buying (for the most part) and get a seller eating that’s at least somewhat useful.
I really hope this forces Amazon to start vetting sellers more, they’ve simply been run over by aliexpress “drop shippers”.
https://law.justia.com/cases/california/court-of-appeal/2021...
https://law.justia.com/cases/california/court-of-appeal/2020...
No more cheap/counterfeit USB deathdapters https://youtu.be/3Hdn0MuCK_0
Also, I think electrical, li-ion, and RF products will have to prove their safety and compliance certification paperwork.
Or more recently a golden gem:
"Making the sellers responsible for items will inevitably make them more expensive, and I don't want that"
Though this case wasn't about that. I think it is clear however that Amazon is not just an eBay-like site. They choose for you who to buy from by default.
That history must include returns, refurbishments, etc.
If anyone has a problem with a product that arrived at a consumer's house the chain of handling and ownership should exist.
Is the product official?
Did a second party seller buy a product they believe is official and ship it?
Did someone buy something and then return it (and was it really the same something)?
If a bad batch of that product got shipped out, can Amazon recall it without manually sending a human to look in every bin that might have it (and what if there are 500 middle-men selling slightly cosmetically altered versions of the same cheap crap from across the sea)?
They can't just use APC/UPC anymore, because they'd have to accomodate the potential of sellers with a wide variety of products independently stored, even when not in use. This changes the FBA workability to only favor big actors, which admittedly, is exactly what people seem to expect.
Amazon works as well as it does because all the hoops everyone else has to jump through just haven't been held against them. It's no wonder they were an investor's darling.
Note: This is how I'd have started approaching building Amazon's logistics/FBA branch. Basically a library of physical goods. There's no way to know if they had started out that way whether they'd be in the position they are in now, but it is clear to me the direction many consumers want them to go.
Right now as it stands, for high value items or items where counterfeits are dangerous (think chargers) I have been either ordering at brick and mortar stores (Walmart, BestBuy) or direct from the manufacturer (Apple, Anker, etc)
My safety is worth a few extra dollars, a short trip to the store, or a few days wait on shipping.
(I ended up buying the manufacturer-branded refill ... from Best Buy, not Amazon.)
So, like does this also apply to esty? EBay? Heck, maybe Shopify? At what point does the liability cease for the service provider?
> Owners of malls typically do not serve as conduits for payment and communication in each transaction between a buyer and a seller. Moreover, they do not typically charge a per-item fee rather than a fixed amount to rent their storefronts. Instead, these actions – 1) interacting with the customer, 2) taking the order, 3) processing the order to the third party seller, 4) collecting the money, and 5) being paid a percentage of the sale – are consistent with a retailer or a distributor of consumer goods.
I would say Etsy, eBay, and a Shopify lean slightly more mall-like than Amazon but whether that difference is enough for their legal department to be comfortable concluding they’re definitely outside the scope of this ruling is impossible to say. You can bet they’ll all be reviewing and revising their third-party seller program documents, though.
Slightly related, there was a recent case in Philadelphia that came to a similar conclusion (holding Amazon responsible for defective third-party products) for an entirely different reason: the commingling of Amazon-owned inventory and third-party inventory.
Regardless of how Amazon reacts to this specific case I think the direction things are heading for Amazon with respect to products liability is pretty clear.
[1]https://www.courthousenews.com/wp-content/uploads/2021/04/Lo...
>1) interacting with the customer, 2) taking the order, 3) processing the order to the third party seller, 4) collecting the money, and 5) being paid a percentage of the sale – are consistent with a retailer or a distributor of consumer goods.
Which is fair; it's just the cost of doing business. It's just that some merchants may reconsider whether it's a cost that's worth paying for working through Amazon.
Is a marketplace of vendors a store? No. Is a piece of software that enables a vendor a store? No. Is a store that runs software to host products from distributors a store? Yes. That's Amazon.
Slippery slope averted.
>Is a store that runs software to host products from distributors a store? Yes.
Is not valid (presupposed outcome)
Did you mean,
Is a marketplace implemented via software to host products from multiple suppliers a store?
Conclusion: Yes. It is. It has inventory. It brokers sales and transactions. It is a store.
IANAL. If you are reselling to the end-customer, then you are effectively a retailer and depending on where you operate will have some level of liability. Incidentally, a true middleman - a distributor - does (at least in the US) carries liability for product defects as does the retailer and manufacturer. I worked for a distributor who had to back a defective product from an out of business manufacturer who's warranty insurance was depleted. A lot of people at our company made bad assumptions about the law, and didn't realize that most consumer protection laws could not be waived by the consumer... So we ended up with a batch of 12000 bad network devices that we had to replace... When you operate at 20-30% gross margin that takes a huge bite out of profit.
>So, like does this also apply to esty? EBay? Heck, maybe Shopify?
The question is, who is operating the store? Who's name is on the receipt? In the case of eBay, the seller is clear (eBay forces the use of an escrow service -- often PayPal -- for payment). In the case of Shopify, the seller is clear (the store owner). On the question of Amazon, we shall see, but it appears they have lost quite a few cases (https://www.washingtonpost.com/technology/2020/08/29/amazon-...).
It’s not squarely an Amazon phenomena, of course, local e-retailers allowing 3rd party sellers in a similar manner ended up with similar results but it’s kinda frustrating to have to deal with all that as a buyer; it removes a lot of the convenience of buying products online when I have to conduct an investigation just to order what I wanted.
Really the experience of shopping at amazon in Europe is so off putting that I would rather only shop in person if they would be my only choice.
1. Seller sells me a small patio side-table on Amazon.
2. Seller marks item as "shipped" with a UPS tracking number, meaning it has a tracking # but carrier has not taken possession of table.
3. Seller contacts me indicating that "FedEx" trucks are being used for covid purposes and that said table requires multiple boxes (not true) and that there are a backlog of boxes waiting to be picked up and that table will be delayed, but offers me a percentage discount which I decline.
4. Package never ships.
5. After the required number of waiting days from Amazon, I request and receive a refund.
What's the scam here? Is it purely negligence and they're not actually benefitting from this charade or why would a 3rd party seller go through this? How would this benefit them?
1. eBay and Amazon basically drop all small sellers.
2. eBay and Amazon require third party sellers to hold insurance protecting themselves if anything happens.
3. eBay and Amazon aggregate data and drop selling of broad categories of products that statistically lead to lawsuits.
I do not see how these three things are not implemented in the next 12 months.
4. Supreme Court throws consumer protection under the bus and finds in Amazon's favor
That impulse would be balanced by the "pro-business" (usually anti-consumer) attitude many conservatives have, so it could go either way.
But yeah, unqualified usage of 'supreme court' makes things confusing because that normally resolves to SCOTUS.
The Supreme Court still reviews state supreme court decisions, but Amazon would have to allege some sort of constitutional violation, which seems unlikely here.
I mean not requiring sellers to be insured - and yes every product is different, has different risks, but that is reflected in the insurance premium - basically is Amazon saying they don't give a shit about the quality of the products they market on their marketplace nor the safety of their marketplace customers. Its scandalous and if people only knew how much power they actually had they would crush Amazon into the dirt over night just by collectively organizing a mass cancellation of Prime, 1 week boycott of purchases and visitation...it would bring Amazon to its knees.
From some googling, it seems Amazon does require this of all sellers but didn’t require proof. I imagine we’ll see increased enforcement now.
Amazon:
A) takes the payment (and later disburses it net30/60/90 whatever) instead routing of it (possibly less a fee) directly to the seller
B) Doesn't allow communication directly between the seller and buyer
C) Requires already fairly significant restrictions on the seller
I don't think eBay does any of those things or at least not to nearly the same degree.
So you might get blamed for counterfeit goods sold by someone else if Amazon fulfilled an order with the 'same' goods provided by another seller instead of those actually provided by you.
I haven't heard that leading to any lawsuits like this, but it easily could be an issue in the future.
This is the hard part with business. If you make a product, you are responsible for it. If you sell a product, you are responsible for it. If I sell a dangerously defective used lawn mower at a garage sale, I'm responsible (yes hard to prove).
One of the dangers of too much growth is that your liability can out run your profits in a way that puts the whole business at risk. Historically, it was hard to make a new product and get it on the shelf... retailers required certification by a consumer products testing lab and would have to have indemnification AND proof of insurance where the retailer was a named beneficiary. Even though all of this is likely in the fine print at Amazon, one has to wonder if it is verified and audited.
Judge Dread