A recent court decision in California may have major implications for Amazon.
On Thursday, a California Court of Appeals ruled that the company can be held legally liable for damages caused by products sold by third-party sellers on its site. Presiding Judge Patricia Guerrero ruled 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 case in question involved a California woman named Angela Bolger who bought a defective replacement battery for her laptop from an Amazon seller, Lenoge Technology HK Ltd. According to a report from CNBC, the item caught fire, leaving her with third-degree burns.
Amazon has characterized itself as a mere conduit for products from its legion of independent merchants, who make up the majority of the company’s marketplace. But the California court ruled that because the company made itself a part of “the chain of distribution” for the item by storing it in its warehouses, receiving payment, shipping the product, setting relationship terms between itself and the seller, and demanding fees on each purchase, it was “pivotal in bringing the product to the consumer.”
“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 said, adding that the company will not receive protections through Section 230 of the Communications Decency Act, which protects online sites from being held responsible for the content their users post.
The ruling sets a significant precedent, opening Amazon up to liability on a number of potentially explosive claims from consumers unhappy with the products they’ve purchased. The platform has been plagued by complaints from government agencies, brands and shoppers alike about its seemingly lax stance on counterfeits and illicitly sold goods—some of which could end up being dangerous to consumers.
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On Friday, more than a dozen industry associations including the American Apparel and Footwear Association (AAFA), the Fashion Jewelry and Accessories Trade Association, and the Retail Industry Leaders Association (RILA), announced the formation of the Buy Safe America Coalition, designed to combat the issue of fakes on online marketplaces like Amazon.
The organization aims to back legislation, like the INFORM Consumers Act, which would require platforms that rely on third-party sellers to vet these sellers more thoroughly, collecting more in-depth information about their businesses.
Jeremy Robinson, Bolger’s attorney, told CNBC that Thursday’s ruling would be felt by consumers across the nation.
Amazon told the outlet it planned to appeal the decision, saying, “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.”