Feds claim online retailers liable for defective products
Dozens of consumers have sued Amazon in recent years for harm from exploding hoverboards, defective batteries, flawed dog collars and other defective products. But many courts have denied liability in personal injury and wrongful death cases by citing product liability laws that were not intended to deal with online shopping platforms. Earlier this month, however, the U.S. Product Safety Commission sued Amazon to compel its participation in formal recalls of dozens of defective products sold on its platform.
Business model
Amazon does not own most merchandise sold on its platform. These goods are technically sold by third-party sellers including established brands, small craft makers, and thousands of manufacturers and distributors from China.
Amazon charges commissions and other fees for listing on its site. It is also playing a larger role in shipping and handling under a program that charges sellers for storing products its warehouses and shipping them to customers who click a link.
This model provides an infinite supply of products. But it is difficult to control because sellers sign up and manage their listings with self-service tools.
Lawsuits
Product liability lawsuits against Amazon were decided on limited issues such as whether the company took ownership of the product or helped create a marketplace for certain merchandise. Amazon usually claims that it is a neutral marketplace that connects buyers and sellers.
It also asserts protection because other companies drafted merchandise descriptions and arranged for delivery. Amazon attempted to use section 230 of the Communications Decency Act that grants immunity to platforms for content created by others.
Parents of a toddler injured after swallowing a remote-control battery lost a Texas lawsuit earlier this year. A California plaintiff, however, won a lawsuit for burns she suffered after a hoverboard she purchased on Amazon allegedly sparked a fire.
CPSC
In its lawsuit, the CPSC claimed that products stored and shipped by Amazon meet the distributor definition in the Consumer Product Safety Act. This, according to the CPSC, gives it the authority to compel Amazon to cooperate with third-party product recalls or face penalties. The CPSC is seeking Amazon’s cooperation in formal recalls of thousands of hair dryers, carbon monoxide alarms and children’s pajamas.
Before the lawsuit, Amazon proposed a voluntary system where Amazon and other marketplaces would coordinate recalls. The CPSC said that talks failed when Amazon refused to participate in a formal and legally required recall process.
This lawsuit could end a common tech industry defense. States may also impose their own rules. Attorneys can also help consumers seek compensation from defective products.
