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Product liability, third party sellers and online retailers

| Sep 9, 2020 | products liability |

Under normal circumstances, if someone uses a product and it has a flaw that causes an injury, the injured party may sue the product’s manufacturer and/or distributor. Cornell Law School explains that in some cases, the person may also sue the retailer that sold the product if it was defective at the time of the sale. 

Until recently, some online retailers have escaped liability in defective product claims. However, CNBC reports that in California, a recent appeals court decision has reversed that. 

Third party sellers

Many online retailers, including Amazon, provide a platform where third party sellers can make their products available to consumers. The online retailers themselves are not manufacturing, selling or endorsing the products that others advertise and sell through their sites. 

About 60% of Amazon’s e-commerce sales are through third party sellers, and the company’s position is that it is not liable in product defect cases because it does not have direct involvement in product sourcing or distribution. The company also claims to spend millions on ensuring product compliance and safety. 

The chain of distribution

When a woman suffered severe burns due to a defective laptop battery explosion, she included Amazon in the liability lawsuit. The original district court sided with Amazon in absolving the retailer of liability, but an appeals court disagreed. 

The new ruling states that the company became part of the chain of distribution because it stored and shipped the product, as well as received payment for the item. The court also cited the creation and terms of the relationship between Amazon and the third party seller and the fees involved as contributors to the company’s responsibility for product safety. Other product liability cases against Amazon are ongoing.