Comment by kjrose
5 years ago
This is really interesting. Can anyone on here explain if I am correct that this basically means any site that is operating as a middleman between supplier and consumer would be held liable for issues with the product?
So, like does this also apply to esty? EBay? Heck, maybe Shopify? At what point does the liability cease for the service provider?
I believe this is the opinion[1] discussed in the article. The important bit explaining the court’s reasoning starts on page 16. Basically, Amazon inserts themselves in the middle of transactions beyond merely providing a “storefront”.
> 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...
This article doesn't really delve into the ruling at all, so I'm not sure. It's quite possible narrower than that, having to do with something specific about how Amazon does business, in which case I would expect them to do doing whatever makes them liable rather than fixing the reliability issue. Honestly, I mostly just wish they'd put country flags next to sellers names so I could avoid getting products from China
Amazon would have to break this chain:
>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.
>explain if I am correct that this basically means any site that is operating as a middleman between supplier and consumer would be held liable for issues with the product?
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-...).
This does not mean that. This means that if you are a store and you sell something, you are liable.
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.
Largely agree with your assessment, but...
>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.
some amazon third party sales are shipped from/by the third the third party and some are fulfilled by amazon. the article doesn't state which was true in this case, but my suspicion is it actually did come from amazon's storage, which is never the case for ebay/etsy/etc.
In this case it was not fulfilled by Amazon.
If the site has to assume liability for third-party products, it makes me wonder if there's even a viable business model there.
There always is a viable business model. Brick and mortar stores have always assumed liability for the products they sell, even if they didn't make it.
They don't have to assume the whole liability - they can have a supplier contract that passes through all the liability costs (or part of it) to the supplier. In fact, as I understand, Amazon already does that. It's just that Amazon would become the first station to sue if the consumer is wronged. Nothing prevents the Amazon from passing the responsibility by either suing the supplier in turn or forcing them to join the lawsuit. What Amazon wanted is to be completely out of the picture, but the court denied them this. I don't think this invalidates the whole model - they still can act as a middleman, maybe just be a bit more careful with especially shady suppliers.
This strikes me as (yet another) instance of 'if you can't make it work, the business shouldn't exist.' If the business model really depends on the ability to sell bad goods without any blowback, it's a bad business.
I'm very sure there is, it's just that the commissions will have to reflect the necessary work to deal with potential customer relations issues.
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.