Product Liability and Third-Party Sellers

American consumers enjoy a wide array of options when it comes to shopping in online marketplaces. In most cases, transactions proceed smoothly, and consumers are pleased with the quality of the product. However, consumers can face challenges when seeking compensation for defective products sold on online platforms like Etsy, eBay, Amazon, and Facebook Marketplace.

Read on to learn about the legal responsibilities of third-party sellers and the platforms themselves. This article also discusses recent legal developments and court cases that have impacted third-party seller liability. A local product liability attorney can help if you or a loved one sustained an injury due to a dangerous or defective product.

Understanding Third-Party Seller Liability

Third-party sellers using e-commerce platforms, such as Amazon.com, Inc., impact almost every consumer in the American economy. For example, Amazon, the largest e-commerce retailer in the world, sells more than $1 billion in consumer sales daily. Most of the products it sells are from third-party vendors.

Third-party sellers who use Amazon and the Amazon marketplace to facilitate the sale of third-party products bear responsibility for their packaging and ensuring their products are safe. Product liability issues related to third-party sellers on these platforms are common, and the law continues to evolve.

Recent Legal Developments

Ensuring product safety for products sold online is an important consumer protection issue. Given Amazon’s significant market share, its potential liability for product liability claims under state and federal law is a critical issue, as recent case law demonstrates. Amazon’s legal liability in cases can influence the legal landscape and potentially impact how other e-commerce platforms are viewed in similar legal contexts.

Previously, Amazon denied legal responsibility for any injuries caused by defective products obtained from third-party sellers through Amazon’s website. In product liability claims, Amazon argued that it was not the item’s manufacturer, distributor, or retailer. Amazon asserted that it was only the facilitator of the sale between a buyer and seller. As a result, Amazon claimed that it should not be held liable for harm, including property damage and personal injury caused by dangerous and defective products.

Bolger v. Amazon.com, LLC

Recent lawsuits involved consumers who were seriously injured by dangerous products and defects in items obtained through Amazon.com. One example is Bolger v. Amazon.com, LLC, a 2020 California state court product liability case. In Bolger, a woman suffered severe burns after a replacement laptop battery she purchased from a third party on Amazon exploded.

In this case, the California Court of Appeals ruled that Amazon could be held liable for injuries caused by the defective product. The court found that Amazon played a pivotal role in the stream of commerce—it brought the product to the consumer, regardless of whether Amazon was a retailer or distributor. Caselaw from other jurisdictions shows similar results in defective product cases against Amazon.

Oberdorf v. Amazon.com, Inc.

Oberdorf v. Amazon.com is another landmark case questioning Amazon’s liability for defective products sold by third-party sellers on its platform. Oberdorf addressed whether Amazon could be considered a “seller” under Pennsylvania products liability law. Amazon asserted that it was only a service provider and, therefore, not responsible in tort law for products sold by independent sellers.

Initially, the U.S. District Court for the Middle District of Pennsylvania ruled in favor of Amazon, agreeing with Amazon’s arguments. The Third Circuit Court of Appeals applied a test articulated by the Pennsylvania Supreme Court and found that Amazon’s involvement in warehousing, listing, and shipping positioned it as a seller.

The Third Circuit initially overturned the district court’s decision, suggesting Amazon could be liable for the defective product, but the case was settled before a final en banc decision was reached. The parties resolved the case before a final ruling, which left some legal questions unanswered. However, while the panel decision was vacated and is not binding precedent, the judicial reasoning signaled a potential shift in liability for e-commerce platforms.

E-Commerce Policies Updated

Following Oberdorf, Amazon updated its policies regarding defective products. It expanded its A-to-Z Guarantee to cover claims of personal injury and property damage caused by defective products sold on its website. The policy now offers compensation for claims under $1,000, with potential coverage depending on the responsiveness of the third-party seller to legitimate claims, subject to specific terms and conditions.

Legal Responsibilities of Third-Party Sellers

With the legal precedent that other courts may follow, third-party sellers on Amazon and similar platforms can face increased scrutiny and potential liability. Third-party sellers must take measures to improve product safety and ensure compliance with relevant regulations.

Amazon created the Amazon Insurance Accelerator program. It allows sellers to purchase liability insurance at competitive rates. A third-party seller with adequate insurance coverage is better positioned to compensate injured parties who present legitimate product liability claims.

Tips for Protecting Yourself

Recent cases can help lead to more accountability for commerce platforms concerning the sale of unsafe products. Due to recent case law, you have more recourse as a consumer if defective products harm you. An experienced products liability lawyer in your area can explain your legal options if you or a loved one sustained an injury due to a defective or dangerous product purchased from a third-party seller on an online platform.