If someone sells you a product that blows up, they should be held responsible for it.
This simple idea has been a bedrock principle of consumer protection law for over 50 years. Those who sell products or host their sale online tend to be in the best position to know whether a product is defective and poses a risk of injuring people or damaging property. They are certainly better situated to know this than consumers who have far less information about potentially harmful products.
While brick-and-mortar stores have been liable for defective products for decades, it is unclear whether the law requires the same of online marketplaces such as Amazon that allow vendors all over the world to offer their products to consumers. Recently, a California appeals court held that Amazon should be deemed a seller of a defective replacement laptop battery that a consumer bought through the site and that later exploded. But other courts have ruled differently, finding that Amazon’s marketplace is just a service that connects consumers with thousands of different vendors.
A bill currently being considered by the California Legislature seeks to end this uncertainty, at least for California residents. While small businesses are already responsible for defective products they sell, Assembly Bill 3262 would hold online marketplaces such as Amazon to the same standard.
This clarity is needed because consumers often don’t even know who they’re purchasing from on big platforms such as Amazon — especially in the age of COVID-19, when we’re all buying a lot more stuff online. Amazon started out selling products directly to consumers. But over time, they’ve evolved more into a marketplace, allowing third-party vendors to offer their own products on the Amazon site.
While there are certain consumer benefits to making a wide array of products from different sellers available on the platform, there are real costs as well. A Wall Street Journal investigation last year found 4,512 products listed for sale on Amazon that had been “declared unsafe by federal agencies, deceptively labeled or banned by federal regulators.” For example, cheap imported “hoverboards” have caught fire, resulting in deaths and injuries to children and millions of dollars in property damage.
And when things go wrong today, consumers can’t always get relief. In recent years, Amazon has brought in a large number of foreign sellers on its platform, many of which may not be subject to the jurisdiction of American courts or that simply may be impossible to track down. In one case, a Pennsylvania woman bought a defective dog leash that snapped in two, struck her and blinded her in one eye. The leash came from “the Furry Gang” — ostensibly a Nevada limited liability company, but even a private investigator eventually hired by Amazon couldn’t uncover who was behind it.
Amazon hosts lots of different sellers on its platform, but it gets to decide who can sell on it, and under what terms, such as requiring proof of insurance. If a company refuses to comply with the terms, Amazon can decide that the potential harm and its potential legal exposure due to defective products may outweigh the profits it can make by allowing the vendor to be on its platform.
For marketplaces such as Amazon that make money off third-party sellers, the law would appropriately clarify that they’re going to be held accountable for defective products. That’s the right call.
California policymakers should enact AB 3262 without delay to provide much-needed protections to consumers.
Justin Brookman is director of privacy and technology at Consumer Reports.