Legal Rulings In The U.S. Involve Amazon Third Party Vendors

Legal cases have arisen with Amazon third party vendors selling poor quality items to Americans.

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Angela Bolger heard some clicks in her laptop, and sparks flew from the $12.30 replacement battery she’d recently purchased on Amazon. It caused third-degree burns on her arms, legs and feet, as well as burning her bed, clothes and the floor of her San Diego apartment. Four years have passed, and Bolger still has surgeries to graft skin to repair the damage.

Amazon fought her lawsuit seeking to hold it liable for the injuries. The only compensation Amazon provided was a refund. Nearly 60 percent of all physical goods sold on Amazon’s e-commerce marketplace come from third-party merchants. The company has argued in court that this relationship absolves it of any liability related to defective products sold by those vendors. Courts have largely sided with Amazon.

A handful of other cases nationally have halted Amazon’s winning streak. New legislation this week in California aimed to place responsibility directly on e-commerce retailers that provide merchants selling dangerous goods.

The bill, first-of-its-kind, would extend rules that apply in the physical world to electronic commerce. Assembly members called for holding online marketplaces liable for the products they sell.

Amazon supported the measure with one request, that the law applies to all online marketplaces and competition, including competitors do not warehouse and ship products sold by third-party merchants. That drew intense opposition from several Amazon rivals, including Etsy, whose chief executive, Josh Silverman, wrote in a blog post  that the measure will saddle small businesses with “complex, hard-to-comply-with legislation that only Amazon can afford to absorb.”

Amazon has emerged as the nation’s largest online retailer. The company has prioritized their vendors’ selections, allowing merchants to sell on the site with scant vetting. 

The business of selling other merchants’ goods is unique to Amazon. In the last quarter, Amazon generated $18.2 billion of revenue from seller services such as fees and commissions, a figure that jumped 52% from the same period a year ago.

The legal question and challenge for Amazon is that as it has allowed so many sellers into its marketplace, it’s also made it difficult to police for dangerous goods. In addition to that claim, Amazon has also come under fire for fake goods sold by third-party merchants. 

In July, Amazon notified third-party vendors that they cant sell anonymous goods in the United States after Sept. 1st.  Until recently, legal experts say, courts often found Amazon’s relationship with those sellers at enough of an arm’s length that it was insulated from liability for defective goods.

When products from Chinese sellers hurt shoppers in the United States, the merchants often disappear, leaving consumers unable to hold them accountable. Because of this, U.S. courts have started to apply the same rules as toward retailers in rulings.

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