Third Party Liability and Amazon’s Marketplace Loophole

Amazon, the online retail giant, is currently in the media spotlight for its inability or refusal to vet the products sold on its platform. A Wall Street Journal investigation found over 4000 mislabeled, unsafe, and banned products on Amazon’s Marketplace.

“Marketplace” is the retail giant’s business model which has been so successful that other retail giants like Walmart and Sears have followed suit. On its Marketplace, Amazon sells items under its brand name and other brand names it owns, and products listed by third-party manufacturers and suppliers. The third-party listings are the fastest-growing part of the Marketplace, accounting for almost 60% of Amazon’s sales in 2018. Amazon profits from third-party sales by taking various fees and commissions from each sale.

Unfortunately, Amazon doesn’t effectively prohibit its suppliers, often located overseas, from listing products on Amazon.com that do not meet U.S. safety regulations and would not be sold by other retailers here. As shown by the Journal investigation, this results in numerous dangerous products being sold on Amazon.

This isn’t the first time that Amazon has come under fire for its hands-off approach to third party sellers on the Amazon Marketplace. Amazon has mostly been able to avoid product liability lawsuits by claiming that it is a platform, not a retailer. This has allowed the online giant to maintain a large inventory of goods, make money from items sold by third-party suppliers, and remain liability-free in the process.

That may be changing. Cracks continue to appear in the online retailer’s defense strategy, and courts are starting to recognize that Amazon should not be able to gerrymander its way out of responsibility for the damage it causes. CaseyGerry is currently prosecuting an appeal involving the issue of defective products sold on Amazon, and it is our hope that California will soon recognize online retailers and retail facilitators must own up to their responsibilities.

CaseyGerry is known for taking on challenging cases and has a history of successfully representing plaintiffs against powerful entities.