Amazon liable for products from third-parties, Appeal Court

Amazon liable for products from third-parties, Appeal Court


Amazon loss a case in a federal appeals court that on Wednesday ruled out the online retailer could be held responsible for defective products from third-party sellers, a ruling which exposes the company to lawsuits from customers who buy third-part products from its website.

Previously many of the other courts including two federal courts, in their ruling have rejected the requests of holding Amazon accountable of products from third-party vendors as a seller. But the new ruling from 3rd U.S. Circuit Court of Appeals in Philadelphia is appeared to the first court which came up resisting that trend as it reversed a lower court ruling of not holding Amazon liable for third-party products.

On its platform, besides selling its own products, Amazon also offer the service to third-party sellers for listing their products on its website for selling, with options available to them of rather storing their products in Amazon’s warehouses or shipping their products to the customers directly.

In the quarter ended March 2019, from services provided to third-party vendors, Amazon generated revenue of about $11 billion, while 50% of the items sold on its platform are from third-party sellers, according to a report by database firm Statista.

It is the state law which generally governs any ruling about the liability for defective products and the current decision is based on the laws of Pennsylvania, the home state of complainant Heather Oberdorf.

David Wilk, Oberdorf’s lawyer, called the decision of the 3rd Circuit Court as gratifying as the court agreed with their stance while recognizing that the existing definition of Pennsylvania’s product liability law was not properly covering the real world scenarios, like dominance of the Amazon in the marketplace.

Oberdorf sued Amazon in 2016, after an incident of losing one of her eyes because of snapping and recoiling of a retractable dog leash that hit her in the face bought from a third-party seller through retailer’s website.

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I handle much of news coverage for tech stocks, and occasionally cover companies in different sectors. In the past, I've written for other financial sites and published independent investment research, primarily on tech companies. I have a B.A. in Economics from Columbia University. I'm based out of San Diego, but grew up in Southern New Jersey. I play basketball and tennis in my spare time, am a long-time (and long-suffering) fan of Philadelphia's sports teams, and alternate daily between using an iPad Air, a Galaxy Note 3, and one or two Windows PCs.