Amazon Held Liable for Dangerous Products by California Appellate Court
An astonishing 200,000 brands are fighting counterfeit and fraudulent products on Amazon's websites
May 1, 2021
April 29, 2021, Los Angeles, CA – Amazon has long skirted liability for third-party sales of dangerous, fake, and fraudulent products, leaving injured consumers without recourse or compensation. California Appellate Court Judge John S. Wiley Jr. agreed in a recently published decision, "The Amazon is the world's largest river. Amazon.com supposedly chose its trademark because it aimed to create the world's largest river of commerce. Amazon.com can control what it created." Application of strict liability ... may incentivize Amazon to expand its safety compliance requirements to more products and thus further the goal of product and consumer safety.
At issue is whether consumer loss and damages should be borne solely by the injured consumer who may have no recourse against other defendants, or whether it may be spread among those who profited from the sale of the defective product.
Amazon's public actions and illusory claims obfuscate its true intention to enable and facilitate the sale of an enormous amount of dangerous and fraudulent products for substantial profit without consequence. Amazon routinely responds to death and injury lawsuits asserting it is only a service provider and has no control over selecting the product or its pricing, therefore not subject to strict liability. While publicly claiming its support for state legislation last year that would have made all online marketplaces strictly responsible for injuries caused by defective products, Amazon was concurrently appealing court decisions and challenging lawsuits for fraudulent and dangerous items. Hardly an acceptable or ethical business practice, but effectively impeding, delaying, and frustrating plaintiffs.
Contrary to Amazon's assertion that it merely provides an online storefront for others to sell their wares, Amazon places itself as a powerful intermediary squarely between the seller and the buyer. (1) Amazon advertises and promotes the product, (2) interacts with the consumer, (3) takes the order, (4) processes the payment, (5) collects a 15% to 40% transaction fee, (6) transmits the order to the seller, (7) and may warehouse and ship the product. Amazon's nefarious and bullying business tactics have been exhaustively reviewed in the media.
While Amazon also provides purchasers with what it calls an "A-to-z Guarantee:" "We want you to buy with confidence any time you make a purchase on the Amazon.com Website," it does not consider the A-to-z Guarantee to constitute a warranty for the products it lists.
Amazon has the ability to influence the manufacturing or distribution process, requiring safety certification, indemnification, and insurance before it agrees to list any product. For sellers whose gross proceeds exceed a specified threshold, Amazon's Business Services Agreement (BSA) also requires them to acquire excess insurance naming Amazon as an additional insured. All are consistent with a retailer, yet Amazon claims its actions are similar to a shopping mall. Appellate Judge Sam Ohta disagreed, "owners of malls typically do not serve as conduits for payment and communication in each transaction between a buyer and a seller and do not charge fees for each sale."
In the instant legal case, Kisha Loomis bought a hoverboard for $370 on the Amazon website in 2015 as a gift to her son. When her son plugged it in to charge it, a fire broke out, and Loomis suffered hand and foot burns while putting it out, her suit said. She sued Amazon and other participants in the sale. The China manufacturer "TurnUpUp" collected $736,000 from hoverboard sales on Amazon's websites and paid Amazon $110,645.92 in fees -- a direct financial benefit from its activities and sales of the product. After reports of other fires, and a Consumer Product Safety Commission investigation, Amazon halted hoverboard sales on its site in December 2015.
Recently, the Fourth District addressed this issue as a matter of first impression review in Bolger v. Amazon.com, LLC (2020) 53 Cal.App.5th 431 (Bolger), denied November 18, 2020. Bolger held Amazon "is an 'integral part of the overall producing and marketing enterprise that should bear the cost of injuries resulting from defective products " (Id. at p. 453). As a factual and legal matter, Amazon placed itself between [the seller] and Bolger in the chain of distribution of the product at issue here. Amazon accepted possession of the product from [the seller], stored it in an Amazon warehouse, attracted Bolger to the Amazon website, provided her with a product listing for [the seller's] product, received her payment for the product, and shipped the product in Amazon packaging to her. Amazon set the terms of its relationship with [the seller], controlled the conditions of [the seller's] offer for sale on Amazon, limited [the seller's] access to Amazon's customer information, forced [the seller] to communicate with customers through Amazon, and demanded indemnification as well as substantial fees on each purchase. Whatever term we use to describe Amazon's role, be it 'retailer,' 'distributor,' or merely 'facilitator,' it was pivotal in bringing the product here to the consumer."
The California Supreme Court previously ruled in Vandermark v. Ford Motor Co. (1964) 61 Cal.2d 256 (Vandermark), "Retailers like manufacturers are engaged in the business of distributing goods to the public. They are an integral part of the overall producing and marketing enterprise that should bear the cost of injuries resulting from defective products.
Amazon continues to destroy the retail economy, retail workers, consumer confidence, and related services despite hundreds of lawsuits that expose its dangerous business practices. Undeterred by pending legislation, executive orders, and just plain common sense and ethics, the website grabs the retail dollars previously injected into local economies and support trades and turns them into higher salaries for Amazon management and inestimable wealth for CEO Jeff Bezos.
An astonishing 200,000 brands are fighting counterfeit and fraudulent products on Amazon's websites earning Amazon the distinction of being the first and only U.S. company to be added to the U.S. Trade Representative's "Notorious Markets List." The list is reserved for the worst online markets and offenders that enable and facilitate the world's largest criminal enterprise; counterfeit product sales, copyright piracy, and trademark infringement. The profits are indeed enormous, bolstered by the avoidance of income tax: Amazon paid no federal income tax on $11.2 billion in profit in 2018 and a 1.2% tax rate on a $13.3 billion profit in 2019.
We all end up with the subsidizing and consequences of the sale of defective products while Amazon takes its transaction fee for each item sold.
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