Amazon Supports Proposed California Product Liability Act for Online Sellers (with Terms)

(Reuters) – Less than two weeks after a California appeals court ruled in the Bolger v. Amazon case that the online retail Leviathan could be held liable for faulty products sold on its website, Amazon gave a surprise this weekend Announcement Out: It provided conditional support for a proposed California law that would make it easier for consumers to hold electronic retailers responsible for placing defective products on the market. As long as other online retailers can’t evade the law based on how they get revenue from selling products from outside vendors, Amazon said in a blog post, it will support the bill.

The law, known as AB 3262, was passed by the California Assembly and approved by the Senate Judiciary Committee. The entire state Senate is expected to vote on the proposed bill later this week – which is being rejected by Etsy, eBay, the California Chamber of Commerce, the Internet Association, the National Federation of Independent Business, and several other corporate groups. Amazon’s late support is seen as a boost to the bill’s prospects, which were already pretty rosy in California’s more consumer-friendly legislation.

On Monday, in response to Amazon’s blog post, legislators, presumably in response to Amazon’s blog post, amended the bill to make an exception for websites that only receive a fee for advertising a vendor’s products and to clarify that online sellers are responsible for the “Facilitation” of the sale of defective goods can be held liable by external suppliers.

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As you know, Amazon has fought product liability lawsuits for years from consumers who purchased third-party goods through its website – whose products account for nearly 60% of Amazon sales. Most notably, the company has managed to convince courts that while it stores the sellers’ products in its warehouses, processes customer payments and ships goods to consumers in Amazon trucks, it is not a “seller” under state tort law can be held liable because it does not take ownership of products offered by third parties. Amazon lost a case in the U.S. 3rd appeals court in 2019, but the appeals court overturned its verdict and asked the Pennsylvania Supreme Court to weigh up. The Ohio Supreme Court is also looking into the problem.

California law would remove any uncertainty for the benefit of consumers. Bill’s author, Assemblyman Mark Stone, presented the proposed bill as an alignment of liability for brick and mortar retailers and online marketplaces, which had sales of more than $ 600 billion in 2019. Without ensuring that online marketplaces have the same responsibility as an actual store, the bill states that more retailers will be abandoning physical stores and more consumers will be free of recourse if they buy a defective product from a third party. “The strict liability of the manufacturer and the electronic retail market alike offers the injured plaintiff maximum protection and does not damage the electronic retail marketplace,” says the draft law.

The law includes carveouts for used or used goods clearly marked as such, for handcrafted products and for auction goods. But even the Amazon competitors eBay and Etsy are not exempt from the proponents of the draft law. These websites, like Amazon, generate revenue from the sale of new products made by third parties, so in the opinion of AB 3262 supporters, they should be held responsible for defective products.

Etsy and eBay vehemently oppose the law, arguing in a joint letter to the Senate last month that the law would extend liability for online sellers beyond the boundaries of brick and mortar retail. Etsy and eBay emphasized the differences between their business model and Amazon’s: they don’t have warehouses to store products from outside sellers, they don’t act as intermediaries for buyers and sellers, and they don’t ship products. They described themselves as neutral platforms that allow buyers and sellers to easily get in touch with one another. According to eBay and Etsy, unlike Amazon buyers, buyers on their websites shouldn’t have a reasonable expectation that they will act as sellers or retailers.

The California Senate report on the bill cited arguments from eBay and Etsy, but said proponents of the bill believed the two sites had adopted practices similar to those of retailers rather than “peer-to-peer” platforms. Ultimately, it is about certain facts in each case, in particular the control of the online retailer over the sale of the defective product, according to the Senate report.

But this week’s changes, apparently driven by Amazon’s blog post, will make it more difficult for eBay and Etsy – and other sites that generate revenue from facilitating online buyer-third-party transactions – liability for faulty products to avoid. Amazon could even benefit from the law in the end because it is better positioned than small competitors to withstand liability for defective products.

AB 3262 opponents remain firmly convinced that the law is a bad idea. Jaime Huff of the Civil Justice Association of California, who signed a letter against the proposed coalition of business groups bill, said via email that the bill was a radical departure from established product liability law. “The bottom line is that this bill would raise barriers to entry to online sales, hurt small businesses, close small online marketplaces, and increase the cost of goods that consumers buy online,” said Huff.

EBay said in a statement that AB 3262 goes well beyond the California courts liability imposed on Amazon in the Bolger case. The bill “applies the same standard for Amazon to dozens of third-party marketplaces that make it easy for small businesses to reach customers,” the statement said. “This is a one-size-fits-all solution that, at a critical time, would only penalize California’s small and small businesses that rely on e-commerce to be successful.”

And Etsy CEO Josh Silverman said in a post on Medium that Amazon is using consumer safety as a pretext to crush competitors. “This is an abuse of market power,” said Silverman. “Amazon is taking bold steps to wipe out its competitors by promoting complex, hard-to-follow laws that only they can afford. Amazon’s goal is to be the only place where you can buy things online. “

Brian Huseman, Amazon’s Executive Director for Public Policy, who authored the blog post Conditionally Supporting AB 3262, didn’t respond to my email request. The Amazon press office did not respond either.

If California passes AB 3262, it will be interesting to see if Amazon continues to deny its liability outside of California after publicly announcing that online retailer liability is a boon to consumer safety.

COVID-19, as the writers of AB 3262 pointed out, has only accelerated the shift of US consumers to online purchases. It’s a big deal that Amazon is now agreeing to improve consumer safety by holding websites responsible for selling defective goods.