Amazon is one of the biggest companies in the world, and its dominance as an online retailer continues to grow every year. In fact, Amazon has gone beyond simply providing the platform to connect buyers and sellers. In some cases, it partners with businesses to take over nearly all aspects of sale and delivery. This is done through its “fulfilled by Amazon program.”

This raises an interesting legal issue, however: What liability does Amazon assume for products that are dangerous/defective and cause injury to consumers? Until recently, the answer was: virtually none at all. But in an important court decision that could set significant precedent nationwide, an appellate court recently held that Amazon could be deemed liable for faulty products sold by third-party vendors through its website.

The ruling was announced in mid-August by a California appellate court. The original case before the court concerned a defective laptop battery that exploded, causing severe burns to the plaintiff. The battery was manufactured by a Chinese company called Lenoge Technology and was sold through Amazon’s platform.

In the past, Amazon has been shielded from liability for problems with third-party merchandise by the Communications Decency Act of 1996. This act says that websites cannot be held liable for publishing content submitted by third parties.

If Amazon had simply provided the selling platform in this case, that protection might have applied. But Lenoge Technology had paid to participate in the “fulfilled by Amazon” program. Under this arrangement, Amazon becomes much more involved in the sales and fulfilment processes and sets the terms of the relationship with sellers. Here are some details:

  • Sellers ship products to Amazon warehouses, where they are then stored until sale
  • All shipping and returns happen through Amazon
  • All communications between consumers and sellers must go through Amazon
  • Sellers pay extra fees to Amazon for participating in the program

Because of this deeply intertwined relationship, the court reasoned that Amazon “was pivotal in bringing the product here to the consumer.”

While this ruling initially applies in this one California case, it could very well set a precedent for future product liability cases involving products sold through Amazon. By including Amazon as a defendant, plaintiffs in product liability lawsuits could improve their chances of obtaining a fair settlement or jury award to fully cover their medical bills and other expenses. And just as importantly, this ruling could prompt Amazon to ensure that the products it endorses are actually safe, ultimately reducing risks to all consumers.