Will marketplaces become legally liable for what they sell?
Purchasing from online marketplaces can be a gamble for customers. Now the state of California wants to put responsibility for the safety and quality of products sold through these platforms more squarely on the shoulders of operators.
A new bill, introduced to the California State Assembly last month, would impose strict liability on online retailers that communicate sales offers or facilitate transactions with third parties, according to The National Law Review. The bill comes after earlier legislation to hold marketplaces responsible for the safety of products they sell stalled out in that state’s senate. The earlier legislation was written in probable response to a court case in which a woman purchased a laptop from a third-party seller on Amazon.com’s marketplace and was later injured when the device’s battery exploded.
Taking a different approach, a federal bill called the INFORM Consumers Act was recently introduced in the U.S. Senate. It would require third-party sellers to provide more information to the public. The bill is backed by the Retail Industry Leaders Association.
The California case is far from the only dangerous incident linked to electronics purchased from marketplace sellers. In 2015, a type of hands-free scooter known as “hoverboards” grew popular in the U.S. These products, often purchased via marketplaces such as Amazon’s, were prone to battery explosions. A year later, a destructive house fire in Knoxville, TN, tied to one of the defective hoverboards prompted a lawsuit against Amazon, according to The Associated Press.
Amazon settled the lawsuit for an undisclosed sum before the case was scheduled to go to trial in November of 2020, according to Legal Examiner.
Tragedies such as the house fire have turned the assurance of the safety and quality of products sold on online marketplace into a perennial concern in the U.S. It is an issue only poised to get more serious as international marketplaces like Wish and AliExpress continue to grow in popularity stateside.
Legislators have taken other stabs at tackling the multifaceted issue. In an attempt to stem the flow of counterfeits that appear on marketplaces, the U.S. House of Representatives introduced a bill last year called the Shop Safe Act of 2020, which would have made marketplace owners legally liable for the sale of phony goods on their websites.
The Shop Safe bill does not appear to have moved any farther in Congress, according to government initiative tracking site GovTrack.
- New California Bill Would Impose Strict Products Liability on All Online Retailers – National Law Review
- Retailers Back INFORM Consumers Act – RILA
- Should Amazon pay a penalty for counterfeits sold in its marketplace? – RetailWire
- H.R. 6058 (116th): SHOP SAFE Act of 2020 – Govtrack
- Hoverboard fire lawsuit against Amazon can move forward – Associated Press News
- Amazon Settles Product Liability Case Over Hoverboard House Fire – Legal Examiner
DISCUSSION QUESTIONS: Would putting the onus on third-party sellers for more transparency, as with the INFORM Consumers Act, be helpful in addressing counterfeiting and negligence conducted through marketplaces? How do you see online marketplaces responding to legislation that would hold them liable for third-party sellers?