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A ruling by a Maryland judge in a federal product liability case against Amazon is likely to have major implications for years to come for some online marketplaces and consumers alike. It's definitely going to be a little more of a "buyer beware" atmosphere than before when it comes to online sales.
Here's what you should know about product liability laws and online marketplaces due to the new ruling:
What started the case against Amazon?
After a couple received a headlamp purchased on Amazon as a gift, the lamp malfunctioned and ultimately set fire to their home, burning it to the ground in 2014. The headlamp was produced and sold by a Chinese company called Dream Light through Amazon's site. The couple's insurer, Erie Insurance Company, paid out more than $300,000 in damages. Then the insurance company sued Amazon for the money, claiming that product liability laws put the company directly in the supply chain.
Why could Amazon have been liable?
Generally speaking, product liability laws impose strict liability on every part of the supply chain to the consumer -- whether it's the manufacturer, distributor, supplier, or retailer. For example, had the headlamp been sold by the local Walmart, the lawsuit could have named Walmart as the defendant instead.
The Chinese company was also named in the suit, but obtaining a settlement from Chinese firms can be tricky. Many lack sufficient holdings in the United States to give the plaintiffs enough recourse to claim U.S. jurisdiction over the case or collect. Often, overseas companies offering cheap knock-off goods come and go quickly under a variety of names and can be problematic to even track down. That made Amazon the party that the insurance company would have been more likely to collect from -- had the suit been successful.
Why did the lawsuit against Amazon fail?
Essentially, the court rules that, in this instance, Amazon just acted as a marketplace or vehicle that let sellers and buyers meet up -- like eBay, Craigslist, or Etsy. When the manufacturer of the headlamp shipped directly from its own warehouse in China to Amazon to be passed onto the buyer, it never transferred possession of the item to Amazon. Amazon never paid anything for the item nor took the title of it by any agreement.
While the judges in the case questioned the fairness of the laws in place today given that they were crafted long before online marketplaces were a thing, this is definitely going to require buyers to be more cautious about what they purchase from Amazon -- which actually controls 50% of all online retail purchases today.
For buyers, it's a warning sign that they need to look at what company is supplying their products carefully when they purchase through Amazon. Many may have a false sense of security about the online marketplace -- but they need to regard it more like eBay when they make a purchase and consider the consequences of a bad deal with a defective product carefully.
If you're wondering if you have a valid claim over a defective product that caused you financial losses or personal injuries, remember that no two cases are exactly alike. Talk to a product liability attorney today.Share