Amazon to Pay Up to $1,000 for Defective Products

Infamous fire hoverboards sold on Amazon.

Amazon has announced that it will pay consumers up to $1,000 for products sold by third parties that cause damage or injury. This is a slight shift from its position that as merely a “marketplace” for other sellers, it bears no responsibility for dangerous products sold on the site. See CNN article here by Jordan Valinski.

Who Is Responsible for Product Defects?

Every state has different products liability law, but many share common features. Manufacturers are liable for damage caused by unsafe designs and product defects. But what if the manufacturer goes out of business or is overseas? This would leave fault-free victims without any recourse.

Like many other states, Washington holds a “product seller” liable in certain circumstances. For example under RCW 7.72.040:

(2) A product seller, other than a manufacturer, shall have the liability of a manufacturer to the claimant if:

(a) No solvent manufacturer who would be liable to the claimant is subject to service of process under the laws of the claimant's domicile or the state of Washington; or

(b) The court determines that it is highly probable that the claimant would be unable to enforce a judgment against any manufacturer

Is Amazon Responsible for Product Defects as a Product Seller?

Amazon has described itself as a marketplace for product sellers - not a product seller itself. In normal retail terms, Amazon wants to be the mall rather than the stores in it. Terms of use state, "If you purchase any of the products or services offered by these businesses or individuals, you are purchasing directly from those third parties, not from Amazon," and "Amazon does not assume any responsibility or liability for the actions, product, and content of all these and any other third parties."

But Amazon’s terms of use do not dictate the law of any state. In the well-publicized case of Oberdorf v. Amazon, the Third Circuit initially held Amazon liable as a product seller, then reversed, then certified the question to the Pennsylvania Supreme Court. But before the court could hear the issue, the case settled.

This exact issue has not been decided in Washington. Our law defines “product seller” as “any person or entity that is engaged in the business of selling products, whether the sale is for resale, or for use or consumption. The term includes a manufacturer, wholesaler, distributor, or retailer of the relevant product.” RCW 7.72.010.

Amazon likely believes that playing a more active role in consumer complaints - and paying small monetary damages - reduces the risk of adverse court decisions like in Oberdorf, holding the company liable to injured victims. Time will tell how courts decide this issue.