28 August 2019

Amazon courts trouble

Legal defence falls flat as platform swamped with products which violate FDA regulations says Wall Street Journal report.


“Amazon has ceded control of its site,” according to a Wall Street Journal report. In an investigative report, the WSJ states that “just like tech companies that have struggled to tackle misinformation on their platforms, Amazon has proven unable or unwilling to effectively police third-party sellers on its site.”

Liability rebutted

Research suggests that in addition to a multiude of counterfeits, there are “thousands of banned, unsafe or mislabeled products.” These range from nearly 100 different eyelash-growth products falsely listed as “FDA-approved” to sleeping mats the Food and Drug Administration warns can suffocate infants. The Seattle-based behemoth has achieved a 36.5 percent market share of online retail as of 2018, and became the second company to ever reach a $1 trillion market cap the same year, following Apple. Amazon relied heavily on its marketplace, which has 2.5 million third-party sellers amounting to nearly 60 percent of all physical merchandise sales by Amazon. Close to 15,000 listings for products have been identified by the WSJ which fall foul of FDA regulations, “many of them anonymous, many in China, some offering scant information,” the report states. According to the WSJ’s Alexandra Berzon, Shane Shifflett and Justin Scheck Amazon regularly disclaims liability, asserting that it is not the seller, but instead, merely an intermediary.

Legal defence

“Amazon’s common legal defense in safety disputes over third-party sales is that it is not the seller and so, [it] can’t be responsible under state statutes that let consumers sue retailers,” according to the reporters, suggesting for the most part this has proven effective. However, last month when a 3-judge panel for the US Court of Appeals for the Third Circuit Court of Appeals determined that Amazon is, in fact, liable for the damage caused by a defective dog leash purchased from a third-party on its marketplace in December 2014. The court determined that despite the fact that the leash was “sourced and shipped by [a] third-party vendor … Amazon’s involvement in transactions extends beyond a mere editorial function; it plays a large role in the actual sales process.” The case, contested by Amazon, may have a significant impact upon Amazon because over half of the products sold by Amazon each year come from third-parties. The WSJ suggests the Third Circuit’s decision “could impose on Amazon greater responsibility” and legal liability over the products listed on its site by third-parties.

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