Is Amazon Responsible For Third-Party Product Liabilities? Appeals Court Rules Yes

A federal appeals court in Pennsylvania has ruled that Amazon (AMZN) can be found liable for products sold on its third-party Marketplace platform that cause injury. The split ruling was in regards to a dog leash, which blinded a plaintiff in one eye when it broke and recoiled.

The case involved the vendor, The Furry Gang, which could not be located after the injury was announced as it had deactivated its account in 2016, Retail Dive reported.

The ruling was the first to argue that Amazon has liabilities for products sold on its Marketplace by third-party vendors, Reuters reported. The ruling argued that while Amazon was not the seller of the product, it was responsible for regulating sales on its Marketplace as well as the interaction of customers.

The ruling said that because Amazon “governs every step of the sales process,” including mediating problems between vendors and customers, it can be held liable for product issues.

The ruling judge in the case maintained that Amazon was the only party left in the marketing chain for the injured party to “redress” because the vendor had essentially disappeared. The judge continued by saying that Amazon is “uniquely positioned to receive reports of defective products” and has the authority to remove those products from its Marketplace.

The judge contended that Amazon could include liability risks into its seller fees. The judge also said that the number of lawsuits that the e-commerce giant could face from product liabilities could incentivize it to remove products that pose hazards from its Marketplace.

The split ruling had one dissenting judge stating, that Amazon could be forced in “a fundamentally new business model” based on the liability of its Marketplace products.

Shares of Amazon stock were up 1.60 percent as of 3:27 p.m. ET on Tuesday.