Online Marketplaces and Product Liability: Who’s Responsible for Defective Third-Party Products?

The rise of online marketplaces like Amazon and eBay has led to an increase in third-party sellers using these platforms to sell their products directly to consumers. However, when a defective product injures the consumer, it can be unclear who is legally responsible – the third-party seller, the marketplace itself, or both. This article examines the complex issue of liability for defective products sold on online marketplaces.
Liability of Third-Party Sellers
Third-party sellers who use online marketplaces are generally considered the manufacturers and distributors of the products they sell. Under product liability law, manufacturers and distributors can be held liable if they sell a defective product that causes injury or damage.
However, many third-party sellers on Amazon and eBay are small businesses or individuals who may not have sufficient resources to compensate injured consumers. While consumers can sue the third-party seller, they may not be able to collect if the seller declares bankruptcy or disappears. This poses a challenge for consumers seeking accountability for their injuries.
Liability of the Online Marketplace
Online marketplaces themselves have largely avoided liability for defective products sold by third-party sellers by arguing that they are merely providing a platform and are not involved in manufacturing, distribution or sales. However, some courts have found that marketplaces can exercise a sufficient degree of control over third-party sellers to be held liable under certain circumstances.
Factors that may determine an online marketplace’s liability include:
• Providing Fulfillment Services: If the marketplace handles storage, packaging, and shipping of the product, they may be considered a distributor.
• Advertising Defective Products: If the marketplace promotes or recommends defective products, it may be liable for negligent advertising.
• Failing to Police Sellers: If the marketplace fails to vet high-risk sellers or remove defective products from their site, they could potentially be liable for negligence.
Section 230 Protections
However, many online marketplaces are shielded by Section 230 of the Communications Decency Act. Section 230 generally immunizes websites and platforms from liability for third-party content. Marketplaces have used Section 230 to defend against product liability lawsuits by claiming they are only hosting seller content, not creating or selling products themselves.
Some legal experts argue that Section 230 goes too far in protecting online marketplaces and should be reformed to hold them accountable when they play an active role in sales and distribution. But legislative action has not yet amended Section 230’s broad protections for internet companies, although this might change once the Supreme Court has issued guidance.
Self-Regulation by Marketplaces
In response to liability concerns, many online marketplaces have implemented policies and protocols to police sellers and products on their own platforms. For example:
• Product Reviews: Letting consumers review products helps identify potentially dangerous or deceptive products.
• Seller Verification: Marketplaces can require sellers submit ID verification and business licenses to reduce fraud risk.
• Testing and Inspections: Amazon randomly tests product samples to ensure compliance with safety standards.
• Removal Processes: Marketplaces like eBay and Etsy have processes for reporting and removing unsafe or illegal products.
However, the effectiveness of self-regulation varies widely across different online platforms. Critics argue that stronger federal oversight and regulation is still needed.
Consumer Recourse Options
When a consumer is injured by a defective product purchased from an online marketplace, here are some options they can consider:
• Sue the third-party seller directly for product liability if they can be identified and located.
• Make a product liability claim against the marketplace if there is evidence they played a role in the defect.
• Report the product to the marketplace to have it removed from sale to prevent future injuries.
• File a complaint with the Consumer Product Safety Commission if it is a dangerous consumer product.
• Check if the credit card used has purchase protection that can reimburse for damages.
• Consult a personal injury attorney to determine all viable legal claims related to the defective product.
While e-commerce has benefited consumers in many ways, issues around product liability and accountability continue to evolve. Careful consumer action, vigilant marketplaces, and updated regulations will be needed to better balance the responsibilities of online platforms and third-party sellers.
The growth of e-commerce has opened up easy access to third-party sellers but has also created ambiguity around liability for defective products. Talk to us today if you bought a defective product from an online marketplace and it caused an injury. You can visit our offices at the following addresses:
• Orlando – 315 Park Lake Cir., Orlando, FL 32803
• Tampa – 11700 N. 58th St., Ste. A, Temple Terrace, FL 33617
• Kissimmee – 1052 E. Osceola Parkway, Kissimmee, FL 34744
• Poinciana – 4663 Old Pleasant Hill Road, Poinciana, FL 34759
• Davenport – 40230 US Highway 27, Suite 140, Davenport, FL 33837
• Bradenton – 409 6th Avenue East, Bradenton, FL 34208
Call now for a free consultation on (888) 522-0222.