Federal Appeals Court Just Found Amazon Liable for Third Party Sellers’ Products

It was a victorious day for Amazon customers who have been duped, swindled, and harmed by products from some third party sellers on the e-commerce company’s platform.

On Wednesday a Federal appeals court ruled that Amazon is to be liable for third party sellers’ defective products on its platform.

A Pennsylvania Federal court has appealed a lower court ruling to make Amazon liable for these faulty or counterfeit products.

Amazon has been met with backlash over the years for allowing vendors to sell these kind of items on its site. Defective products include a hoverboard that exploded and burned down a family’s house and a dog leash that blinded a woman.

Pennsylvania customer, Heather Oberdorf, had purchased a retractable dog leash on Amazon.com from a third-party vendor, The Furry Gang. While walking her dog in 2015, Oberdorf was blinded after the leash suddenly recoiled. The Furry Gang has not been contactable by either Amazon nor Oberdorf.

While the company had previously escaped liability for its vendors’ products in other court rulings, Amazon didn’t win today.

“Amazon fails to account for the fact that under the Agreement, third-party vendors can communicate with the customers only through Amazon,” said the latest ruling. “This enables third-party vendors to conceal themselves from the customer, leaving customers injured by defective products with no direct recourse to the third-party vendor.”

In the most recent letter to shareholders, CEO Jeff Bezos wrote, “Something strange and remarkable has happened over the last 20 years,” Amazon’s Jeff Bezos said in his annual letter to shareholders. “Third-party sales have grown from 3% of the total to 58%. To put it bluntly: Third-party sellers are kicking our first-party butt.”

In 1999, Amazon did $1.6 billion in physical gross merchandise sales itself, compared to $100 million by its third-party sellers. Last year, Amazon’s direct sales were $117 billion and third-party sales, mostly from small- and medium-sized businesses, came in at $160 billion.

Disclaimer: We have no position in Amazon.com, Inc. (NASDAQ: AMZN) and have not been compensated for this article.