A California appeals court has ruled that Amazon is legally responsible for defective products sold on its site by third parties.

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  • A California appeals court ruled Thursday that Amazon was legally responsible for faulty products sold on its site by third parties.
  • The court said Amazon “played a pivotal role in providing the product,” a faulty replacement laptop battery, to a customer, who claimed to have been burned in the explosion.
  • The ruling overturns a previous court ruling in favor of Amazon and could expose Amazon to huge legal costs or force it to tighter control of sellers on its site.
  • Visit the Business Insider homepage for more stories.

Amazon was hit with legal defeat this week after a California appeals court ruled the company could be held liable for faulty products sold on its site by third-party sellers.

In a unanimous decision on Thursday, Judge Patricia Guerrero of the Fourth District Court of Appeal wrote that “under established principles of strict liability, Amazon should be held liable if a product sold on its website is found to be defective “.

The ruling overturned an earlier trial court ruling in favor of Amazon’s motion for summary judgment, though the company can still appeal to the state’s Supreme Court. Amazon did not immediately respond to a request for comment.

The case involved a replacement laptop battery that Amazon customer Angela Bolger had purchased from a Hong Kong-based company called Lenoge Technology, which had become “E-Life” in the online marketplace of Amazon. Bolger alleged in her lawsuit that “the battery exploded several months later and suffered severe burns as a result,” which she argued Amazon should be held responsible for.

Amazon had argued that it was not responsible because “it did not distribute, manufacture or sell the product” and that Lenoge was the seller.

But the court disagreed, finding that Amazon had played such a disproportionate role in the transaction that it was responsible for the faulty battery.

Guerrero wrote that Amazon “stood between Lenoge and Bolger in the distribution chain… accepted possession of the product… stored it in an Amazon warehouse… brought Bolger to the site… provided him with a list of products. … Received his payment… shipped the product in Amazon packaging… checked the terms of Lenoge’s offer to sell… restricted Lenoge’s access to Amazon customer information… forced Lenoge to communicate with customers via Amazon… “and demanded compensation as well as substantial fees on every purchase. ”

“Whatever term we use to describe Amazon’s role, be it ‘retailer’, ‘distributor’ or simply ‘facilitator’, it was essential to bring the product to the consumer,” she concluded.

Nor did the court buy Amazon’s statement that it should be protected under section 230 of the Communications Decency Act 1996, which protects internet companies from the legal repercussions of content posted by third parties on their sites.

He determined that Section 230 did not apply because Bolger’s claims “depend on Amazon’s own business, and not on his status as a speaker or publisher of content provided by Lenoge for its product listing.” .

Pending the results of a possible appeal, Thursday’s decision potentially exposes the online retail giant to significant legal exposure from other customers who could bring similar lawsuits for faulty or damaged products. It could also force Amazon to adjust its policies to more tightly regulate third-party sellers.

The number of third-party sellers on Amazon has grown significantly in recent years, and they now represent more than half of the products listed on the site. It has also led to an increase in faulty, counterfeit, dangerous, expired and even illegal or banned ads.

Amazon listing review site Fakespot found that in a recent 10-day period, 2,766,693 products on Amazon and 417,616 sellers were “unreliable,” concluding from this sample that “15% of Amazon sellers are unreliable and should be avoided ”.

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