This holiday season, a cautionary tale about online shopping . . .
November 2015: A mom buys her son a hoverboard on Amazon (pictured above). She thinks she is buying it directly from Amazon. She isn’t; she’s actually buying it from a third-party merchant in China, and her order history and receipt show the order is being “fulfilled” by “W-Deals” and “-Deal-.” But the mom’s confusion is understandable. She buys it on Amazon.com. She receives the email confirmation and receipt from Amazon.com. And the hoverboard arrives in an Amazon box.
Shortly after the mom buys the hoverboard: News reports of hoverboard explosions and fires lead Amazon to begin an internal investigation of hoverboard safety.
December 2015: Amazon stops all hoverboard sales worldwide and sent the buyers a warning email with the subject line “Important Product Safety Notification Regarding your Amazon.com Order.” The body of the email states that there have been "reports of safety issues," contains a link for “information and safety tips” about the hoverboards’ lithium-ion batteries, and includes a link to return the hoverboard. The mom, however, doesn’t immediately return it.
January 2016: The hoverboard’s lithium-ion battery catches fire and burns down the family’s home. The two kids who are home at the time are able to escape by breaking windows on the second floor and jumping out. But all the family’s possessions are destroyed in the fire.
Can the mom sue Amazon for: (1) selling a defective or unreasonably dangerous product; (2) confusing her about the actual seller; or (3) failing to warn her about the defects or unreasonably dangerous nature of the product? Sixth Circuit Court of Appeals: No, No, Maybe.
First, Although the mom buys the product on Amazon, pays Amazon, receives the order confirmation from Amazon, and receives the product in Amazon box, Amazon isn’t the seller. The third-party merchant who “fulfilled” the order is. So Amazon isn’t responsible for selling a defective or unreasonably dangerous product (that is, it's immune from a products liability claim).
Second, the mom admits she doesn’t remember noticing that the order is being “fulfilled” by “W-Deals” and “-Deal-.” So she can’t claim that Amazon has confused her with these names. She didn’t notice them. Or if she did, she doesn’t remember.
Third, when Amazon sends the warning email to the mom, it voluntarily assumes a duty that it wouldn't otherwise have — a duty to warn. Once Amazon assumes that duty, it has an obligation to make its warning reasonable under the circumstances. And maybe it wasn’t, the court of appeals concludes. So the court throws the mom’s case a lifeline and sending it back to the district court for trial on this issue.
Takeaway (for consumers): When buying online, double-check who you're buying from, particularly if buying on Amazon. And when the warning emails come in from Amazon, read them carefully.
Takeaway (for companies): Be cautious about inadvertently undertaking duties, such as the duty to warn, that you wouldn't otherwise have.
Question (for legislatures and law and economic scholars): Really? This is the incentive structure we want to create? Because Amazon is an online marketplace, not a traditional seller, it's not liable for product defects if the sale is "fulfilled" by a third-party vendor? But if Amazon later undertakes to warn customers about potential product risks, it may be liable?
For more on this case, check out the Cyberlaw Podcast and WSJ.