Faulty products are pretty standard. Brick and mortar stores have dealt with them according to their return policies. These practices have translated onto the world of e-commerce, where Amazon is an absolute king. While having to deal with faulty products from time to time is reasonable, the constant struggle with them is not, especially when you add expensive lawsuits that are also damaging for the brand.
That is exactly what Amazon is going through at the moment. Faulty products, expensive lawsuits, and a PR nightmare are apparently everyday occurrences for this giant now. But what will it lead to? And how is Amazon going to respond? Before we seek answers to these questions, let's take a look at some of the most prominent causes of "faulty products" on Amazon.
State Farm vs Amazon - Defective Piece of Plumbing
State Farm is a renowned insurance company from the US. It’s battle with Amazon started in 2018 and ended in July 2019. The cause of the dispute was a defective piece of plumbing, more precisely a bathtub faucet adapter.
One of State Farm’s customers purchased a piece of plumbing on Amazon. It proved to be defective, causing a flood in the customer’s home and damaging flooring, walls, furniture, and appliances. After the inspection of the customer’s home, State Farm pinpointed the cause of the flood - faulty bathtub faucet adapter.
The next logical step is to sue Amazon for selling a faulty product, which led to material damage. The presiding judge was the US District Judge James Peterson. The court was located in the Western District of Wisconsin. Why is this important? Because Wisconsin law protects service providers. The chances for consumers to recover damages from sellers are higher than from service providers.
Nevertheless, a couple of weeks ago, the judge ruled that Amazon was responsible for selling the faulty bathtub faucet adapter. Peterson closed the case with the following words: “The undisputed facts show that Amazon is an integral part of the chain of distribution, an entity well-positioned to allocate the risks of defective products to the participants in the chain.”
This was a great conclusion given Amazon’s argument that they are a mere service provider. Amazon provides an online marketplace and logistics. The company has nothing to do with the product. The Chinese company XMJ sold the faulty facet through Amazon, and they should be held accountable.
Heather Oberdorf vs Amazon - Defective Retractable Dog Leash
Just a few weeks before the conclusion of the State Farm vs. Amazon lawsuit, another lawsuit triggered by a faulty product came to its end. The presiding judge found Amazon accountable for the faulty product. This may not yet be the final decision as Amazon asked the 3rd Circuit to re-hear the case. The story is very similar to the previous one; only this time using the faulty product didn’t result in material damage but bodily injury.
The story starts with Heather Oberdorf browsing Amazon one day in search of a retractable dog leash. She finds an appropriate one, orders it, and puts it to use. During one of the dog walks, the leash snaps, recoils and hits her directly in the eye, leaving her partially blind.
After the treatment, Oberdorf goes all legal. She hired an attorney and sued Amazon.com Inc. for strict product liability and negligence. All of this took place in 2015, and four years later, the court proceedings are still ongoing. The company that sold the dog leash via Amazon platform, The Furry Gang, was nowhere to be found.
The case moved from local to federal court, and the last ruling is that Amazon.com Inc. is responsible for selling a faulty retractable dog leash. Currently, Obendrof’s attorneys are working on a response regarding Amazon’s requirement for case re-hearing.
Amazon’s Overall Approach to The Problem
In both cases we’ve gone through, Amazon tried to build a defense on the Communications Decency Act (CDA). This act bars any claims associated with faulty products sold on Amazon. In this case, Amazon is only “an online publisher of third-party content.” Third-party content here are the products sold by numerous merchants on the Amazon platform.
Amazon is not a seller. Amazon.com Inc. is an online marketplace that also provides logistics services such as packaging, shipment, and storage facilities. Fortunately, in both cases, the judges choose to see Amazon entirely differently. After all, Amazon is dominating the e-commerce market, and as such, it should set best practices for others to follow, such as promoting the manufacture and distribution of safe products.
What Possible Solution Awaits Us?
The lawsuits are harmful to Amazon, both financially and in regards to their brand image. Even if Amazon manages to get out of these lawsuits as the winner, the company would still have paid for attorneys, and its name would still have been in the news alongside the “FAULTY PRODUCTS” phrase.
Product liability insurance is currently the most logical step for Amazon. Amazon ToS for Pro Merchants lists product liability insurance as a requirement, but the company doesn’t ask merchants to provide proof of having it. Maybe this is the thing that will change. It is logical for merchants on Amazon to expect changes in ToS and to get evidence of having an activate product liability insurance policy.