Since Amazon got started its business model has changed significantly. Originally, the company sold only books, and only through its own distribution channel. As the company grew, it expanded its offerings, selling products other than books, and eventually opening the platform up to third-party sellers. That change took Amazon from being a traditional retailer and made it more like a flea market, where they provide the space and others use the space to sell their own products.
That virtual store concept has allowed the retailer to grow its product assortment while not having to grow its distribution network. It has also kept the company separated from potential lawsuits, especially in sales that are between a third party seller and a customer. That is until a recent court ruling in the 3rd US Circuit Court of Appeals in Philadelphia, which stated that Amazon can be held liable for sales in which the company only acts as a payment processor.
The case revolves around an incident in which a customer, Heather Oberdorf, purchased a retractable leash through the Amazon Marketplace from seller Furry Gang. Furry Gang shipped the product directly from their facility in Nevada to the customer. The leash broke, and the cord struck the owner in the eye, blinding her. She sued Amazon in 2016 for the defective product after she was unable to locate any representative of the seller. Amazon was also unable to contact Furry Gang since they stopped selling on the Marketplace in 2016.
The ruling is a reversal of several lower court rulings, all of which have said that Amazon has no legal liability for products and sales that they are not involved with. The ruling was mostly based around the idea that Amazon's Marketplace allows the sellers to separate themselves behind a level of anonymity. This separation leaves customers with little or no recourse in the event of a defect. This reversal could potentially open other sites, like eBay or Craigslist, up to liability for sales that they broker. This will likely cause sites like Amazon to require sellers to identify themselves, either as individuals or corporations, giving customers direct recourse.