> In Wednesday’s opinion, Circuit Judge Jane Richards Roth, writing for a 2-1 majority of a three-judge panel, said Amazon may be liable in part because its business model “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.”
Seems like Amazon can just force third-party vendors to reveal their full legal identity to the customer then?
I don't care who's liable as long as someone's liable and it's fully enforceable within the US court system.
It is still a big deal, because customers are going to be a LOT more hesitant to buy stuff if they realize it's sold by a random Chinese dude and not Amazon.
And, if Amazon's entire supply chain is filled with counterfeits, all the more reason why Amazon should 1) reveal who the seller really is, or 2) be liable for the counterfeits.
You misread the comment you're replying to, I think. empath75's claim "Amazon’s entire supply chain is filled with counterfeits" is intended to mean that parties other than the seller—such as warehouse employees, delivery companies, importers, etc.—are also inserting counterfeits into Amazon's supply chain, such that even products "sold by Amazon" in the strictest legal sense, can potentially still be counterfeits.
Given this, customers should already have been wary of purchasing from Amazon, enough that finding out that they're often purchasing from third-parties shouldn't further affect their opinion (i.e. they should already have as low an opinion of Amazon as if they had already known that, because of the other supply-chain problems.)
Most people don't have that opinion though - things brought through Amazon are viewed as being vetted and high quality when compared to items through eBay or Wish - Amazon has made no effort to disabuse people of this conception and I personally think they've worked actively to downplay the role the third party plays in product delivery.
I've also always been a bit curious if amazon might be liable for defective products shipped through their warehouse by virtue of the transfer of custody alone. This sort of business model is quite new (it's worlds different from a flea market) and there are several interesting commercial responsibility questions around it.
I think that this article means the opposite... and that Amazon could be liable for stuff that you buy from random Chinese dudes. So it should become less risky.
The GP means (I think) that this decision effectively forces Amazon to make a decision: either stop permitting third-party sellers or else require third-party sellers to identify themselves (and, implicitly, provide bona fide contact information). The result of the second option is that many third-party sellers on Amazon will be exposed as Chinese sellers who in practice cannot be held accountable.
GP here: And not just contact information, but a legitimate US legal and financial presence.
If you're selling in the US, I need to be able to effectively sue you and win in the US if you sell harmful or illegal products, full stop. So you should have to put up some kind of financial bond and a law firm to represent you. Because mom and pop businesses can't do this themselves, this should be provided as a kind of insurance policy that's just part of the cost of doing business. Heck, Amazon can be that insurance policy if they want.
But right -- if I can't sue you, you should under no circumstances be allowed to sell within the US on a US platform.
Any US legal entity (corporation, LLC, etc.) formed in one of the 50 states is required to have a registered agent in its state of formation. The primary purpose of said registered agent is to receive legal process on behalf of the US legal entity.
So any US corporation or LLC should meet the "US legal and financial presence" requirement that you describe.
My wife runs a small side-business and has a Seller account on Amazon. I'm a little nervous for what this might mean (assuming they don't appeal and actually do something about it) in the short term in terms of compliance costs, etc., but in the long run I think it's for the best. There is a real problem with inferior quality products and intellectual property/copyright theft from non-American sellers and aside from that the points you note are valid too: people who buy from sellers using Amazon's platform ought to have recourse--and either Amazon or the seller has to provide it when required.
> Seems like Amazon can just force third-party vendors to reveal their full legal identity to the customer then?
Minimizing the prominence of seller identity and maximizing that of the Amazon brand has been a key Amazon business strategy; they very much want sellers not to matter.
I suspect, though, that even were that problem cured, their commingling practice would leave them liable unless they also allowed buyers access to the identity of and the ability to reject transactions based on the original product source (which may not be the seller, due to commingling) with FBA products.
" Seems like Amazon can just force third-party vendors to reveal their full legal identity to the customer then?"
I bought a defective sever power supply from a 3rd party seller at Amazon in Europe. Amazon claims they don't know the identity/address/email of this seller. Wrote it off as a loss.
Edit: I mean, Amazon must have given this guy my money. They must have something from him. Bank account, Email etc.
That would require Amazon to stop co-mingling real and counterfeit products which would in turn dramatically help the problem. It probably wouldn't fix everything but being able to make an informed decision would help.
Amazon could end up being required to declare the seller’s information to the buyer (at time of purchase!), and required to validate that information using expensive non-trivial practices such as business license lookups and tax form SSN/EIN checks. This court decision implies that liability defaults to Amazon under their current practices, and shifting that liability would need to involve disclosure prior to sale. These are all absolutely market-destroying things - and when you apply them to eBay, which does not provide seller contact information or perform tax validation before the sale occurs, it only worsens in potential impact for businesses profiting off of their enforcement-free approach today.
It seems to me that the difference with Ebay is that I am buying from a specific person (even if that person is effectively a stranger to me). On the other hand with Amazon I'm presented with a product that happens to be sold by many different people.
I've bought and sold a moderate amount on eBay - as a buyer I am protected for the most part. Every dispute I've filed as a buyer I've won, and every dispute I've had filed against me as a seller (2, in 10 years) I've lost. One was my fault (I made a mistake with the description) and the other was someone claiming I shipped the wrong item, (which I didn't, they just got a free game out of it). The weighting is heavily in favour of the buyer on eBay, and even after being scammed once I still think it's the right thing to do.
On the flip side for Amazon,it feels unfair that the seller has my contact details and can use it to send me emails asking for reviews and to market their other products even when I've opted out of marketing emails. I've had a few counterfeit products where the seller just hasn't responded and I've been refunded but left with the counterfeit item, which doesn't sit well with me. The comingling is an awful problem, and if there were another site that offered next day delivery on a variety of goods with guaranteed wualotythat was more expensive, id swap in a heartbeat.
Indeed, I think that’s a critical difference that has likely protected eBay from this concern - and is an area where Amazon thought it could differentiate itself without risk of liability. The risk to eBay is that Amazon’s push on that front of deniability creates a backlash that imposes new constraints of disclosure and/or verification on eBay.
eBay is a flea market. It's what that sell themselves as. You are knowingly purchasing used items and there's almost always a picture of the exact item you're getting and where it's being shipped from. Amazon by comparison is a black box of magic, only the magic smoke is toxic and you have no idea who to go to for redress. Amazon has gotten a free ride for years, screwingb both their sellers and buyers, making knock off products when it sees profit motive, it's time to pay the Piper.
"I'm going to compete with eBay in a market visibly riddled with fraud and malicious actors" is probably a bad omen regardless of the third-party problem.
But. If you arrange the transaction between the two sellers and hold payment+device in escrow, then that's clearly "arranged between two sellers" and wouldn't be the target of this ruling.
(Escrow insurance isn't cheap, though. And without escrow, you have nothing but risk.)
The use of an approach based on Letters of Credit entail clasuses that compel arbitration. That means there must be "Principled Documents" available that will support a court case in the event the arbitration process fails. Further, it is now seen that there are weaknesses in arbitration jurisprudence that allow either party to reneg on payments to the arbitrator; in which case the judge must dismiss the case. (Harvard Negotiation Law Review). It is not clear if the arbitration process will be modified (read: repaired). In effect, Amazon is asking to ignore precedent jurisprudence.
Inventory commingling could also be a problem here— the vendor you’re ostensibly buying from isn’t actually providing the product you receive, and there’s no way to find out who did provide it.
I think the issue is more than just exposing full legal identity. The shopping experience on Amazon is an abstraction. When looking at Product X, on different days, different sellers may be in the "buy box". From the customer's perspective, they are buying from Amazon, not the vendor.
IANAL, but what happens when the third party vendor is in China, effectively out of reach from a US consumer? Would Amazon be the defacto responsible party.
When I order from a third-party seller, there's no guarantee there's any invoice?
If they ship directly, sometimes it comes with a kind of paper receipt, sometimes it doesn't.
If they fulfill via Amazon, it definitely doesn't. I don't think I've gotten a receipt/invoice with any Amazon package in years... (I remember it used to come with them.)
And I click through my online order and click on the name of the seller, it just has tabs with things like generic shipping and return policies. I can't find any legal or contact info whatsoever beyond the name.
OK, I am not that familiar with Amazon DE's operation, I only ran companies that acted as 3rd party sellers on Amazon US, including writing MWS software, and they had certain requirements.
People think they buy from "Amazon" and not a "marketplace", as it's how it used to be. Even though it's now more or less just a high-valued ebay clone. Hundreds of duplicates, lots of shitty items.
I always thought that "shipped and sold by Amazon" means actual Amazon (except for the group binning issue). And "fulfilled by Amazon" means they're holding and selling some other company's stock.
It's kind of accurate but incomplete. What you're missing is that Amazon does "commingling" in which all sellers of item X (including Amazon itself) submit inventory to Amazon and all of that inventory of supposedly identical items is put together into one big pool. If someone manages to submit counterfeit items, they have successfully contaminated the pool so some seller's customer is going to get counterfeit goods by it probably won't be a customer of the counterfeiter.
That's not actually relevant for this case, however. In this case it sounds like the item in question was not fulfilled by Amazon but was directly shipped by a seller who is no longer active and cannot be reached using whatever contact information Amazon has.
I'm actually kind of surprised by this ruling because it seems like it is requiring Amazon to maintain current contact information for former sellers for some indeterminate amount of time. I guess the closest thing that I'm thinking of in terms of another business working like this is dropshipping where you sell items without maintaining an inventory but instead have the order shipped directly from a manufacturer or wholesaler to your customer. That's actually fairly common with a lot of computer equipment, where you'll see on a website a mention of "ships directly from manufacturer"
I have found that “shipped and sold by amazon” also involves a very high proportion of defective or counterfeit items.
Even with books, there are many copyright-violating counterfeits, alongside many “printed on demand” copies at horrible quality (but not advertised as such) under some kind of shady deal Amazon forced down publishers’ throats.
Unfortunately Amazon has driven many alternative vendors out of the market, so it’s sometimes hard to find things elsewhere online.
I hear this complaint about quality a lot online. But I've been buying for ten years, hundreds of orders. And not once have I had a complaint. The closest I got was a broken Amazon branded space heater but they recalled all of them last week so that feels like an anomaly. So I'm not really sure what to think.
I've definitely noticed a huge drop in quality over the years. Depending upon what you order it's safer to go through AliExpress. I wouldn't buy anything that I value my life or my data for from Amazon.
I know right? I actually used the Walmart website recently for a purchase _shudder_ of razor blades because I simply don’t trust Amazon any more. I cannot understand how this is good for them.
They ended up replacing it after a month of back-and-forth repetitive communications... but it was a pain and it ended up costing me because I had to reship it to a family member in another country because it didn't come on time. They apparently lost the defective tablet that I returned somewhere in their system.
The amount of counterfeits on Amazon these days is astounding.
I was a legitimate seller about 10 years ago and I had a competitor buy one of my products and complained to Amazon that it was a counterfeit. My account was suspended and I had no recourse. To this day, I can't be attached to any seller account without it being put under review and eventually banned.
At this point I had 100% positive feedback and I spent lots of time to please all of my customers. My money was held for 90 days and it nearly bankrupted me.
I learned two things from this:
1) Don't base your entire business on a third-party platform. They become your boss and a single point of failure.
2) Fuck Amazon. I hope they get broken up and destroyed by the US government. They abused their third-party sellers for years and then when they couldn't extract enough profit anymore, they were systematically put out of business and pushed out.
In the meantime, the top “recommended by amazon” result for windows 10 is counterfeit software sold for half price (at least in Canada). The whole first page of reviews is people complaining about fakes or licenses not working
I was just on Seller Central yesterday and the only current barrier to committing fraud or selling dangerous goods on the worlds largest marketplace is a $40 monthly fee, a bank account, and enough creativity to make up a company name.
I hope this will help crack down on fraudulent product listings as well. There are a lot of bad actors. Youtube and facebook aren't the only major players with moderation issues
Don’t know about that. My wife just created an individual account to sell some things around the house. She had to jump through so many more hoops than I thought.
She needed to upload her passport to prove who she was. She had to have a credit card with her name on it. Plus she needed to prove she had access to the bank account (needed to have it show her name on the account). As well as the usual social security number being used at sign up.
Way more than I thought, but she had some identity theft issues. So that may have impacted or triggered something.
I don't and shouldn't have to care who the supplier is or what kind of agreement they have with the store; I am conducting business with the store. My contractual interactions are with the store. It process the orders, handle payment, shipping, etc.. I don't get how they can claim otherwise.
Meanwhile, I can't ever get Amazon to accept liability for the 3 bits of cardboard and a deck of playing cards I received instead of a £209 SSD that was sold by Amazon directly: https://twitter.com/JamesMcMinn/status/1144537350602678273
I had an Amazon package in Europe stolen. "Delivery to mailbox". They did not want to reimburse me or send me another one since based on "statistics" they assumed the package delivered.
Thanks god I payed with my US CC. Disputed the charge, got an angry email from Amazon, closed my Amazon account and never heard anything again.
Nope. I am still down £209 and have gotten no further. I have:
- Sent them a video of me opening the 2nd delivery to find playing cards (Literally from opening the Amazon box through to finding the playing cards inside the Samsung SSD box)
- Reported the matter to my local police, who phoned Action Fraud on my behalf. I've got me a crime reference number from Action Fraud.
- Signed 2 affidavits declaring what I did / did not receive
I've phoned them numerous times, and twice now that has involved speaking to someone, being put on hold, and then redirected to my own voice mail.
If I was the only person to have received card and a deck of playing cards I could understand their reaction, however they've removed the item from sale because a number of other people in recent days have received the same things [1].
When I spoke to my local police they were extremely confused by Amazon's behaviour. I gave Amazon the details of the officer I spoke to and the crime reference number, but that got me nowhere other that the same boilerplate email.
At this stage, I fear I'm going to end up taking Amazon to the small claims court here in the UK just to get my money back.
Optionally phone them one more time and inform them your next course of action is credit card chargeback.
Phone the card you used and walk them through what happened - they should reverse the payment. They're equally liable with Amazon. Edit: There's no guarantee Amazon will keep your account open after this - then again nor is that guaranteed after a CCJ.
Inform your local trading standards office and offer the same evidence.
If sellers can disappear, that's a problem. Amazon should be liable for ensuring sellers can be tracked down and prosecuted. In cases where they do manage to do that, though, should they still be on the hook?
Amazon does the entire sales process, collects the money, overwhelmingly ships and warehouses the products, tightly controls listings.
I'm not sure there is any case where Amazon should not be liable. You buy something "fulfilled by Amazon" and at no point in the transaction is any sort of third party involved.
Amazon should be held responsible, and they can recover damages by suing the third party. This protects the buyer in the case that the seller disappears or cannot afford the settlement.
IMO, amazon would be better off moderating their platform.
It’s about time. I just finished dealing with one of these vendors and they already had a laundry list of terrible reviews showing EXACTLY what I experienced but for bunches of other people. How in the world were they still a vendor?
This is interesting. Doesn't this make comingling a high business risk activity for Amazon? If the item shipped was from a different third party seller than the one billed, Amazon would get sued instead of the third party seller if it turned out to be defective or fake. Amazon makes a rich enough target that I imagine lawyers would accept cases on contingency whereas they might not against random small third party sellers?
Good. Amazon has sold me garbage and dangerous products. Example: I bought a MacBook power adapter from them (not Apple branded). When I went back to review it the product page was gone. In 220 volt countries, it would cause all connected touchscreens and touchpads to become unusable, and I got mild electrical shocks from the aluminum MacBook case. If you touched the aluminum laptop body, it felt like it was vibrating with electricity, even if it didn't shock you. (And yes it was rated for the higher voltage just like the authentic Apple adapter.)
Anyone with a legal background can you shed light on the ramifications for other platform plays? Is this just because they say its from Amazon or more any marketplace?
The court was careful to only make the determination that Amazon was a “seller” in this specific instance because of Amazon’s role in the sale. From the opinion[1]:
> Our decision, guided by Pennsylvania law, is limited to the question of whether Amazon is a “seller” based on its role in effectuating sales of physical products offered by third-party vendors. We express no view, for example, on whether other companies providing online marketplaces are considered “sellers.”
There were four factors the court used to help determine that Amazon was a “seller” (starting on page 12 of the opinion) and they all went against Amazon.
Thankyou for the link - it's quite interesting. Here's the section:
In its opinion, the Pennsylvania Supreme Court made clear that courts later tasked with determining whether an actor is a “seller” should consider whether the following four factors apply:
(1) Whether the actor is the “only member of the marketing chain available to the injured plaintiff for redress”;
(2) Whether “imposition of strict liability upon the [actor] serves as an incentive to safety”;
(3) Whether the actor is “in a better position than the consumer to prevent the circulation of defective products”; and
(4) Whether “[t]he [actor] can distribute the cost of compensating for injuries resulting from defects by charging for it in his business, i.e., by adjustment of the rental terms.”
What’s interesting too is the court could have concluded their reasoning with this four-factor analysis but then the ruling would most certainly be limited to Pennsylvania. So while they explicitly said they aren’t making the determination for marketplaces other than Amazon they do go through the effort in Section B (page 21) to lay out additional rationale/legal justification that brings Amazon’s actions within the meaning of “seller” in other jurisdictions as well.
In Wednesday’s opinion, Circuit Judge Jane Richards Roth, writing for a 2-1 majority of a three-judge panel, said Amazon may be liable in part because its business model “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.”
For context, concealment is bad here because co-mingling means Amazon doesn't even know which vendor shipped the defective product (and as mentioned in past posts on HN, they also blame the wrong vendor sometimes.) The fact that in this case the bad actor up and vanished is just unacceptable.
Co-mingling allowed Amazon to cut the "real" vendors from the piece of the pie, and make tons of money from having "hundreds" of options (all looking like the original).
Case in point: you couldn't buy an Apple product from Amazon without getting a fake, even though the listing said "Apple".
Why it took this long to get Amazon to be liable bewilders me.
> For context, concealment is bad here because co-mingling means Amazon doesn't even know which vendor shipped the defective product
That is not true.
From Amazon documentation on commingling:
> Note: Amazon ensures that the initial source of the commingled units can be traced throughout the fulfilment process.
> How does Amazon track my commingled inventory?
> Even though your inventory does not have additional labels, Amazon will assign a virtual trackable label to your units once they have been received. Virtual trackable labels allow Amazon to keep a track of your inventory at all the times.
> Important: Amazon ensures that the exact same units from two sellers, participating in the commingling programme, are always physically segregated. This means that Amazon storage logic does not allow same ASINs of different sellers to be stored in the same bin in our warehouse if they are commingled.
Can you please clarify this a little more. I thought I read in HN many times that commingled items can be supplied from any vendors supply and not the one a buyer chose. What does it mean that they track it but don't ensure that proper items are delivered and what's the advantage of amazon to commingle.
Another thing is if Amazon actually fulfill one buyer's sell through another's supply how is this not a fraud by amazon and how they are not sued out of business even without any fake item issue? This is one thing I never understood.
> I thought I read in HN many times that commingled items can be supplied from any vendors supply and not the one a buyer chose.
Correct.
> What does it mean that they track it but don't ensure that proper items are delivered
It means Amazon can send an item originally supplied by any seller, but Amazon will know who the original seller was.
> and what's the advantage of amazon to commingle.
Reduced fulfillment cost by e.g. having the stock closer to the buyer and reducing the need to ship orders from multiple warehouses (due to orders containing various different products and/or different sellers), as they have more inventory of that product to distribute throughout their warehouses.
> Another thing is if Amazon actually fulfill one buyer's sell through another's supply how is this not a fraud by amazon and how they are not sued out of business even without any fake item issue?
Both sellers have agreed to commingling. When you buy from seller A but seller B has stock closer, sellers A and B will perform a trade (automatically) where A gets one item of B's stock and B gets one item of A's stock. And then the now A's item will be shipped to customer. So at the time of shipping it is A's item, as the customer ordered.
If I was Amazon, I would start tracking which vendor supplied a particular instance of a product. Seems less costly than dealing with owning the liability of third-party vendors.
You can supposedly opt out of co-mingling now, and I do wonder how much money they really save by doing it. A few expensive legal penalties might be enough to kill the program.
They are shifting part of this cost onto sellers with the Transparency program. My company has had a few calls with Transparency reps and will be enrolling in the coming months.
Not a lawyer but I run a marketplace. Anticipating exactly this kind of situation we require a clear display of the transaction principal, run a limited KYC check for each new onboarding, and (since the main product leads to participation in physical activities) each seller warrants their public liability insurance cover and indemnifies us against various breaches and circumstances.
So who are the wealthy companies that might use their financial might to stop amazon changing this law to their advantage? Is there another way amazon won't get the law changed to suit them?
I've pretty much stopped buying anything over $100 on Amazon after being burned twice. I buy direct or from other competitors. Hope a solution is on the horizon.
This is good for consumers, so I like it[1].Amazon has been able to exploit this asymmetry it enjoys compared to Wal*Mart, so I think this bring them to an even playing field with regard to that.
I’d be happy if they simply stopped commingling inventory.
[1]I guess they could argue the "Platform" angle, but I'm not sure that would hold water for them.
> In Wednesday’s opinion, Circuit Judge Jane Richards Roth, writing for a 2-1 majority of a three-judge panel, said Amazon may be liable in part because its business model “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.”
Seems like Amazon can just force third-party vendors to reveal their full legal identity to the customer then?
I don't care who's liable as long as someone's liable and it's fully enforceable within the US court system.