Court Rules Amazon Should Be Liable For Defective Third-Party Products

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Court Rules Amazon Should Be Liable For Defective Third-Party Products
The decision from the Third U.S. Circuit Court of Appeals reversed a lower court ruling.
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A federal appeals court ruled that Amazon can be held accountable for defective products sold by third-party sellers.

The decision from the Third U.S. Circuit Court of Appeals reversed a previous court's ruling. It was sent back to a lower court, and if it's upheld, the ruling would make Amazon liable for products it hosts on its platform for independent sellers.

The ruling states that under Amazon's agreement with third-party vendors, the sellers can only communicate with customers through Amazon. "This enables third-party vendors to conceal themselves from the customer."

The decision could make a significant impact on how Amazon does business. Third-party sellers made up over $11 billion in Amazon's revenue in its first quarter.

It could also be costly for Amazon. Earlier this year, the company told investors it had an issue with counterfeit and pirated products, which means it may now have to cover those costs to consumers.