Amazon’s Latest Legal Victory Is a Win for Sellers, Not Shoppers

UPDATE: A spokesperson from Amazon has provided the following statement:

“As a customer obsessed company, we closely monitored potential risks with hoverboards since they were first offered for sale, regardless of whether sold directly by Amazon or by sellers on our stores. As the Consumer Product Safety Commission noted at the time, when we learned of safety concerns about this toy, we were the first retailer to proactively stop sales, issue an alert, and refund customers. We continue to invest in our teams and technologies so we can improve our early detection systems and protect customers.”

What We Reported Earlier

In late 2015, at the height of the hoverboard craze, a Nashville mom bought one of the buzzy, self-balancing scooters for her son on Amazon, only to have it spontaneously explode and burn down their million-dollar home. Last week, a Tennessee judge ruled that the e-commerce giant is not liable for the faulty product, siding with Amazon’s argument that it is not responsible for products sold through its third-party marketplace.

These goods make up an increasing share of its business: CEO Jeff Bezos recently revealed that in 2017, more than half of all units sold on the site were from third-party sellers. A growing number of these manufacturers are based around the world, particularly in China, where a booming counterfeit industry and lax consumer safety regulations have led to an influx of shady products on online marketplaces, with companies playing whack-a-mole to keep up and brands like Birkenstock condemning the lack of oversight on e-commerce platforms.

For shoppers who buy fake or faulty goods from these international vendors, there’s generally little recourse beyond seeking a refund and flagging customer service; the sellers can be impossible to track down, even when the legal system is involved, and courts have repeatedly sided with Amazon in third-party marketplace disputes.

The mom, Megan Fox, argued that Amazon failed to warn her about dangers it was aware of with the product, but the judge dismissed her claims, determining that the platform didn’t have any such duty. Amazon did, eventually, offer full refunds to anyone who bought a hoverboard on the site, and for a time removed them entirely.

In late January 2016, U.S. Consumer Product and Safety Commission Chairman Elliot F. Kaye commended Amazon on “voluntarily stepping up, providing a free remedy and putting customer safety first.” The CPSC announcement and Amazon’s moves, however, came two weeks after the Foxes’ home was demolished and after dozens of other videos and reports surfaced of hoverboards catching on fire.

In December 2015, the company sent an email to customers including Fox referring to “recent news reports of safety issues” around the product, but not specifically “fire” or “explosion,” despite internal emails revealing that executives were aware of 17 complaints of such occurrences with hoverboards purchased on Amazon, according to court documents. The email also included an offer to return the product, which provided a link to the site’s “Contact Us” page and stated, “If you’d rather not keep the product, please contact Customer Service to initiate a return.”

Steven Anderson, the Foxes’ lawyer, said the family is considering an appeal.

*This story has been amended to include the specific language and timeline of Amazon’s offer to refund customers who purchased hoverboards.

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