“On the Internet, nobody knows you’re a dog,” runs the caption of a famous New Yorker cartoon. Yet in e-commerce, identity matters. And, in e-commerce, nobody is bigger than Amazon—the second company in the history of the world to achieve a trillion-dollar valuation. At latest count, Amazon boasts 310 million customers, 90 million of which are “prime” members. That’s a lot of retail sales daily. But who are you dealing with when you buy goods on Amazon? It is not always clear: Amazon itself? A chain store? A local merchant? A fly-by-night manufacturer of cheap goods in a foreign country? This is important because Amazon sells a lot of things; some explode, causing serious injury. Recent examples of products causing injuries include cell phone chargers, electronic cigarettes and hoverboards. Yet, courts have consistently left consumers who purchase such items through Amazon without a remedy.
In a recent case, Heather Oberdorf purchased a retractable dog leash on the Amazon website. Ms. Oberdorf claimed that the leash malfunctioned and struck her in the eye, causing permanent injury. Amazon defended, saying that they were not the seller. They had merely facilitated the transaction for a firm called The Furry Gang, now nowhere to be found (metaphorically, the dog). A federal court sided with Amazon, saying that Ms. Oberdorf could not state a claim under product liability or contract law against Amazon because it wasn’t’ the seller. Further, Amazon was protected by Section 230 of the Communications Decency Act that insulates internet platforms from liability for statements of third-party content providers. Taken together these conclusions left Ms. Oberdorf utterly without recourse. Paradoxically, the same would not have been true if she had purchased the leash at PetSmart. Brick-and-mortar merchants are answerable to their customers; Amazon, apparently, is not. In the modern e-commerce environment, this distinction is untenable and, in Amazon’s case, misleading.
Expectations about rights, creditworthiness and recourse shift with perceived identity. It matters whether one is dealing with General Motors or a used car salesman, a bank or an empty corporate shell, Amazon, or a dog. When a customer orders from Amazon, Amazon collects the shipping and payment information. Usually, the goods are stored at and shipped from Amazon’s warehouse. The box containing the purchase arrives at the customer’s home with the name of Amazon plastered all over it. If the customer is dissatisfied with the product upon receipt, it is returned to Amazon. In this regard, Amazon has the discretion to retain the customer payments for an extended period in anticipation of returns and refunds. By appearance, Amazon does everything that a direct seller does, except stand behind the product if it causes injury. The great likelihood is that a majority of Amazon customers do not have the slightest notion that, if the so-called true seller is bankrupt or not subject to the jurisdiction of American courts, Amazon washes its hands of them. If this is not outright fraud, it is a very close sister to it.
Amazon’s defense rests on two alternative claims about their identity: we are a communications platform, not a store; or, we are a public marketplace, not a vendor. Yet Amazon tries to have it both ways. It claims to be one (a platform/market) but acts like the other (store/vendor). It is, in fact, the largest single vendor in the history of commerce. This characterization of Amazon’s role in a consumer transaction has consequences. It determines: (1) what representations are being made and by whom for warranty purposes; (2) who is the seller for liability purposes if the product causes serious personal injury; and (3) who, if anybody, must verify that suppliers are reliable merchants.
Cases like Oberdorf that insulate Amazon from traditional forms of liability reward and encourage lack of transparency. They also run counter to settled rules of tort and contract law that would apply to a goods seller in “real space.” Under basic principles of honesty and fairness, Amazon should generally be treated as a seller. But, at the very least, Amazon’s customers deserve to know who they are dealing with. If Amazon does not wish to be thought the seller, they must make clear that they do not stand behind the product. If Amazon wishes to be viewed as a “conduit,” it must make clear that it does not exercise any control over who sells in its marketplace. Alternatively, if it wishes to be viewed as a trusted marketplace, Amazon should be required to stand behind the products it sells.
Transparency about identity is essential to trust in e-commerce. The law should help, instead of getting in the way.
Edward J. Janger is the David M. Barse Professor at Brooklyn Law School. Aaron D. Twerski is the Irwin and Jill Cohen Professor at Brooklyn Law School. They specialize, respectively, in commercial law and torts.