Professors Edward Janger and Aaron Twerski: On the Internet, Amazon Might Just Be a Dog
"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 whom 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 are 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. She claimed that the leash malfunctioned and struck her in the eye, causing permanent injury. Amazon defended itself, saying that it was not the seller. It 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 Oberdorf could not state a claim under products liability or contract law against Amazon because it wasn’t the seller. Further, Amazon was protected by Section 230 of the Communications Decency Act, which insulates internet platforms from liability for statements of third-party content providers. Taken together, these conclusions left 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 Amazon’s name 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 its 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’s 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, it must make clear that it does 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 of Law and associate dean for faculty research and scholarship. Aaron D. Twerski is the Irwin and Jill Cohen Professor of Law. They specialize, respectively, in commercial law and torts. This article first appeared in the New York Law Journal.