Wednesday, April 7, 2021
Amazon as a Seller of Marketplace Goods Under Article 2: Part II
Amazon has sought to avoid liability for dangerous and defective third party goods sold on its platform on the basis that it does not hold title to the goods in question. In yesterday’s blog post, I pushed back on Amazon’s title argument. Here, I want to make the following super-legal observation: “If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.” Amazon looks like a seller, acts like a seller, and convinces buyers it is a seller. Amazon probably is a seller and should be estopped from arguing otherwise.
At the outset, it bears mentioning that many (if not most) people do not realize that Amazon is both a seller and an online marketplace for third party sellers. Its very interface makes it exceedingly difficult for a user to understand that Amazon is sometimes a seller and sometimes not a seller. As one professor notes, “You’d have to be a genius to figure out what’s going on.” When someone buys goods on Amazon, they probably think they are buying from Amazon.
Not so, says Amazon. After all, Amazon “discloses” to buyers that it is sometimes not the seller of goods on its platform. Amazon does this through the use of two words: “Sold by.” These two words, which appear only after a buyer has already clicked on a product, are supposed to impart to a buyer the knowledge that they are not buying goods from Amazon—but instead buying directly from a third party seller. Many buyers, of course, don’t see or pay attention to the miniscule “Sold by” text which appears below the “Add to Cart” and “Buy Now” buttons. In fact, except for these two words, goods sold by Amazon look identical on the website to goods sold by a third party vendor, as illustrated below:
Let’s assume, however, that I am a savvy buyer and notice the “Sold by” line. Will I understand its meaning, or its legal significance? Will I know that if I buy goods “Sold by” Amazon, I will enjoy some form of consumer protection, but if I buy goods “Sold by” a third party seller on Amazon, I will not? A lot of good it does to “disclose” to a buyer something the significance of which they cannot comprehend. Unless you have a PhD in Amazonomics, it is difficult to understand what “Ships from Amazon,” “Sold by X” and “Prime Free Delivery and Free Returns” means as a factual matter, much less as a legal matter.
Amazon also claims that its Conditions of Use disclose to buyers that they may be purchasing directly goods from a third party seller. Buried in the middle of a 3,400-word, densely-written document, Amazon lets buyers know that “Parties other than Amazon operate stores, provide services or software, or sell product lines through the Amazon Services. In addition, we provide links to the sites of affiliated companies and certain other businesses. If you purchase any of the products or services offered by these businesses or individuals, you are purchasing directly from those third parties, not from Amazon.” I suppose we must ignore the fact that no rational human being would ever read the Conditions of Use—assuming they could even find them tucked away at the very bottom of the Amazon home page, next to the hyperlinks for “Privacy Notice” and “Internet Based Ads.”
The reality is that Amazon does everything it can to convince buyers that they are buying from Amazon and not just through Amazon. Most glaringly, Amazon commingles the listings where it is the seller and listings where third parties are the sellers. Goods sold by Amazon do not show up with a different background than third party goods. Goods sold by Amazon do not appear on a different section of webpage from goods sold by third parties. A buyer does not even have the ability to search only for goods sold only by Amazon, without pulling up third party vendor goods. And after a buyer has conducted a search, there is no way for a buyer to filter the results so that a buyer only sees goods sold by Amazon. Make no mistake: these choices by Amazon are deliberate. Amazon could easily operate two different websites—one website where it sells goods and one website where it operates as a marketplace for third party goods (much like Ebay or Etsy). Or, it could even operate one website and clearly delineate between goods that it is selling and goods that third parties are selling. This would not be difficult to do. Instead, Amazon purposely blurs the lines between which products it sells, and which products third parties sell. This is designed to capitalize on the trust and confidence that buyers have in the Amazon name.
Additionally, Amazon takes on almost all of the functions of a traditional seller with respect to third party goods, thus furthering the impression that buyers already have that they are buying from Amazon. This is particularly true with respect to goods sold through the Fulfillment by Amazon program. Under the Fulfillment by Amazon program, third parties ship goods to Amazon for Amazon to store in its warehouses. When a customer places an order, an Amazon employee will take the goods from its warehouse, put them in an Amazon box, pack them up with Amazon-branded tape, and ship them out to the customer. In many cases, Amazon packages its own goods together with third party goods in the same Amazon box. Amazon now even has its own delivery service, so there is a good chance that the goods will be delivered in an Amazon truck by an Amazon employee. When a customer places an order, Amazon processes the buyer’s payment, sends an email confirmation, and provides shipping information. The receipt inside the box will be from Amazon. The buyer’s credit card statement will show a charge from Amazon. If a customer wishes to return a product, he must return it to Amazon; he is not able to contact the “true seller” directly. Amazon handles all complaints, returns, replacements, exchanges and refunds. And, of course, for all of this, Amazon receives a hefty fee. It is hard to imagine a “non-seller” (Amazon) being more involved in a sales transaction and a “true seller” (the third party vendor) being less involved in a sales transaction. Under any reasonable construction, Amazon is the true seller of third party goods.
As the court stated in State Farm Fire & Cas. Co. v. Amazon.com Servs., Inc., “Amazon seeks to have all the benefits of the traditional brick and mortar storefront without any of the responsibilities.” Amazon wants to be a seller, but not take any on any of the responsibilities associated with being a seller. Fortunately, courts are beginning to see through this shell game. Amazon’s days of getting off “on a technicality” may be numbered.