Not Liable for Faulty Products: Amazon on Consumer Disputes

Sadaka Associates Consumer Fraud, Defective Products 0 Comments

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Online retailers are in an awkward position in terms of customer satisfaction and liability. As brick and mortar businesses continue to wane, e-commerce has grown to comprise roughly eight percent of all retail transactions, with Amazon leading as the largest internet-based retailer. While Amazon’s first-party transactions are typically handled with little incident, their facilitation of sales from third parties have lead to a complex discussion regarding the company’s liability for defective merchandise, as demonstrated in a recent case brought before authorities in Chandigarh, India.

The initial suit, brought before the city of Chandigarh’s State Consumer Dispute Redressal Commission by Gopal Krishna, concerned a defective cellphone unit produced by Remdi. Remdi produces low cost, unlocked smartphones with features roughly comparable to what Samsung and other first-line cellphone manufacturers offer. Unfortunately for Mr. Krishna, the cellphone in question, a Xiaomi Redmi Note 3, proved defective within just two months from the purchase date. Krishna submitted the phone to Remdi’s customer service center for repair or replacement, but the cellphone manufacturer failed to return the repaired device by the specified date.

Mr. Krishna then went on to seek redress from Amazon’s customer service department. However, Amazon refused to help after Xiamoi Remdi refused to issue a report declaring the cellphone “dead on arrival,” which the online retailer demanded Krishna furnish. Denied compensation from either party, Mr. Krishna took his case before Chandigarh State’s Consumer Dispute Redressal Commission. The commission not only found in favor of Mr. Krishna, but held both Amazon and the cellphone manufacturer liable for the complaint. The companies were jointly required to reimburse the plaintiff for the cost of the phone, as well as additional funds for compensation and legal fees. The total judgement amounted to a little under 400 U.S. dollars.

Amazon, in spite of the judgement, maintains that they are not liable for faulty products sold through their website. The online retailer contends that, in its role as as a marketplace, the blame should ultimately rest with the manufacturer. The consumer council held, however, that marketplaces, web or otherwise, are “duty bound to ensure” that all products sold through them meet a basic check of quality, furthermore holding that such marketplaces are vicariously liable for any losses incurred by customers should products fail to meet these basic expectations.

Amazon has since escalated the case, bringing it before the National Consumer Dispute Redressal Commission. The commission was specially set up in 1988 to support the enactment of India’s 1986 Consumer Protection Act. Overseen by a current or retired Supreme Court of India judge, the national commission’s decision will carry significant weight and will potentially set a precedent that extends beyond India’s borders.

Online retail is inherently non-local as it enables consumers from across the globe to access a web-based retail portal, which is especially true for a retailer of Amazon’s size. Amazon maintains individual but connected retail portals for India , the United States, the United Kingdom and Ireland, France, Canada, Italy, Spain, Germany, Netherlands, Japan, Australia, Brazil, Mexico, and China. The massive online retailer is no stranger to controversy, having faced criticism in the past for anti-competitive practices, the sale of controversial products, tax avoidance, trademark violation and sale of bootleg products, as well as allegedly poor conditions in their numerous warehouses. That said, Mr. Krishna’s case is the first of its kind for Amazon.

Amazon Seller Service Private Limited maintains that responsibility ultimately rests with manufacturers. Scheduled to take place in September 2017, the case will have profound ramifications not only for Amazon, but for online retailers, manufacturers, and consumers.

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