Some lawmakers in California want to also start holding online marketplaces—websites like Amazon, eBay, and Etsy that aggregate products from multiple third-party sellers—liable for defective products sold on their platforms. If they get their way, this will likely shut down the ability of many small retailers to easily offer their products to a global market and cut off a world of options for the average consumer.
As Daniel Castro writes in InsideSources, in the case of online marketplaces, most never even take possession of products as retailers ship directly to their customers. As a result, there is little online marketplaces can do to prevent defective products from entering the market. Making them liable will have little to no deterrent effect. The growth of online marketplaces has been a boon for buyers and sellers, giving both access to more options and opportunities. Buyers like online marketplaces, because they can easily compare prices and products across multiple sellers and sellers, have flocked to these platforms because it provides them new opportunities to connect with many more buyers.
Policymakers should also stick to the principle of “don’t shoot the messenger” and avoid imposing product liability on online marketplaces that do nothing more than connect buyers and sellers. By allowing online marketplaces to flourish, policymakers can promote continued innovation and growth in online commerce, leading to more choice and competition for consumers.