eBay Lobbies Against Illinois Law That Would Hold Sellers & Marketplaces Responsible For Product Liability
Lawmakers in Illinois are considering passing legislation which would hold both online sellers and ecommerce marketplaces responsible for product liability claims, but eBay Mainstreet hopes to stop the proposed law in its tracks.
Illinois Senate Bill 1671, introduced on February 5, 2025, would amend the Code of Civil Procedure if passed, allowing "high-volume" sellers and marketplaces to be consider jointly and severally liable along with the manufacturer for any harm caused by products made outside the US.
Provides that in any product liability action based on any theory or doctrine commenced or maintained against a defendant or defendants other than the manufacturer, if the product was manufactured outside the United States and is offered for sale by a seller through an online marketplace, then the seller, the online marketplace, and the high-volume third-party seller are jointly and severally liable with the manufacturer for any harm caused by the product.
Defines "seller", "online marketplace", and "high-volume third-party seller" to have the same meaning as used in the Illinois Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act. Applies to causes of action accruing on or after the effective date of the Act.
The law would use the same definitions as the already passed Illinois Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act, which is basically Illinois' version of the federal INFORM Consumers Act and appears to use the same metrics.
eBay's corporate lobbying division eBay Mainstreet posted an today about meeting with Illinois policymakers as part of an advocacy day for tech companies, where they say the express concerns and advocated for both buyers and sellers who they say will be hurt by this legislation if it passes.
The eBay Government Relations Team recently traveled to Springfield, IL to meet with state policymakers as part of an advocacy day for tech companies. The meetings served as an opportunity to discuss eBay’s presence in Illinois, how we invest millions annually to develop new tools and programs that help sellers better serve their customers, and our efforts to support small businesses across the state.
We also discussed concerns with product liability legislation currently under consideration that would hurt both buyers and sellers in the state. The Team is appreciative of the time provided by state policymakers, and we look forward to continued engagement throughout the legislative session on issues impacting ecommerce and small businesses.
As with many of eBay's lobbying efforts, publicly they may say they are fighting for buyers and sellers on the platform but that doesn't mean the company doesn't also have a vested interest in these issues - especially in product liability lawsuits where the ~$31 Billion corporation would obviously have much deeper pockets for plaintiffs to try to dig into than most sellers.
But for eBay, there's an even bigger issue in play - the looming potential appeal of a ruling which dismissed a lawsuit the EPA brought in 2023 seeking to hold eBay liable for the sale of illegal chemicals, pesticides, and emissions control cheat devices on the platform.
eBay's defense was that Section 230 of the Communications Decency Act of 1996 protected them from liability for the actions of third party sellers - and U.S. District Judge Orelia Merchant agreed, granting eBay's motion to dismiss on Section 230 grounds in September 2024.
The DOJ is currently deciding whether to appeal that decision, which if allowed to stand will provide a strong precedent for other online marketplaces looking to use Section 230 as a "get out of liability free" card.
Liz Morton
eBay faced an estimated potential ~$2 Billion in fines related to the violations alleged in this case, not to mention further potential lawsuits that could have come from the multiple shareholder rights firms investigating possible breaches of fiduciary duty related to these claims.
As part of their defense, eBay argued that it is "never itself a seller" and is instead "a pure third-party, peer-to-peer online marketplace."
While it may be true eBay did not directly sell the specific items in question in this lawsuit, their blanket statements saying the company is "never itself a seller" have been demonstrably false at least since August 2023, when eBay set up shop on its own platform as its owned-subsidiary TCGPlayer.
Interestingly, eBay changed TCGPlayer policies and appeared to have stopped selling items under that account on September 23rd, 2024 - the week before the case was dismissed - and coincidentally, resumed selling on eBay on February 24th - the same day the DOJ was granted their request for more time to decide whether or not to move forward with this appeal.
Liz Morton
That suggests eBay may have been concerned that provably false statement about "never being a seller" could become an issue on appeal or that the FTC under new leadership might look into the anticompetitive concerns the practice raised which were cited in a petition urging the Commission to investigate eBay's acquisition of TCGPlayer.
Sullivan & Cromwell LLP were recently named a Product Liability “Practice Group of the Year” by Law360, citing the firm's Section 230 win for eBay as one of their crowning achievements that will "have significant impact on all online marketplaces."
Notably, Walmart is pursuing a Section 230 defense trying to duck liability for massive organized retail crime, theft and fraud facilitated through their marketplace in a class action lawsuit filed against the company last year.
The victims of this sophisticated triangulation fraud scheme allege Walmart profits from and fails to prevent the digital shoplifting, saying the company is complicit in the crimes as they knowingly recruit and do not properly vet fraudulent sellers from China and have not taken action to stop the fraud even after it was reported to them.
Liz Morton
Unfortunately, the current legal and regulatory framework has so far allowed these multi-billion dollar tech giants to avoid accountability for all manner of fraud, theft, counterfeits, illegal and dangerous items on their sites - and eBay's lobbying activity shows they desperately want to keep it that way.
