Proposed amendments to Assembly Bill 3262 will expand authority to ensnare companies that are advertising products online, which could create liability issues for them, according to an organization that advocates for small businesses in California.
“If a lady’s legs are burned from a product, for example, it's not just the online marketplace, Amazon or smaller online marketplace companies that can be brought into a lawsuit, now companies that advertise the product to California folks online can be included in a lawsuit,” said NFIB California state director John Kabateck.
Sponsored by Assemblyman Mark Stone (D- Scotts Valley), the language in AB 3262 noted that COVID-19 had caused growth beyond $600 billion in annual online retail sales and that without the accountability measures contained in AB 3262, consumers would be left with no avenue to claim damages for defects caused by products purchased online.
“Currently, the bill holds the online marketplaces accountable for just merely distributing products to the customer and now these additional amendments make it even worse by expanding that definition to online ad agencies,” Kabateck told the Southern California Record.
“Not all online ad agencies are big Wall Street ad agencies. There's a lot of folks who do online ad agency work that are smaller companies. There are also other small businesses out there that are merely advertising. So, now if you're advertising that product, not even selling it, the amendments expand it to those who are promoting it.”
The purpose of liability is to ensure that the costs of injuries resulting from defective products are borne by the manufacturers, sellers, and other entities that are engaged in the business of distributing goods to the public, rather than by the injured consumers, the bill states.
Jaime Huff, vice president and counsel of Public Policy for the Civil Justice Association of California (CJAC), said that AB 3262 is a sledgehammer approach to a problem that would have ripple effects for small businesses at a time when they are struggling for their very survival.
“This bill would increase barriers to entry for online sales, cutting off a convenient and COVID-free way for small businesses to sell goods to homebound Californians at a time when small businesses and consumers need each other the most,” Huff told Southern California Record.
The state of California public health department has reported 699,909 coronavirus cases, as of Aug. 31, and 12,905 deaths.
“There are online digital advertisers that may advertise the product but they're not the actual online marketplace,” Kabateck said. “It could increase legal costs for small businesses and will also be an inhibitor for even companies that are advertising products online.”
On Aug. 31, AB 3262 was delayed, according to CJAC, allowing for vetting and reworking the language after organizations and businesses pushed back hard.
“CJAC looks forward to working with Assemblyman Stone to focus AB 3262 in a way that solves an issue that select consumers face rather than a sledgehammer approach that would have ripple effects for small businesses as they struggle for their very survival,” said Kyla Christoffersen Powell, CJAC president and CEO.