Market leader MercadoLibre has prevailed in a law suit by a defrauded buyer who used the online platform to purchase a car.
Online marketplaces are growing exponentially in Argentina and the LatAm region, and regulations lag notably behind. This week, the region's largest provider, MercadoLibre, has prevailed in a suit against an online buyer who had been defrauded by a seller user in the sale of a car. Since there are no specific statutes in place regulating the online platform provider's liability in such cases, we must rely on the courts to light the way with case-specific rules.
On March 22, 2018 the National Court of Appeals for the City of Buenos Aires decided in "Kosten, Esteban vs. Mercado Libre S.R.L." Mr. Kosten sued MercadoLibre to recover moneys transferred to buy a vehicle from a seller he contacted via the MercadoLibre electronic marketplace, and which was never delivered. The Court found that MercadoLibre was not liable to a defrauded buyer in this type of case, where the marketplace provider does not have an active role in the transaction. MercadoLibre argued that the site provides to types of services: a) as publications data host and b) as online marketplace broker. In the Kosten case, the plaintiff had merely used the online platform to obtain the seller's publication data and did not use MercadoLibre as a broker in the transaction.
The Court did not have a local statute to apply and had to resort to comparative law references from the European Parliament regulation on the subject. These regulations establish that the operators of digital marketplaces are not liable if they did not broker the transaction or had an otherwise active role in it.
What this means for online marketplace users
This new caselaw provides online consumers and sellers a clearer line between transactions that are protected by joint liability of the online platform provider and those transactions in which buyers have to apply their own diligence to be protected. The key is the degree of interaction the online platform has with the transacting parties. If the provider acts merely as a publication data host, then it would not be held liable for disputes among buyers and sellers, which will be treated as any regular two-party contract dispute.
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