Amazon Go: ever more innovative retail

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Amazon shows us once again how the retail trade evolves at the pace of technology, prompting us to consider such changes in judicial terms.

Amazon Go, the revolution of physical commerce

The e-commerce leader intends to revolutionize our shopping habits with a new concept of fullyautomated physical store. Named Amazon Go and equipped with multiple sensors and cameras, it allows customers to make purchases without having to go through the checkout.

To do so, consumers scan their phones on an entry portal via a previously downloaded application, pick up their items and go back through the portal. They are subsequently billed automatically via their mobile phone. In short, no cash register staff indicating the amount to be paid and no credit card to validate.

So far, this technology has only been tested in the United States, through a single store in Seattle. An event that nevertheless raises the question of the flexibility of French legislation, and even more so European law on such an innovation, if it were to spread overseas.

When does transfer of ownership occur?

Transfer of ownership is the action by which a property changes hands. It takes place for example under French law “at the time the contract is signed” (art. 1196 C. Civ.). Traditionally, in a physical store, transfer is deemed to take place when the item sold is paid for in full at the checkout. (Cass. Com. 8 January 2002, no. 98-13142). It is therefore considered that the final delivery of the object is only granted by the seller to the buyer at the time of payment of the price.

In the case of Amazon Go, there is no physical payment per se. At what point can it then be deemed that the transfer of ownership takes place? If we consider that this takes place upon exiting the store, when the automatic invoice is issued, we may wonder whether Amazon would grant itself the right to take back the goods in the event that the payment is not completed due to, for example, a sensor error. This would not be a transfer of ownership for the buyer, then, but merely a holding of the supposedly sold item.

This question actually arose. A journalist tested the system and came out of the store with a pot of yogurt in her hand, which she thought she had paid for. When she looked at the invoice, she noted that the sensor had not taken this purchase into account. Finding herself unwittingly shoplifting – which is, of course, a legal aberration from a criminal point of view, the intentional element being a sine qua non condition for qualifying a robbery – she shared the anecdote on the social networks. The event went viral and the brand demanded payment for the product, which the journalist refused. Not wanting to give in to the bad buzz, the e-commerce giant finally made a commercial gesture by offering the yogurt. Having confidence in its nonetheless fallible system, the brand had not stipulated any means of settling such conflicts in its terms of sale.

Similar questions arise in other already identified cases, such as poor distinction between two clients of the same physical size in close proximity. It would be very unpleasant to be charged for a product taken by another consumer….

Amazon Go, a remote retail service?

In addition, this new concept highlights the thin line that now separates physical and online commerce and the legal implications that follow.

Insofar as Amazon Go requires online services, such as the billing application, to enable its users to purchase the goods offered for sale, , it is legitimate to wonder whether this constitutes distance selling, in which case it should be subject to the applicable legislation.

First of all, Article 10 of European Directive 2011/83 on consumer rights, transposed in Article 121-21 of the French Consumer Code, requires the seller to offer a right of withdrawal.

In principle, store purchases are not affected by such a right. Technically, such purchases are firm and definitive. It is true, however, that in practice, many retailers make a goodwill gesture by offering the possibility of exchanging and refunding certain items. Nevertheless, from a purely legal point of view, the question arises in such types of sales.

In addition, as an example, French law also specifies a few particularities in terms of “electronic” sales, which could be related to a purchase at Amazon Go. Article 1127-1 of the Civil Code requires, for example, that the customer be provided with “the various steps to follow in order to conclude the contract electronically” and “the technical means enabling the offer recipient, before the conclusion of the contract, to identify any errors made in entering data and correct them“. Amazon Go should therefore ensure that users can benefit from all this data before they leave the store. In addition, even though Amazon Go’s principle is that consumers can make their purchases as quickly as possible, they should always be able to keep an eye on their shopping cart; the question remains as to how, in a fully automated store, they could change, for example, any errors made by sensors.

If Amazon decides to generalize its concept, it would be interesting to see how it would deal with these legal constraints.

The Fitzlawter Law Firm has expertise in Internet law, new technologies and business law. It will be able to guide both French and international players in all their e-commerce issues.