Selling slightly damaged, yet properly advertised, appliances online, whether through Craigslist, eBay or other online sales outlets, is not illegal. Resellers run afoul of the law when they sell appliances under false pretenses, such as selling a damaged item as brand new.
Most of the legal issues surrounding selling damaged appliances online stem from the use of deceptive advertising. Resellers that sell damaged appliances as new may face civil suits from either the purchasers or the Federal Trade Commission. Federal laws rate any advertisement unlawful if the intent is to deceive or mislead consumers, and a listing for any good online counts as an advertisement in the court of law.
Retailers ought to check local consumer protection laws, but can operate safely without fear of legal reproach by accurately conveying any damages to any potential buyers. The law sides with consumers' "general impression" of advertisements, so advertisers cannot hide any details under asterisks or confusing presentations.
Many of the same laws that online retailers operate under apply to brick-and-mortar retailers as well. The national retailer Sears vends damaged goods at it's Outlet and Warehouse stores, sometimes called "Scratch 'n' Dent" stores. The company protects itself from legal action by properly advertising the defects and damages on the goods.