What next for online marketplaces? Product safety and liability reforms in the UK and the EU

What does it mean for online marketplaces?

In August, the OPSS published a consultation as part of its on-going UK product safety review. This review focusses on assessing whether the UK product safety framework needs to be modernised in light of emerging technologies and new models of supply.

The consultation closes on 24 October 2023.

We have published a detailed article which explains each of the OPSS' proposals which are being consulted on in turn.

If they were to become law, the OPSS' proposals would have a significant impact on online marketplaces and fulfilment centres.

The consultation places emphasis on the notion that consumers can be at greater risk when purchasing products online as opposed to in high street stores. The OPSS has also vocalised its intention to reform elements of the current system, which it argues put bricks and mortar retailers at a disadvantage compared with online sellers. It refers to feedback from contributors to its previous consultation that non-compliance with existing safety requirements can be more prevalent among online sellers.

The OPSS refers to online marketplaces having little control over the third party products sold on their  platforms and not completing safety checks on the products sold. It highlights that online marketplaces often take a reactive approach to safety, ie only taking action once instructed to do so by the authorities.

 It also suggests that there is a problem of online marketplaces withdrawing unsafe products only for them to be re-listed several days later.

OPSS proposals

In light of this, the OPSS is consulting on reforms to the current framework, including requiring online marketplaces to do the following:

• take reasonable steps to verify information about third party sellers for high risk products
• monitor the UK Government Product Recalls and Alerts page and monitor their marketplace for the availability of any flagged products/products which look similar, and
• gather product safety information about third party goods, including analysing customer reviews for safety concerns and carrying out targeted monitoring of any products that they identify could represent a risk.

Providing more information online

The OPSS is also consulting on new rules to require product safety information to be provided online at the point of sale and not just on products/packaging as under the current rules (eg UKCA/CE marking on electricals). The UK Government argues that, at present, this creates inequality between high street and online sales.

The proposal is for the introduction of new rules which would require the below information to be provided to customers online:

• any product safety warnings/information which is on the product/packaging (eg UK importer address/UKCA marking)
• a clear indication of whether the product is being sold by a third party seller
• if so, contact information for this third party seller.

New enforcement rules

The OPSS is also proposing changes to the enforcement of product safety rules. Firstly, the OPSS is seeking to have a more centralised role, in which it is given new powers to issue statutory guidance for local authorities to follow and the power to take over investigations from local authorities if needed.

Secondly, the OPSS wants to simplify the existing regime in which penalties for non-compliance are spread across different regulations in a way that can be inconsistent and confusing. For example, some regulations allows the authorities to take measures like compliance notices and others do not. The OPSS is suggesting a more consolidated approach in which product safety penalties are recorded in one place and, so far as possible, apply to all products within the OPSS' remit.

The OPSS also wants to introduce new powers including improvement notices and greater powers to inspect businesses operated within the home, which could have an impact on small scale third party sellers.

EU reform

The EU has taken the lead on reforming product liability and safety legislation, as it has already introduced a new General Product Safety Regulation ("GPSR") which will replace the existing General Product Safety Directive.

This introduced specific obligations for online marketplaces, which are now required to cooperate with authorities and to register with the EU's Safety Gate portal. Online marketplaces must also designate a single point of contact for the authorities if they wish to sell goods in the EU.

The GPSR will take effect from 13 December 2024, demonstrating that the EU has a considerable head start over the UK in introducing its reforms.

The EU is also currently revising the existing Product Liability Directive (which dates from 1985).

In September 2022, the EU Commission published its proposal for a new Directive which includes some important provisions relating to online marketplaces. Both the current and the proposed directive provide for a strict liability regime for damages caused by defective products.

The proposal expands the list of economic operators liable for defective products to include online marketplaces if they are acting as manufacturers, importers or distributors or if several criteria are met.

These criteria include:

• a manufacturer of the defective product cannot be identified or, where the manufacturer is established outside the EU, the importer or fulfilment service provider cannot be identified, and the online market place fails to identify those economic operators, and
• the online marketplace presents the product or otherwise enables the specific transaction in a way that would lead an average consumer to believe that the product is provided either by the online marketplace itself or a controlled business.

In such cases, the online marketplace could be held liable for defective products under the new Directive.

If your business is likely to be affected by the OPSS' UK proposals and you would like some advice or assistance with responding to the consultation by 24 October 2023, please contact our Product Liability and Safety team.

If you would like advice on the reforms in the EU, please contact our EU team.