Electronic commerce is going full tilt: it has fundamentally influenced the ways in which enterprises and countries produce, trade and compete in the EU and worldwide.
Ensuring the safety of products placed on the online marketplace remains, however, a challenge. Enforcement authorities cannot effectively conduct on-the-spot inspections or test samples of products, and at times are faced with the impossibility of identifying a responsible company for a product sold online.
Existing product safety regulations at EU level have gone a long way towards improving consumer protection by enhancing consumer product safety and by conducting market surveillance. Given that this legislation was primarily aimed at brick-and-mortar shops, there has been difficulty in applying the rules to the online environment. The EU Commission has thus thought it fit to adopt a notice containing a set of rules as a guide to businesses and enforcement agencies.
In the notice, adopted earlier this month, the Commission sheds light on how the existing legal framework on product safety is to be applied to the online world. The EC Commission clarifies that the existing rules apply indiscriminately to traditional selling, distance selling or online selling. From the moment of being first placed on the EU market, the products must be safe and fully compliant with EU legislation irrespective of the selling technique.
In the traditional supply chain, each economic operator carries responsibilities. Producers must ensure that the products they place on the EU market are safe.
Distributors must also act with due care to help ensure compliance with product safety requirements but have a lesser degree of responsibility than producers.
They are required to ensure that the necessary information accompanies the products, that language requirements for labelling and user instructions are fulfilled, initiate corrective action such as recalls where necessary, and identify any economic operator who has supplied the products and to whom they have supplied the product.
Producers must ensure that the products they place on the EU market are safe
In its notice, the Commission gives special attention to fulfilment service providers, a new business model generated by e-commerce. These third party handlers offer services to other operators in the supply chain relating to storage, packaging, shipping to customers and also returns. In the online world, producers continue to bear the principal responsibility for products’ safety.
However, there are special circumstances where fulfilment service providers may qualify as manufacturers. For instance, if fulfilment service providers affix their name or trademark on the products they will also be considered as manufacturers. Furthermore, if fulfilment service providers offer more than transport and delivery of parcels, they will be considered as distributors at law. This means that they bear the normal responsibilities attributed to distributors.
The Commission notice also deals with the intermediary service provider, another actor on the online marketplace. These service providers offer online platforms to be used by economic operators to sell their products directly to consumers. The intermediary service providers are not normally responsible for unsafe or non-compliant products.
However, responsibility kicks in if the intermediary service provider has actual knowledge or is aware of the unsafety or non-compliance of the product. In such cases, these platforms must act expeditiously to remove or disable access to such product. Should they fail to act in this manner, they will not be exempt from liability and may be held accountable even if they just provide hosting activities. Nonetheless, enforcement agencies cannot impose a general duty on online intermediaries to monitor content or actively identify unsafe or non-compliant products offered.
As regards postal service providers, the Commission clarifies that postal services are not generally considered liable for the content they deliver as they must guarantee confidentiality of correspondence and of the postal items they deliver. However, their work may be affected when packages containing products ordered from third countries are opened and verified by customs authorities as part of product control procedures.
Economic operators that are based outside the European Economic Area may still be regulated by the EU regulatory framework on product safety. This happens when the online seller targets consumers in the EU. If the online seller delivers to addresses in the EU, makes use of a EU language and accepts currencies used in the EU, the operator is deemed to have directed its activities to EU consumers.
This new guidance notice helps economic operators in the online world better understand their duties and their exposure to risks and liabilities.
Dr Josette Grech is adviser on EU law at Guido de Marco & Associates.
jgrech@demarcoassociates.com