Amendments to the Digital Services Act (DSA) has been much anticipated as it proposes new obligations for online platforms and changes to the liability of intermediary service providers for infringing content.
The proposals have particular relevance to the sector as online platforms or marketplaces have become a vehicle for unscrupulous firms or individuals to commercialise illegal and counterfeited products due to the lack of screening and their limited liability over the content they store and distribute.
Industry groups have generally welcomed the proposals, reminding policymakers that the DSA must be carefully designed to fit into existing and upcoming rules including the e-commerce Directive, consumer, product safety, privacy and data protection laws.
BEUC & ads
In particular, the European Consumer Organisation (BEUC) highlights an often-overlooked aspect that refers to the consistent use of terms that determine applicability and scope of the rules.
Referring to the term ‘advertisement,’ BEUC stated the definition must include both, ‘direct and indirect ways to promote, market or rank information, products or services’.
“In the same vein, BEUC witnesses indirect and direct forms of remuneration. Both should be included,” BEUC states.
“This is important because, for example, some online influencers do hidden marketing of products without revealing that they are paid for it.
“This is an unfair commercial practice that is commonly used in the areas of health, food supplements and beauty products, but not only limited to them.”
Indeed, the practice has been highlighted by the group in February this year in a letter of complaint to the Consumer Protection Cooperation (CPC) Network, a collection of authorities responsible for enforcing EU consumer protection laws to protect consumers’ interests in EU and EEA countries.
Sent alongside the correspondence was a document that identifies a number of practices by the social media platform TikTok, which BEUC claims, “constitute a widespread infringement with a Union dimension of several EU consumer laws.”
These include references to a study that found 93% of the content uploaded to the platform contained hidden adverts for fast food, sugary drinks, beauty products, clothing, and video games.
Outside EU jurisdiction
Other industry groups have also asked for more clarity, this time to ensure that European consumers and businesses are equally protected online and offline against repeat offenders and rogue traders, especially those established outside the EU and not directly subject to the Union law.
“The e-commerce directive as it currently stands does not apply to service providers established in a third country,” explains the European Specialist Sports Nutrition Alliance (ESSNA), the trade association representing the European sports nutrition sector.
“This means that online marketplaces from outside the EU are not obliged to comply with the same rules that are applicable in the EU.
“This poses an issue in the food supplements and sports nutrition sector, where a number of unscrupulous companies (or individuals) use the internet and online platforms to reach vulnerable consumers with dangerous products making exorbitant, illegal and unauthorised claims or not abiding by strict EU food law,” the group adds.
“Such practices and products are putting consumers’ health at risk and tarnishing the reputation of the industry.
“Therefore, the obligation in Article 11 to designate a legal representative in the Union for providers not established in any Member State is a welcomed step to ensure better tracing of rogue non-EU players.
Rooting out wrongdoing
ESSNA, based in the UK and Brussels, has been at the forefront of raising standards in the sports nutrition industry, highlighting how vulnerable the industry is to products not meeting trading, regulatory and formulation standards.
In April 2018, ESSNA revealed the scale of the problem, identifying over 400 cases of non-compliant sports nutrition products, that have misled consumers and/or included banned doping substances, within the last five years.
Of the 406 alerts reported to ESSNA, 66 cases were resolved informally, 16 committed to relabelling or reformulating the product in line with EU law, and 26 agreeing to completely withdraw the product in question from the market.
Cases totalling 86 were taken further with the relevant enforcement authorities, including the UK Food Standards Agency and the Medicines and Healthcare Products Regulatory Agency, the Italian Ministry of Health, and the Netherlands Food and Consumer Product Safety Authority, among others.
ESSNA also calls for further obligations for online platforms to inform their customers when they have purchased a counterfeit or illegal product.
This, they say is within the context of establishing a powerful transparency and accountability framework for online platforms and lead to fairer and more open digital markets.
“The proposals serve one purpose: to make sure that we, as users, have access to a wide choice of safe products and services online,” adds Margrethe Vestager, Executive Vice-President for a Europe fit for the Digital Age.
“And that businesses operating in Europe can freely and fairly compete online just as they do offline. This is one world. We should be able to do our shopping in a safe manner and trust the news we read. Because what is illegal offline is equally illegal online.”