European commission clarifies its consumer protection agenda for e-commerce

Acting on one of the priorities laid out in President von der Leyen’s Mission Letter to Commissioner McGrath, the European Commission (EC) has published a communication on an EU toolbox for safe and sustainable e-commerce (the Communication). The Communication announces a menu of regulatory initiatives for the 2024-2029 EC term. These initiatives complement investigations such as a newly announced investigation under the Digital Services Act (DSA) into e-commerce platform Shein and a coordinated investigation by the EU’s Consumer Protection Network. In the Communication, the EC points to a rise in dangerous, counterfeit, and non-compliant products, health and safety risks, heavy environmental costs of shipping and non-EU sellers bypassing EU regulations. 

The EC’s e-commerce agenda is structured around several key elements: (i) the adoption of the previously proposed customs reform package, (ii) increased coordinated controls and enhanced enforcement of the existing rules, (iii) application of environmental rules to e-commerce sales, (iv) more frequent use of digital tools, (v) expansion of online platforms’ liability, and (vi) the voluntary involvement of online platforms.  

New Regulatory Agenda

• Customs Reform

The Communication calls for rapid adoption of the ambitious customs reforms package proposed in May 2023, including the proposal for a new Union Customs Code (UCC) to enhance customs authorities’ ability to supervise and control the flow of goods. The customs reforms package would also remove the EUR 150 duty exemption for imports as well as a simplified tariff treatment for low-value goods, which non-EU platforms rely on to fill low-value orders from EU customers. The package would also extend the Import One Stop Shop (IOSS) to cover all goods regardless of their value and designate online marketplaces registered in the IOSS as the “deemed importer” of products purchased on the marketplace. As such, the online marketplace would be responsible for collecting any relevant duty and VAT, ensuring that goods comply with other EU requirements and providing data to the customs authorities at the moment of the sale (prior to the arrival). In addition, the EC now proposes adding a new handling fee on e-commerce items imported in the EU directly to consumers. 

• Coordinated Controls and Enhanced Enforcement

Customs Priority Control Area (PCA): The EC proposes to establish a PCA, which it can do under its existing powers established by the UCC’s implementing provisions, for e-commerce imports shipped directly to consumers, with targeted controls on high-risk products. The PCA would involve an intensification of import controls to assess the safety of high-risk products, detect potential trafficking of illicit and dangerous goods, and exchange information on non-compliance among authorities. Based on this information, the authorities will be able to intensify future controls for certain operators, goods or trade flows.

Dark patterns: Following up on the EC’s Digital Fitness Check conducted between 2022 and 2024, the EC intends to propose a new Digital Fairness Act (DFA) to reinforce consumer protection beyond the existing rules, including those contained in the Digital Services Act (DSA). The DFA will address issues such as dark patterns, dynamic pricing (i.e., adjusting prices in real time to maximize profits), addictive design, influencer marketing, etc. It will likely be designed as a regulation addressing gaps in existing directives and regulations. For example, the Unfair Commercial Practices Directive (UCPD) applies to B2C transactions, but its principles regarding dark patterns are vague and require case-by-case enforcement. The General Data Protection Regulation (GDPR) regulates the use of data but does not ban specific practices, while the DSA prohibits ads targeting minors and profiling sensitive data but focuses only on platforms.

Market Surveillance Regulation: Based on the findings of the PCA, the EC recommends the use of the existing Market Surveillance Regulation to withdraw and recall products, prohibit operators from making available products on the market, and impose penalties (for systematic non-compliance). For example, in 2024, more than 50 different products coming from China were either withdrawn, recalled or destroyed at the request of the market surveillance authorities.

Joint Enforcement Actions: Based on the first experiences of the PCA, the EC will launch a new Coordinated Activity on the Safety of Products (CASP) to improve cooperation between customs and market surveillance authorities regarding products or product categories sold online, to jointly assess the risks associated with products available on the market and identify the appropriate corrective measures. In 2025, the EC will also propose joint product testing activities within the framework of the Consumer Safety Network and product safety sweeps under the GPSR (i.e., simultaneous coordinated control actions). 

As a result of the compliance shortcomings identified during the CASP 2022, 261 corrective measures were taken, ranging from product recalls to product withdrawals, as well as an obligation to mark the product with the appropriate warnings. Furthermore, the horizontal activities carried out during the CASP 2022 led to the establishment of guidance on risk, of a template for more efficient reporting for the e Product Safety Pledge signatories and of a compilation of case studies. 

CPC regulation: Based on the findings of its recent report on the application of the CPC Regulation, the EC is considering a potential revision of the Regulation to strengthen the enforcement of EU consumer laws, especially regarding widespread illegal practices, irrespective of whether the perpetrators are established within or outside the Union.

• Environmental Protection

New Ecodesign for Sustainable Products Regulation (ESPR): To address e-commerce-related sustainability concerns, the EC intends to propose a new ESPR. This regulation would implement sustainability requirements for products (e.g. return transport options, sustainable delivery, etc.), focusing on reducing environmental impact. The EC plans to adopt a first ESPR action plan by April 2025.

• Digital Tools

Digital Product Passport (DPP): A further objective is the effective implementation of the DPP, established by Articles 9 to 15 of the Ecodesign for Sustainable Products Regulation, Articles 77 and 78 of the Batteries Regulation and other relevant sectoral legislation, to enhance product traceability and compliance verification through a digital passport. A Working Plan is to be adopted in April 2025 to set out which products will be prioritized over the coming years through the adoption of delegated acts.

AI-Enabled Web Crawlers: AI will be used to detect and remove illegal products from online marketplaces and automate the identification of non-compliant products and generate take-down requests. The E-Surveillance WebCrawler is already available for GPSR enforcement. It is used to flag reappearing dangerous products already listed in the Safety Gate and generates automated take-down requests. The EC plans to make another web crawler available in 2025 to perform automated searches for potentially non-compliant products on online marketplaces.

• Online platforms’ liability

Product Liability Framework: The new Product Liability Directive will become applicable from the end of 2026. It will ensure that there is always a person liable for damage caused by defective products, including the online platforms where neither the manufacturer, the distributor, nor the fulfilment service provider can be identified.

Responsibilities of online marketplaces under the DSA: Online marketplaces must combat the sale of illegal goods on their platforms. This includes implementing user-friendly notice-and-action and complaint mechanisms, banning dark patterns, adhering to advertising rules, and fulfilling detailed transparency obligations. Additionally, the EC will strongly enforce the “Know Your Business Customer” obligation, which requires marketplaces to collect information on traders before they can offer products on the platform. The deadline for compliance is February 17, 2025 for traders already present on their platform one year beforehand, i.e., on 17 February 2024.

Evaluation of the DSA’s interactions with the consumer protection and product safety rules: As mandated by the DSA, the EC will also evaluate, by November 2025, how the DSA interacts with the consumer protection and product safety rules. Depending on the outcome of the evaluation, it may lead to a proposal for the simplification of existing rules.

• Voluntary actions

Voluntary Cooperation: The EC will support voluntary cooperation of online marketplaces and other stakeholders through forums such as the Product Safety Pledge+, the Memorandum of Understanding (MoU) against Counterfeit Products or the EU Internet Forum. The Product Safety Pledge+ consists of 20 areas where signatory online platforms took commitments regarding products sold online on their interfaces. These include for example a strengthened notice and takedown mechanism, proactive monitoring of recall sites such as the EU Safety Gate and additional commitments linked to recalls, transparency or trader education. The MoU is a voluntary agreement between rights owners, online platforms and business associations aiming at preventing offers of counterfeit goods from appearing in online marketplaces. The EU Internet Forum was launched initially to address issues related to the dissemination of terrorist content online, but also now incorporates actions on combating drug sales online.