Digital Markets, Competition and Consumers Bill

Written evidence submitted by Electrical Safety First to the Public Bill Committee (DMCCB46)

In relation to the Digital Markets, Competition, and Consumers Bill

1. Key Points

Electrical Safety First welcomes the Digital Markets, Competition and Consumer (DMCC) Bill, but believes it falls short of achieving its objective to safeguard consumers and promote competition. The bill neglects the pervasive issue of dangerous goods being sold on online marketplaces.

This is growing concern especially because of the interrelationship between unsafe goods and digital markets, unfair competition, scams, and fake reviews – all of which are addressed within the DMCC Bill. Unsafe goods harm consumers and place a financial burden on public services including Trading Standards, Fire and Rescue Services, and the NHS.

Selling unsafe goods on online platforms could constitute an unfair commercial practice such as misleading actions (s.218) or misleading impressions (s.219). Notably, advertising a product without taking the necessary precautions and assurances of its safety constitutes a material omission from an invitation to purchase (s.222). However, whilst these provisions apply explicitly to other traders, it is not clear that these provisions will apply to online marketplaces – in order to protect consumers who are shopping online.

This is a concern because consumers deserve equal protections regardless of whether they are shopping on an online marketplace or on the high street.

The DMCC Bill should, therefore, be strengthened to combat the sale of unsafe goods on online marketplaces and safeguard consumers. This is vital given the bourgeoning growth in online sales that has resulted in high consumer dependence and trust in online marketplaces.

2. The Digital Markets Competition and Consumer Bill

The Digital Markets, Competition, and Consumer Bill (DMCC Bill) covers two broad policy areas:

1. Digital markets and proposed competition law reforms (Parts 1 and 2 of the Bill); and

2. Proposed reforms of consumer law enforcement and new consumer rights (Parts 3 and 4 of the Bill).

Despite this focus, the Bill does not address the sale of dangerous goods sold on online marketplaces. This is a concerning because this:

a. Is a direct result of the growth in digital markets over the past two decades;

b. Is anti-competitive, placing responsible businesses at a disadvantage;

c. Is perpetuated and supported by scams and fake reviews – which the DMCC Bill does address;

d. Causes significant consumer detriment; and

e. Causes a significant cost to the public purse – including Trading Standards Services, Fire and Rescue Services, and the National Health Service.

To protect consumers from unsafe goods sold on online marketplaces, Part 4 of the DMCC Bill should include provisions against this unfair commercial practice. Advertising a product as safe when it's actually unsafe can be considered misleading (s.218, s.219), and omitting crucial safety details in an invitation to purchase is a significant omission of material information (s.222). Therefore, expanding Part 4 of the DMCC Bill to explicitly cover online marketplace transactions is essential.

3. Consumer rights and disputes (Part 4 DMCC Bill)

Part 4 of the DMCC Bill relates to consumer rights and disputes and makes provisions to protect consumers from unfair commercial practices (s.217), including:

a. Misleading actions (s.218);

b. Misleading impressions (s.219); and

c. Omissions of material information from an invitation to purchase (s.222).

Material information includes the main characteristics of the product (s.222(2)(a)). Whether or not a product is safe or unsafe relates to the main characteristics of a product and, therefore, constitutes material information. The omission of material information from invitations to purchase on online marketplaces (i.e., advertisements on online marketplaces) is, therefore, an unfair commercial practice.

However, the provisions of Chapter 1 Part 4 only apply to "traders" (s.217(3)) – and it is, therefore, unclear whether the provisions apply to advertisements on online marketplaces.

Indeed, there is some question over whether an online marketplace is acting in the name of or on behalf of a person for purposes relating to that person’s business – particularly when promoting an advertisement on its platform.

If an online marketplace is seen as such then the online marketplace would fall within the Bill’s definition of "traders" and would be caught by the provisions of Part 4.

In any case, consumers deserve equal protections regardless of whether they are shopping on an online marketplace or on the high street.

In order to ensure that this is the case, the definition of "traders" within s.217 should be expanded to include online marketplaces – or, alternatively, there should be a backstop provision such that if no "trader" can be identified, then the online marketplace on which a product was sold will be held responsible.

4. Relationship between scams and unsafe goods sold on online marketplaces

Whilst it is welcome that scams are included within the DMCC Bill, there is a clear interrelationship between scams and unsafe products.

For instance, an investigation by Electrical Safety First found unsafe devices that were advertised as ‘energy saving’ listed on online marketplace, eBay. Not only were these devices ineffective at saving consumers energy but more concerningly, these devices were unsafe – placing consumers and their homes at risk. Scams such as this take advantage of shoppers’ vulnerabilities – resulting in significant consumer detriment – both mental and physical.

Sellers who knowingly or recklessly sell unsafe goods on online marketplaces are in many respects scammers. These sellers mislead consumers by falsely claiming that the products they are selling are safe, exploiting consumers’ misplaced trust.

In addition, it is unclear whether the advertisement of unsafe goods could fall within the DMCC Bill’s’ definition of scams – and as such, there is uncertainty for consumers, businesses, and online platforms.

The DMCC Bill falls short by only addressing scams and ignoring the sale of unsafe goods. To be effective, it should cover broader consumer safety concerns related to unsafe products. Scams are just one part of the issue, and by widening its focus, the DMCC Bill can better protect consumers.Bottom of Form

5. Anti-competitive nature of online marketplaces

Online marketplaces are not recognised as actors in the supply chain. As such, these platforms have no responsibility for ensuring the safety of products sold on their platform.

By contrast, traditional high street retailers are required to comply with product safety laws and incur costs in ensuring that products meet the appropriate safety standards. Online marketplaces, on the other hand, unfairly evade these costs as they are not subjected to the same product safety regulations.

The regulatory vacuum is, therefore, placing responsible manufacturers and distributors at a clear disadvantage. Allowing big tech giants, such as eBay and Amazon to operate with fewer regulations than high street retailers – and to profit from doing so – is anti-competitive.

The purpose of the DMCC Bill is to introduce a new regime that addresses the far-reaching power of a small number of very powerful tech firms – and, in doing so, promote competition. However, if online marketplaces continue to be able to profit from the sale of unsafe goods, whilst high street retailers continue to play by the rules, then the DMCC Bill will not have achieved its objective.

Instead, by maintaining the status quo – and not requiring online marketplaces to comply with product safety laws, the Government is discouraging fair competition.

6. Economic cost of unsafe goods sold on online marketplaces

The economic cost of not including unsafe goods within the DMCC Bill is significant.

This cost is best understood by comparison to the European Union (EU). The EU has addressed the sale of unsafe goods on online marketplaces within the EU’s revised General Product Safety Regulations (GPSR).

These new rules are estimated to save EU consumers approximately €1 billion in the first year and €5.5billion in the next decade.

In relation to implementing the GPSR, the cost to businesses is estimated at €196.6 million in the first year, with recurrent costs of €177.8 million in subsequent years. There is, therefore, a clear economic benefit to addressing the sale of unsafe goods sold on online marketplaces within the EU .

Comparable economic benefits are likely to exist in the UK. However, these economic benefits have not yet been realised due to the Government’s inaction in implementing measures that address the sale of unsafe goods sold on online marketplaces.

7. Government commitments

The Government has made a series of commitments to both online safety and product safety, including:

· Ensuring that only safe products can be placed on the market now and in the future [1] .

· Ensuring the product safety framework is fit-for-purpose [2] .

· Making the UK the "safest place in the world to be online" [3] .

However, at present, these commitments are not being realised – and online marketplaces continue to be a hotbed for unsafe products – an issue which has been emphasised by multiple organisations.

For instance:

· In November 2021, the CEO of the Office for Product Safety and Standards, Graham Russell said: "there is too much evidence of non-compliant products being sold by third party sellers [on online marketplaces]".

· An investigation by the National Audit Office (NAO) that found that ‘there are gaps in regulators powers to regulate online marketplaces.’ [4]

· A House of Commons Public Accounts Committee (PAC) report that found similar results. The report stated that online marketplaces were a "significant source of potential product safety harm" [5] . Reporting on the PAC report went on to highlight that the current product safety laws won’t prevent another Grenfell tragedy [6] .

In order to achieve the Government’s ambitions – both in relation to the DMCC Bill and more generally, it is essential that the DMCC Bill be amended to ensure that the sale of unsafe goods on online marketplaces be included within its scope.

8. Evidence of the risk posed by unsafe goods sold on online marketplaces

Case studies

The tragic death of Linda Merron in 2015 was caused by an unsafe electrical good bought on eBay demonstrates the very real consequences of vulnerable consumers unknowingly buying unsafe products from online marketplaces [7] .

Separately, in 2020, a fire in the Kent’s family home in Ruddhlan was caused by a laptop charger bought on an online marketplace xv .  

In 2020, a fire destroyed the Firth’s family home in East London. This was alleged to have been caused by a battery pack bought on an online marketplace [8] .

Then, in 2021, a fire destroyed the King’s family home in Darlington. This was alleged to have been caused by a battery pack bought on an online marketplace [9] .

Investigations

Electrical Safety First has undertaken several investigations into the safety of electrical products sold on online marketplaces and have repeatedly found unsafe products sold on these platforms:

We found over 60 unsafe e-bike and e-scooter chargers for sale across four online marketplaces, including eBay, Amazon, AliExpress, and Wish.com [10] . This is particularly concerning given that there has been an exponential growth in fires caused by e-bike and e-scooter charges. Most concerningly, a tower block fire in Shepherds Bush in June 2022 was caused by a charging e-bike [11] .

We found recalled white goods being sold on online marketplaces, including Facebook Marketplace and eBay. This included recalled tumble dryers and washing machines that had been recalled due to the risk of overheating [12] - and are, therefore, a fire risk. Concerningly, Facebook Marketplace had no mechanism through which to report a product as being recalled (and, therefore, unsafe) [13] .

A separate investigation by Electrical Safety First found that 93% of a sample of electrical products sold on online marketplaces were unsafe [14] . A further investigation by Electrical Safety First found that several unsafe chargers and plug adaptors were being sold on social commerce sites, such as Instagram Marketplace and Facebook Marketplace [15] .

Lastly, a joint investigation by Electrical Safety First and the British Toy and Hobby Association found several unsafe products – including both toys and electrics being sold on online marketplaces in the run up to Black Friday – a day when consumers are encouraged to shop online [16] .

9. About Electrical Safety First

Electrical Safety First is a safety charity dedicated to reducing the number of deaths, injuries and accidents caused by electricity. Electrical Safety First campaigns on behalf of consumers to improve safety regulation - working hard to raise awareness of electrical risk in the home. Electrical Safety First works with Government, NGOs and Industry as the leading campaigning charity and technical authority on electrical safety.

10. Proposed amendments

Clause 217 page 146 line 11 at end delete ‘.’ and insert ‘or  

(c) a person marketing goods for sale online.’  

This amendment makes a person marketing goods online a trader for the purposes of this Act.

Clause 217 page 146 line 22 at end insert  

‘(c) a product is sold online and the operator of the online marketplace has not taken reasonable steps (as defined by regulations made under section 158 of this Act) to ensure that the goods offered for sale in the online marketplace comply with  

i. The General Product Safety Regulations 2005 (SI 2005 No 1803) ("the 2005 Regulations"), and  

ii. Such other safety requirements as the Secretary of State may specify.   

This amendment makes it an unfair commercial practice to sell goods online unless the specified safety requirements have been complied with.

Clause 218 page 147 line 9 and end insert  

(e) an operator of an online marketplace failing to take reasonable steps (as defined by regulations made under section 158 of this Act) to ensure that no goods offered for sale in the marketplace have been the subject of a notification to an enforcement authority under regulation 9 of the 2005 Regulations.’  

This amendment makes it a misleading action to sell goods online without taking reasonable steps to ensure that those goods have not been subject to a recall.

Clause 234 page 158 line 4 at end add  

‘(5) The Secretary of State must make regulations specifying what constitutes ‘reasonable steps’ pursuant to sections 217 and 218 of this Act .’

This amendment requires that the Secretary of State make regulations to define ‘reasonable steps’ for the purposes of clauses 217 and 218 of this Act.

Clause 241 page 160 line 16 at end add  

" online marketplace" means a service using software, including a website, part of a website or an application, operated by or on behalf of a trader, which allows consumers to conclude distance contracts with other traders or consumers; and   

" safety requirement" includes-   

i. any relevant enactment governing the safety of products or of a specific type of products,   

ii. any voluntary national standard of the United Kingdom, and   

iii. any standard adopted by an international standardising body.   

This amendment defines the terms ‘Online Marketplace’ and ‘Safety Requirement’.

June 2023


[1] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1035917/uk-product-safety-review-call-for-evidence-response2.pdf

[2] Ibid.

[3] https://www.gov.uk/government/news/world-first-online-safety-laws-introduced-in-parliament

[4] https://www.nao.org.uk/wp-content/uploads/2021/02/Protecting-consumers-from-unsafe-products.pdf

[5] https://committees.parliament.uk/work/1292/protecting-consumers-from-unsafe-products/publications/

[6] https://www.theguardian.com/technology/2021/sep/30/uk-product-safety-laws-wont-prevent-another-grenfell-tragedy-report-warns

[7] https://www.bbc.co.uk/news/uk-wales-south-west-wales-32046682

[8] https://www.bbc.co.uk/news/business-55317414

[9] https://www.itv.com/news/tyne-tees/2021-11-24/darlington-family-home-devastated-after-fire-caused-by-cheap-phone-charger

[10] https://www.bbc.co.uk/news/technology-62751274

[11] https://www.standard.co.uk/news/london/london-fire-brigade-shepherds-bush-queensdale-crescent-b1007372.html.

[12] Ibid.

[13] Ibid.

[14] https://www.electricalsafetyfirst.org.uk/media/wvwdtpjo/online-marketplaces-the-evidence-and-impact.pdf

[15] https://www.electricalsafetyfirst.org.uk/media/wvwdtpjo/online-marketplaces-the-evidence-and-impact.pdf

[16] https://www.bbc.co.uk/news/technology-59432079

 

Prepared 4th July 2023