The UK’s appetite for buying online is the highest in Europe, with more than a quarter of retail sales now made through the internet. Whilst this presents an opportunity for small businesses to grow, ensuring the quality and safety of products sourced from overseas suppliers – particularly electrical items – has brought new challenges. So much so that, last month, the London Fire Brigade reported that e-bikes have become the capital’s fastest growing fire trend, with cheap batteries purchased from online sources to blame for an increasing number of blazes.
To address this, in August 2023, the government published its proposals for reform of the UK product safety regime with the aim to stop unsafe items from making their way to UK buyers from online retailers. Rob Rees, Divisional Director, Markel Direct, breaks down the proposal and gives guidance on what online retailers can be doing right now to safeguard themselves against potential disruption caused by the reform.
What is being proposed in the reform of the UK product safety regime?
The aim of the reform is to introduce steps which ensure that products bought online are as safe as those bought on the high street.
Some of the proposed steps include:
- For higher risk products, increase consumer-facing information on online product listings to support informed purchasing decisions. This information required on listings could include: warnings to consumers, a clear and prominent indication of whether the product has been listed by a third-party seller (alongside additional information, such as the name and contact address of the seller), details of what checks (if any) have been carried out on the product or seller and key product safety information which is already on the product, its packaging or its accompanying documents. The government has not yet confirmed which products will be deemed higher risk, but electrical equipment, cosmetics, toys, gas appliances and safety equipment are likely to be in scope.
- Online marketplaces (such as Amazon and eBay) would have duties to cooperate with enforcement authorities to provide information and take appropriate actions if products are unsafe or non-compliant. An additional duty could be that marketplaces must have a compliance function established in the UK which is responsible for ensuring appropriate policies, processes and systems are in place to address the availability of unsafe products.
- Online marketplaces would also be responsible for collecting (and taking reasonable steps to verify) information about third-party sellers for high-risk products. This would involve carrying out targeted monitoring and scrutiny of relevant product listings with a view to addressing listings which reasonably look like they could be advertising non-compliant or unsafe products. As well as consulting sources such as the UK Government Product Recalls and Alerts page, using this information to monitor their marketplaces for products which reasonably look to be an identical or very similar product, and when required, taking appropriate action.
Mandatory incident reporting in the UK for product-related incidents, predominantly those resulting in deaths, injuries requiring an overnight stay in hospital, or fires.
What could the new legislation mean for online retailers?
Stricter requirements for selling high risk items
The legislation aims to introduce new measures to determine the safety of a product being sold. This will mean that the requirements for selling high risk items will get stricter and therefore the possibility of having these products removed for non-compliance will be higher too.It is being proposed that the legislation moves more radically towards a different cross-cutting framework categorising products by hazards and risk levels, with requirements applying according to risk level. This means that if an online retailer sells high risk items, they will need to ensure their listings meet the compliance requirements to be available for purchase.
A reduction in non-compliant, overseas sellers
Online marketplaces bring in a lot of products sold by third-party sellers, many of which are based overseas. This type of seller usually can offer items at a lower price which makes the listings attractive to UK consumers over the local retailers. However, as there is often no responsible economic operator in the UK, it makes any investigation and corrective action difficult when an unsafe product is sold or causes an issue. This results in the re-listing of dangerous products time and time again.The proposal looks to reduce this number of non-compliant overseas sellers to not only improve safety, but also to make the market fairer by lessening the number of sellers who are undercutting price. One way this could be addressed, according to the proposal, is to ensure online marketplaces are duty-bound to have a compliance function established in the UK.
New, or stricter, insurance requirements by online retailers
Selling platforms, such as Amazon, already require some sellers to hold a minimum level of insurance cover. However, as online marketplaces are expected to bear increased accountability for the sale of safe products under the regime, they may introduce stricter insurance requirements for sellers, which could include additional covers or higher limits of cover. This would enable online marketplaces to mitigate their risk, as it would enable them to pursue the seller through legal channels in the event of a claim by a consumer.
4 things online retailers can do now to prepare
There are positive proactive steps you can take to ensure there is as little disruption as possible to your livelihood. Here are some actionable steps that will help safeguard your online retail business from the proposed changes.
- Conduct a thorough audit of suppliers and/ or products
If you are a third-party seller of products then getting ahead of this legislation is the best way to reduce the impact it will have on your retail business. Conducting a thorough audit of the suppliers of the products you sell and/or the products themselves is the best way to ensure that any products that could be deemed as “high risk” meet the UK safety requirements already in place.
Pay attention to the Government recall website and take extra care to check any products similar to those that have been recalled. You should also ensure that you have a system in place for recalls should they occur with any of the products you sell.
- Make sure product listings are detailed with safety in mind
Typically, only basic safety information is required for an online product listing as more detailed information is on the product packaging itself. The proposal suggests that all safety information for high-risk items is included in the product listings. To save a huge admin job later, be sure to update any high-risk product listing descriptions with the full safety information. Any information that would support informed purchasing decisions will give the item a better chance of meeting compliance requirements.
Information could include:
- Warnings to consumers about the potential risks a product has, such as being a choking hazard or overheating.
- Key product safety information which is already on the product, packaging, or accompanying documents, such as age limits, storage instructions and advice on use.
- Ensure you have insurance in place
Should the worst happen and a product you have sold causes harm or damage, you will need to ensure you have public and product liability insurance in place to protect you from costly claims. Product liability insurance provides coverage for tangible products that you sell, manufacture, or distribute. This coverage comes into play when a customer makes a claim due to injury or damage caused by these products.
Some online marketplaces make this insurance a necessity if you wish to use their platform to sell on. For example, Amazon currently requires a limit of at least £400,000 on its UK website for public liability, and products liability if you sell more than £4,000 worth of goods through ‘Fulfilled by Amazon’ as stated on their Seller Central Hub.
- Check your policy to make sure it includes an indemnity to selling platforms
If applicable to your business model, make sure that your insurance policy includes a provision that names the selling platform (like Amazon) as a co-insured, or includes an indemnity to selling platform clause.
If selling on Amazon, then it is in their seller’s agreement that your insurance policy names Amazon as an additional insured party. However, it’s important to note that such coverage is typically not included in standard insurance policies, so individuals or businesses may need to request this specific provision to ensure they are in compliance with Amazon’s terms and conditions.
The proposed changes to the UK product safety regime will be a positive step for those buying online and establishing trust with online retailers. However, it does mean that more effort will be required by retailers to ensure their business is not negatively impacted. The sooner this happens the better. The consultation for this proposal closed October 24th 2023, the next stage involves the consideration of all responses from the feedback period before publishing the Government Response.
Share