Digital, Commerce & Creative 101: As the operator of a business-to-consumer online platform, what consumer law issues should you be thinking about?

What is an online platform?

“Online platform” is not defined in UK legislation. However, as UK consumer legislation derives from European law (albeit there are now greater divergences from EU consumer laws given the new DMCC Act) we can look to European guidance for a steer. The European Commission notes that:

“Online platforms generally provide infrastructure and enable interactions between suppliers and users for the provision of goods, services, digital content and information online. Online platforms’ business models range from providing information from third parties to enabling contractual transactions between third party traders and consumers. Platforms can also advertise and sell, in their own name, different kinds of products."

What do operators of online platforms need to think about?

Who is the consumer contracting with?

 If you are an online platform hosting third-party content or sellers, you should make it clear that you are acting as an intermediary. However, this does not mean you will have no responsibility or liability. You will be subject to “professional diligence” requirements, and so it is important that you set up and manage your online platform in a way that facilitates compliance with consumer laws.

Third-party traders on an online platform must be able to identify themselves to consumers and provide consumers with necessary pre-contract information. Therefore, you need to make sure your online platform is set-up in a way that allows and requires traders to meet their own consumer law obligations, including facilitating third-party traders to identify themselves and provide necessary pre-contract information.

If you have non-trader (i.e. consumer to consumer) sellers on your online platform, you need to make sure buyers know that they will not benefit from the same level of consumer law protection. It is also important that traders on your online platform do not misrepresent themselves as being consumers, in order to avoid having to comply with consumer laws. 

Ranking of search results

If your online platform presents search results, for example, a marketplace platform that displays a range of third-party traders’ products to customers in response to a search, you will need to think about how you rank those search results. 

Unlike in the EU, the UK has no specific laws on ranking search results but the CMA has advised online platforms to disclose the parameters used to rank search results. Failing to do so could arguably be a breach of consumer laws, even though the issue is not explicitly called out in legislation.

Customer reviews

If your online platform hosts customer reviews, or if you write or encourage customers to leave reviews, you should be alive to the issues and pitfalls of customer reviews. 

Writing and commissioning fake reviews, as well as publishing them without sufficient checks or manipulating the way in which they are presented, is expressly banned in the new DMCC Act. However, it was arguably already proscribed as an unfair commercial practice under existing law. 

The CMA has already investigated several online platform operators in relation to the use of such reviews, and so customer reviews is already an area of regulatory interest.  

Pricing practices

 Pricing is a regulatory hot topic, in particular:

• Dynamic pricing or real time pricing (for example, changing prices in real time in response to market demands) which may be considered an unfair commercial practice - you may have seen recent regulatory interest in dynamic pricing practices used during the sale of the Oasis concert tickets. 
• Drip pricing: which is the practice of advertising one price but then charging additional, non-optional fees and charges before the consumer can complete the transaction. There are new rules about this practice in the new DMCC Act so online platforms should be set-up in a way to avoid traders falling foul of these rules.

There are a raft of other pricing practices, such as reference pricing (e.g. Was £Y, Now £X), loyalty/reward scheme pricing, unit pricing, personalised pricing, and the use of pricing algorithms,  that are of regulatory interest and could potentially breach consumer laws, and so online platforms should be careful about how they manage any sellers operating on their sites.

Online Choice Architecture / Dark Patterns

Online Choice Architecture / Dark Patterns (i.e. an online environment that is designed (either intentionally or unintentionally) to manipulate consumers into making certain decisions) is another regulatory hot topic. The CMA has already taken regulatory action in respect of an online platform so other platforms should be wary of employing dark patterns and will want to ensure appropriate measures are in place to ensure information provided by third-party sellers can be validated, particularly where scarcity or popularity claims are made about certain products. For example, a marketplace platform shouldn’t be encouraging users to make purchases quickly on the basis that a product is shortly expected to sell out, if it isn’t able to substantiate that claim. 

Green claims

The CMA’s Green Claims Code explicitly notes that a marketplace platform operator can be liable for misleading environmental claims if it does not take adequate steps to make sure that products being sold on its platform comply with the law, for example, by taking steps to prevent misleading claims and removing claims which it knows to be misleading.  

You might also be at risk if you promote a marketplace platform as specialising in the sale of environmentally friendly products, but you don’t control or select the products which are marketed via that marketplace platform. 

The CMA has also been very active in relation to green claims issues, so online platforms should take care to ensure steps are taken to stay the right side of the law.

Product safety

Currently, there are no UK product safety laws that require online platforms to ensure the safety of the products being offered for sale by third-party traders. However,  platform operators are encouraged to have mechanisms in place to collect customer feedback on product safety, promptly investigate such feedback and take other steps, including monitoring of listings. In addition to taking steps to reduce the risk of unsafe products being sold to consumers, platform operators should take steps to ensure that consumers do not interpret any action by them as being an endorsement of the safety of the products marketed via the platform.

Are there other issues operators of online platforms need to think about?

Depending on the business model, platform operators may also need to consider a raft of other potential issues – such as competition law, data protection, tax, platform to business regulations and online safety amongst other issues.

Being an “intermediary” does not mean online platform operators can simply abdicate responsibility for compliance with regulation. Online platforms have very much been, and will likely continue to be, subject to regulatory scrutiny so careful thought should be given by online platform operators as regards the steps they should take to meet their obligations.