While the Digital Services Act (DSA) does not make a single mention of the term ‘online marketplace’, do not let this ambiguity in terminology fool you. The DSA includes significant obligations which apply to all online services that allow consumers to connect with traders. Read on to find out what this entails and how to get prepared.
The importance of effective trust & safety policies on marketplaces
Online marketplacesPlatforms where businesses and/or consumers can buy and sell goods and services online. An online marketplace can be between businesses, between consumers, or from businesses to consumers. In the DSA online marketplaces are understood as a digital service that facilitates transactions between consumers and sellers by providing an interface for the presentation of goods or services offered by those sellers.... are digital platforms that allow buyers and sellers to transact goods or services with each other, often acting as intermediaries in the transaction. This includes businesses of all shapes and sizes including Amazon, Shopify and eBay Kleinanzeigen.
The EU, with its 450 million citizens, represents a big market — only taking Germany and France we are speaking of around 68.4 million and 51.5 million e-commerce customers, respectively. Of these, most online shoppers look for previous customers’ reviews, and 97% of online shoppers who read product reviews also check for responses from the seller. Building trust has thus become an essential part of retaining customers. After all, several studies have established that customer retention should be a top priority for businesses, even more so than customer acquisition. According to a survey, existing customers are 50% more inclined to try new products from the same platform.
The DSA sets out numerous substantive obligations regulating the relationship between an online marketplace and their users. If implemented well, these can lead beyond strict compliance with the law to further keeping users engaged with your services.
Enter the Digital Services Act: What will you need to do to ensure compliance?
The DSA seeks to promote a fair, transparent, and competitive ecosystem of digital platforms. It therefore retains the important principle laid down more than two decades ago in the – a platform is not liable for the content of their users, unless they have explicit knowledge of it. This remains the case for marketplaces – they can benefit from this liability exemption as long as they act swiftly to review and remove content and products which are notified and assessed as illegal.
Overall, the DSA requires marketplaces to comply with the same obligations as any other hosting serviceA hosting service enables individuals, companies and other service providers to host websites, databases, applications.
Within the meaning of the DSA, a hosting service offers the storage of user-generated content. This includes for example filesharing, social media, video-sharing platforms as well as marketplaces., online platform or social media. This means that marketplaces must have effective notice and actionNotice-and-action is a mechanism that allows users to notify or flag illegal content to an online service. Under the DSA, notice and action mechanisms are mandatory for all hosting service providers and they must be easy to access and user-friendly. mechanisms allowing users to report products and pieces of content that are illegal. Further, marketplaces, as any other hosting service, need to ensure that they inform both the user that reported the product and the seller of the product where any decisions are taken to remove a listing.
The DSA also requires significant tracking of all content moderation-related data points: all user notices, together with any other tool that is deployed for content moderationReviewing user-generated content to ensure that it complies with a platform’s T&C as well as with legal guidelines. See also: Content Moderator under the marketplace’s terms of service will need to appear in a transparency reportA transparency report is a document released by an organization that discloses information related to its policies, practices, and actions. Typically, transparency reports provide details on the handling of requests for user data and content removal, as well as government requests for user records, among other relevant metrics and insights.. Each instance should be quantified and categorised by types of illegal content and source of detection.
In addition to all the general rules applicable to online platformsAn online platform refers to a digital service that enables interactions between two or more sets of users who are distinct but interdependent and use the service to communicate via the internet. The phrase "online platform" is a broad term used to refer to various internet services such as marketplaces, search engines, social media, etc. In the DSA, online platforms..., marketplaces have a few additional obligations. The so-called “know your business customer” obligation ensures that platforms know the traders that offer products and services by collecting and storing information which can be provided to authorities. Further, online platforms that act as marketplaces must also ensure that their interfaces are designed in a way that allows sellers to comply with product safety laws and they are obliged to conduct random checks against official databases.
Perhaps most importantly from the perspective of users and their safety, marketplaces that become aware of illegal products or services being sold must inform the consumers about the seller and about what measures the consumer has available to seek redress. Some studies suggest that informing users of potential risks associated with products can positively impact user retention. A 2022 report found that the majority of shoppers (72%) believe that transparency, which involves providing detailed information about a product such as its ingredients and manufacturing process, is important. Additionally, almost two-thirds of shoppers (64%) stated that they would switch to a different brand that offers more comprehensive product information.
Where a marketplace has 45 million users or above, it will be designated by the Commission as a very large online platform (VLOP). This means that they will additionally have to comply with the extensive set of risk assessmentIt refers to the process of identifying, analyzing, and evaluating the severity and probability of risks and threats associated with business or product development, deployment, and maintenance. In the context of the DSA, very large online platforms are required to annually assess the systemic risks stemming from the design, functioning or use of the platforms, including any actual or foreseeable... and mitigation obligations for VLOPs, as well as carry out a yearly audit of their services and measures to ensure user safety.
Rules for marketplaces are changing fast
The ink on the DSA has yet to completely dry, while already new rules are popping up that specify how certain obligations need to be applied in the context of potentially unsafe products. For example, the EU’s General Product Safety Regulation (GPSR) imposes a three-day deadline for processing user notices related to hazardous products on online marketplaces. It further specifies that random checks have to be performed against the Safety Gate.
What can Tremau do for you?
If you are a marketplace, you are likely already working hard to ensure buyers and sellers can effectively interact on your platform. However, the DSA obligations are extensive, and their operational impact and implementation solutions require careful assessment. Don’t know where to start or lacking internal resources to go at it alone? Tremau can help – check out our advisory services to know more or reach out to our policy experts.
Feeling like you have a grasp of the DSA obligations already, but still looking for help to comply with the law? We have a software that could help in increasing handling capacity and improving your effectiveness in key trust and safety metrics. Reach out here for a demo of our content moderation software that will allow you to comply with the law while tracking all relevant metrics for your business.
