As the Covid-19 pandemic accelerates changes in consumer shopping by increasing online sales, regulators are realizing that such platforms can pave the way for non-compliant and unsafe products.

The Covid-19 pandemic has accelerated changes in consumer shopping, creating a surge in online sales. The number of parallel online marketplaces has grown rapidly, allowing consumers to discover a variety of brands and compare shop products and prices on one site, creating new revenue streams. However, along with these benefits, regulators have found these platforms also create an easy way for non-compliant and unsafe products to reach consumers.

Another factor affecting the consumer electronics sector and product security is that devices are becoming smarter. Countless artificial intelligences (AI) are beginning to permeate all aspects of our lives. Legal and regulatory systems have not kept pace with these developments. Product safety and liability legislation, whether specific electrical safety regulations or general product safety, requires updating. There are a number of proposals in the UK and EU to address these concerns.

The rise of the rule

Increasing consumer appetite for sustainability, and broader eco-design regulations are pushing businesses to design more environmentally friendly appliances such as energy-efficient home appliances. Using electronic devices such as smart energy meters is helping consumers live more sustainably.

Minimizing electronic waste is also a priority. Waste electrical and electronic equipment (WEEE) and battery take-back obligations have been in place for some time. However, the focus has now changed. In the year In October 2022, the European Union passed a law requiring all mobile phones, tablets and cameras sold in the EU to be equipped with a USB Type-C charging port by the end of 2024. Regulators say one issue driving this new rule is demand. To reduce the number of chargers needed by consumers and thereby reduce waste.

Consumer advocates and lawmakers are demanding that manufacturers create products that last longer, have built-in obsolescence, and can be reused or recycled. These changes bring many new challenges in product design, safety and liability.

New General Product Safety Regulation

In June 2021, the European Commission approved a proposal for a General Product Safety Regulation (GPR) to replace the current General Product Safety Directive. Moving through the EU legislative process, this regulation has made several changes that will affect how and by whom product safety is enforced.

The first major revision will be local member state implementation rules, unlike the existing directive – so the rules will be consistent across the EU. Other key changes include revising the definition of “product” to include goods “whether or not connected to other goods” and clarifying the rule’s application to software. Functions such as growth, learning and prediction and cyber security have been added to assess product security. These improvements will have significant effects, especially as AI and smart technologies become more advanced.

The proposal improves the obligations for distributors and retailers. They are required to “prove the manufacturer’s compliance” with certain functions. It also creates a separate duty not to “expose danger”. [a product’s] Compliance with general safety requirements.” Both obligations would go beyond existing obligations and increase the cost and complexity of compliance for retailers and manufacturers.

For some time observers have suggested that online marketplaces be governed by product safety systems. This is not always possible. Product liability for products sold in stores is as small as that of a shopping center owner. However, the proposed rule requires online marketplaces to establish a single point of contact to oversee product safety. They should also remove listings for dangerous products or disable access to dangerous products or display a clear warning “imminent delay”. This can happen as quickly as two business days if ordered to do so by market surveillance authorities.

It is at least reassuring that the proposed rule makes clear that this obligation does not mean that online marketplaces have a blanket obligation to monitor the information they transmit or store. It does not require platforms to proactively search for facts or circumstances that indicate illegal activity, such as the online sale of dangerous products. Given the rapid growth of online marketplaces in the retail sector, these new rules may cause many to rethink their business models.

The laws regarding recall have also been updated. The proposed regulation sets out how a recall notice should look and requires economic operators to avoid statements that could reduce consumers’ perception of risk. Economic operators must inform all consumers they identify of a recall and at least give them the right to repair, replacement or refund in accordance with their consumer rights.

Negotiations on the draft regulation between the President of the European Council and the European Parliament were scheduled to begin in mid-September 2022. Once completed, the proposal will be presented to the General Assembly for a vote before being officially approved. Businesses should familiarize themselves with the process so that they are prepared when and if it is implemented.

The revised product liability directive and a directive on AI liability are all on the horizon

In the year On September 28, 2022, the European Union approved two proposals to modernize the strict liability system for defective products and create liability for damage caused by AI. While the proposals are in their early stages, both involve significant changes to the sector.

The proposal to update the Product Liability Directive clearly addresses a wider range of products. IT SYSTEMS, SOFTWARE UPDATES OR MODIFICATIONS AND DEFECTIVE SOFTWARE SYSTEMS SHALL BE STRICTLY LIABLE FOR LOSS OF DATA TO PROPERTY, PERSONAL OR UNSAFE PRODUCTS. This means that electronic products can be vulnerable not only from physical malfunctions, but also from software-related issues. Companies can also be held liable for damages caused by cyber security failures.

These product liability guidelines are similar to the above-mentioned proposals for general product safety and market surveillance regulation requiring companies to install an EU-based representative. This extends from the current requirement which applies only to importers.

The new AI directive works with these rules.

With AI under the new Product Liability Directive, the Limited AI Directive will be the first law to set the basis for claims for damages arising from AI-enabled products and services. The new regulations should be read in accordance with the AI ​​Act. If you pass, you confirm that any victim, whether individuals or businesses, will seek compensation if they suffer damages due to the fault or omission of the provider, organizer or user of AI.

The rules apply to all uses of AI in any context. The definition contained in the AI ​​Act, which is still being adopted, is “software developed with one or more of the techniques and methods listed in Annex 1 and capable of generating results for a specific set of human-oriented purposes such as content, predictions, recommendations or decisions influencing the environment in which they interact.” to spend. This is a wide area.

The proposed directive eases the victim’s burden of proof by introducing a “presumption of causation.” This means that if a person is found guilty in relation to the harm caused and the causal connection to the AI ​​is reasonable, the court may presume that person is guilty. While this is a remediable assumption, it could be a game changer in accountability as business rushes to adopt AI and expands further.

The proposed AI regulations set disclosure obligations that allow victims to access information about high-risk systems. Examples given in the guidelines include drone delivery operators who do not follow instructions for use.

The AI ​​revolution is also coming to the UK

In May 2022, the Office of Product Safety and Standards (OPSS) and the Center for Strategy and Evaluation Services (CSES) published a study on the impact of AI and smart technologies on product safety. As current UK product safety laws are derived from EU legislation, it is not surprising that the study highlighted the same challenges identified by the European Commission. These include the lack of clarity on how well AI and other smart technologies fall within the definition of “product” and how effectively the law applies to technologies whose safety implications may change over their lifetimes. There is also a similar appetite for increasing the accountability of online marketplaces.

Proposals for the UK’s revamped product safety laws are due to be published by the end of 2022 but could be delayed due to the political turmoil that has gripped the UK government in recent months.

More significantly, the recently published Continuing EU Legislation (Repeal and Amendment) Bill has the potential to undermine the UK’s product safety landscape. If passed as introduced, MPs would have to take steps to convert all existing direct EU laws into UK law.

This applies to all direct EU legislation made under or for the purpose of s2(2) of the European Communities Act 1972 and subordinate legislation from the EU. If a delay is agreed before June 23, 2026, there is potential for a later date.

The impact of this type of delay can be significant. Product-specific laws, such as the General Product Safety Regulations 2005 and those covering consumer electronics, fall within the scope of the bill and many product safety provisions that could be repealed if not written. There is also a possibility that they may be replaced by hastily prepared alternatives.

Businesses operating in the UK market now face a period of significant political and legal uncertainty. Despite the instability of the landscape, or because of it, it is important for businesses to be aware of the changes that may occur in the UK and their consequences.

What’s next?

While there is clear convergence between EU and UK priorities for future-proofing product safety, their approaches and processes may differ significantly. The resulting uncertainty and potential differences between the laws in the two jurisdictions will be a challenge for consumer electronics businesses looking to serve both markets. All this comes at a time when both markets are looking for new regulatory systems.

Changes are on the horizon. Businesses have only a limited amount of time to make their voices heard if they want to shape those changes before they have no choice but to comply without a say in how they are run.

This article was originally published as part of Sedgwick Brand Protection. Remember 2022 Report – Issue 3.

From September 13, 2022, the employer is obliged to register working hours, see this judgment below.

In the recent Queensland District Court decision in Norsgaard v Aldi Stores (Limited Partnership) [2022] QDC 260, the court addressed the issue of whether the defendant’s manual handling training was sufficient to prevent an employee from being injured while lifting a carton of tomatoes.

As the Covid-19 pandemic accelerates changes in consumer shopping by increasing online sales, regulators are realizing that such platforms can pave the way for non-compliant and unsafe products.


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