The European Union (EU) is a lucrative market for many US-based e-commerce companies. However, selling to consumers in the EU requires compliance with a myriad of regulations and directives. This article highlights the most important laws related to e-commerce that US companies must be aware of when selling to European consumers.
E-Commerce Directive
The e-Commerce Directive serves as the foundational legal framework for online services in the EU. Some of its main provisions include the following:
Country of Origin Principle: service providers are subject to the laws of the EU country in which they are established, rather than where their services are accessed.
Liability Limitation: the directive limits the liability of intermediary service providers, for the information they transmit, store, or host, provided they act promptly to remove or disable access to illegal content once they become aware of it.
Commercial Communications: any commercial communication, such as advertising or promotions, must be clearly identifiable as such.
Consumer Rights Directive (CRD)
The CRD is a key EU directive that aims to enhance consumer protection laws across EU member states. It sets out specific rights for consumers in relation to distance and off-premises contracts, ensuring a consistent level of consumer protection for online and offline purchases within the EU, as follows:
Right to Information: before making a purchase, consumers must be provided with clear, comprehensible, and unambiguous information about the main characteristics of the product or service, total costs, payment arrangements, delivery details, and the right to withdraw.
Right of Withdrawal: consumers have the right to withdraw from a contract within 14 days without giving any reason. This is also commonly referred to as the "cooling-off" period. If a consumer exercises their right of withdrawal, the trader must refund all payments received, including delivery charges, without undue delay and within 14 days.
No Hidden Charges: traders cannot charge consumers additional fees without their express consent. Pre-ticked boxes on websites for additional payments are not allowed.
Digital Services Act (DSA)
The DSA regulates online intermediary service providers, encompassing a wide array of services, from simple websites to internet infrastructure services and online platforms. The DSA will be applicable to services of all sizes as of 17th February 2024. There are numerous provisions in the DSA, including the following:
Transparency Obligations: online platforms must be transparent about their content moderation policies and practices. This includes providing clear reasons for removing or disabling access to user-generated content.
Protection Against Illegal Goods: the DSA requires online marketplaces to take measures to prevent the sale of illegal goods and to quickly remove them once identified.
Dispute Resolution: platforms must establish an internal complaint-handling system and provide consumers with access to a mediator to resolve disputes.
General Data Protection Regulation (GDPR)
The EU's GDPR is one of the strongest privacy and security laws in the world, designed to "harmonise" data privacy laws across EU member states while providing greater protection and rights to individuals. Below are some data protection provisions contained in the GDPR:
Data Protection: companies must ensure that personal data of EU citizens is processed lawfully, transparently, and for a specific purpose. Once that purpose is fulfilled, the data should be deleted.
Right to Access and Erasure: EU citizens have the right to access their personal data and request its deletion.
Data Breach Notifications: companies must notify the relevant data protection authority of any data breaches within 72 hours of becoming aware of it.
Geo-blocking Regulation
The Geo-blocking Regulation is an EU law designed to prevent unjustified discrimination against consumers based on their nationality, place of residence, or establishment within the European Economic Area (EEA). It primarily aims to ensure that consumers have equal access to goods and services in the digital single market without facing discriminatory barriers.
Non-discrimination: traders cannot discriminate against customers based on their nationality or place of residence in terms of prices, sales, or payment conditions without justification, such as legal requirements or specific circumstances that warrant differentiation.
Conclusion
In conclusion, while the EU market offers opportunities for US e-commerce companies, it's crucial to comply with the various regulations and directives in place. The highlighted rules are just a fraction of the comprehensive framework governing online service providers. Depending on the nature of the service offered, numerous additional rules within these directives and other specific requirements may apply, and non-compliance can lead to hefty fines and damage to reputation.
Are you concerned whether your current online practices or future plans are in compliance with EU e-Commerce laws? Then check out our e-Com Legal Packs where we do a detailed review of your online practices and help you comply with applicable law.
If you'd like to review, discuss, your compliance with EU e-Commerce laws and whether our e-Com Legal Packs are a good fit for you, schedule a no-obligation, complimentary 30-minute consultation with us.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
