Cosmetics sales on the internet have increased dramatically in recent years, especially since the start of the health crisis in 2020. In this environment, the well-known “marketplaces” are among the inescapable actors, bringing with them enormous prospects but also numerous obstacles, notably in terms of legal difficulties.

What are the legal implications of selling via these platforms in France and the EU, in terms of liability and safety?

What is a marketplace, exactly? 

Marketplaces are a type of digital platform that brings together suppliers and consumers for the purpose of selling a product. Marketplaces are a terrific way for sellers to reach out to new clients in this regard.

These platforms should not be confused with multi-brand e-commerce sites, which do not function as middlemen but rather sell the items on sale directly. Some sites, such as Go Ethnyk or Feelunique, offer both cosmetics distribution and a link between brands and purchasers, similar to Amazon.

Is it necessary to distinguish between the two models? Yes, because their respective liability regimes are vastly different, and the implications of this qualifier, in the case of product conformance, are far from simple in reality, for both operators and customers.

The marketplaces’ specific legal regime

Indeed, while marketplaces are subject to a number of obligations specific to their activity as online platforms (particularly in terms of transparency and fair trading), they do not operate as vendors and, as intermediaries, benefit from a limited liability regime that exempts them from civil and criminal liability if products do not comply with regulations.

This limited liability framework, which also permits them to avoid a general need to oversee content accessible on their platforms, is, however, subject to certain restrictions. It indicates, in particular, that they should be unaware of the criminal nature of items and that, if they are aware of it, they should remove them off their platform quickly.

Above all, their identity as a mere “host” is related with their status as a passive “shop” that passively stores and makes available to the public the offers of vendors, without having any “active part” in the sale or control over the items. They are otherwise referred to as “publishers,” and if a user of their platform sells an unlawful goods, they may face civil or criminal charges.

The stakes surrounding the concrete function of marketplaces are therefore significant, and a string of court rulings for the main ones (eBay, Alibaba, and Cdiscount) exist to establish the framework that must not be broken in order to prevent slipping into the platform’s dark side…

Safety of the product from the clients’ point of view

This has been known for a long time: market inspections by authorities (particularly the DGCCRF in France) indicate extremely high rates of product non-compliances, if not outright hazard, and 2020 has just served to intensify the trend. Cosmetics are consistently among the goods with the greatest rates of non-compliance in this regard.

In fact, many merchants from outside the EU have direct access to the European market through huge marketplaces. However, for many sellers, compliance with the stringent European laws isn’t always a top concern. As a result, there is a wide range of items on these platforms that do not fulfill the same requirements as European products (especially in terms of content, claims, or the identification of a Responsible Person based in Europe), some of which are potentially hazardous to customers.

The authorities, on the other hand, require access to the suppliers in order to take action. Although these vendors’ contact information is required on marketplaces, it frequently does not allow national authorities to contact infringing sellers who are located on the other side of the world (and in countries not always willing to cooperate with the European authorities).

Finding the perfect balance 

For the authorities, this is a huge challenge: most of the time, their only interlocutor is the marketplaces, which, in theory, only have a limited responsibility for these non-compliances and, even if they comply with their obligations to remove any product reported as non-compliant from sale, the number of products on sale is such that the authorities’ resources are insufficient.

As a result, despite announcements from both Brussels and Paris on new and increasingly restrictive regulations, it is difficult to strike a balance between the platforms’ responsibility, which cannot go too far without jeopardizing the system, and the need to protect European consumers’ interests and health.

In any event, every (current or prospective) marketplace operator must exercise prudence in explicitly defining his function and interventions in the vendor-buyer interaction. And we can only advise that the operator be effectively supported, because, aside from product safety, many other regulatory limitations, such as new taxation laws or those connected to the circular economy emerging from the AGEC Law, will certainly have a direct influence on this model.