Brexit: eCommerce and Defective Product Liability In a Post-Brexit World

by Guest Author - Quittance

Product liability is the area of law that holds manufacturers, distributors, importers and retailers accountable for any damage to property or injuries caused by their products.

At the time of writing, UK product liability law is a mixture of UK and EU legislation. EU law will continue to apply until 31 December 2020 - the end of the EU Withdrawal Agreement transitional period. Thereafter, UK importers, distributors and retailers of EU products will no longer be bound by EU law.

What will the changes to product liability legislation mean for online retailers based in the UK? 

Defective product liability legislation

HIstorically, there have been two key pieces of product liability legislation that could affect online retailers:

The Consumer Protection Act 1987 (CPA)

The Consumer Protection Act 1987 (CPA) is primary legislation that holds manufacturers to account for products deemed to be unsafe. If goods are imported from outside the EU, the CPA makes importers, distributors and ‘own-brand’ retailers accountable.

Under the CPA, consumers are entitled to claim compensation if a defective product damages property, or causes an injury or death.

The CPA also introduced the principle of ‘strict liability’ for product liability claims. Under this legal principle, a claimant does not need to prove that a manufacturer or distributor was negligent in order to make a successful claim. The claimant will only need to establish that the product was defective and that the defect was, on the balance of probabilities, the cause of the injury.

The General Product Safety Regulations 2005 (GPSR)

The General Product Safety Regulations 2005 (GPSR) place various controls on ‘producers’ to ensure the safety of consumer goods. The regulations ensure that products are safe, under normal use or in reasonably foreseeable circumstances.

For EU-based businesses, a ‘producer’ is defined by the GPSR as an importer, manufacturer or any other person presenting himself as the manufacturer (e.g. own-brand retailers).

If the product is being imported from outside the EU, a producer is defined as either the importer, or the manufacturer’s representative if that representative is based within the EU.

Producers must take all ‘reasonable’ steps to ensure that any product they put on the market is safe. What counts as ‘reasonable’ will vary in line with the type of product and the inherent risk in using the product.

In addition there are sector-specific regulations for certain product types where a specific or higher risk exists. These product types include toys, cosmetics, gas appliances and medical devices.

Failing to comply with the GPSR can lead to criminal prosecution.

1st January 2021 and beyond

If you import goods from outside the EU, it will be business as usual. However, as from 1 January 2021, the rules for UK companies that import from any EU member state will now be essentially the same as the rules for those importing from outside the EU.

Both the CPA and the GPSR will be amended when the Product Safety and Metrology Regulations 2019 (PSMR) come into force at the end of December 2020. The PSMR aims to ensure that product safety legislation continues to operate correctly after the UK fully withdraws from the EU.

Strict liability will also apply to any business that imports products from any EU member state. Importers will no longer be able to rely on safety accreditations or certifications carried out in the EU. Importers will become responsible for the safety of any product they import and sell in the UK.

If the imported products are to be sold in the UK, the importer will need to show their name and address on products supplied to the UK market.

Amendments to GPSR will also require importers and retailers to implement measures to protect consumers, including:

  • Carrying out or commissioning their own safety testing
  • Investigating and retaining a record of safety complaints
  • Ensuring that they are notified of any product recall notices
  • Notifying retailers and consumers of any product risks

Will there be an increase in the number of product liability claims?

From January 2021, all UK businesses that import products into the UK will be liable for injuries or property damage caused by a defective product they supplied.

Chris Salmon, Director of Quittance Legal Services said “Although product liability claims are relatively rare, compensation settlements can run into £100,000s for more serious injuries. Where a manufacturer would have been the probable defendant in an injury claim involving a defective product that was made in the EU, importers and distributors will now be in the firing line.”

Getting ready for the revised regulations

UK-based online retailers should not be complacent about the impact of Brexit on their safety obligations.

There are a number of things online retailers should be doing in readiness for January 2021. You should reevaluate whether the consumer products you supply are safe. Make sure that packaging is safe, marketing messages are accurate, instructions are fit for purpose, and any product safety notices or labelling are in place.

Check that your products comply with any specific sector directives. Consider whether your products will interact safely with other products they could foreseeably be used with.

Sign up to new recall alerting systems (when they become available)

Dangerous product recalls in the EU are handled by Safety Gate (formerly Rapid Alert System or Rapex). Safety Gate issues notifications about defective products and unsafe product recalls between EU states.

Once the UK leaves the EU, it will not be part of Safety Gate. Plans for a UK-based alternative are not finalised, so it is recommended that UK businesses continue to monitor Safety Gate alerts until a new system is implemented.

Update to safety marking

The CE mark that shows a product has been assessed as safe will be replaced by the ‘UK Conformity Assessed’ mark, or UKCA mark.

For lower-risk products, it may still be possible to self-certify. However, requirements may change as the UK enters into new trading relationships with the EU and other countries.

Check your insurance

Public liability insurance covers manufacturers, importers and retailers against the cost of a claim made by a consumer that has sustained an injury or property damage as a result of a defective product.

Although product liability insurance is not mandatory for online retailers, most retailers have some level of cover. Cover is usually inexpensive and readily available. If you are not currently insured you should consider whether your increased exposure to a claim might warrant taking out a policy.

If you are already covered, you should check whether your policy offers sufficient protection once the new rules come into effect. Check that your policy terms are not going to change, and make sure you are aware of any new obligations the insurer places on you.