Modern Retail

Product Liability After Brexit – the Risks for Online Retailers

Product liability

Debates about the UK’s relationship with the EU have focused on hot button issues like immigration, budget contributions and fishing rights. After decades of integration however, the reality is that almost every aspect of British life is affected by EU regulations.

Now that the final stages of Brexit are here, the process of disentangling UK and EU laws begins in earnest, and a raft of new legislation is coming into force.

Although most of the new laws and regulations amount to “business as usual”, UK companies must pay close attention to those areas where material changes will occur. Product liability law is one such area that will affect UK importers, distributors and retailers.

At the end of December 2020, the Product Safety and Metrology Regulations 2019 will come into force. The regulations include changes that will expose many businesses to additional liability.

Increased liability for UK-based businesses

The UK’s existing product liability laws are set out in two main pieces of legislation, the Consumer Protection Act 1987(CPA) and the General Product Safety Regulations 2005 (GPSR).

Chris Salmon, Director of Quittance Legal Services, writes, “For any business importing products into the EU, the CPA imposes strict liability for injuries caused by the imported products. Under the CPA, an injured consumer can make a claim against the importer of a defective product. A claim is possible even if the importer carried out safety checks and was unaware of the defect.”

From January 2021, this strict liability will apply to any business importing into the UK, rather than just into the EU. As a result, many UK businesses that would not have been strictly liable for injuries caused by defective products before Brexit will now be liable.

Unless your business sells consumer products manufactured within the UK, you may find that your current product liability insurance is no longer suitable. 

Changes to CE marks and product labelling

All consumer products sold in the EU must have a CE mark. Although CE marks will remain valid during the Brexit transition for products sold in the UK, the CE mark is being replaced by the UK Conformity Assessed mark, or UKCA.

Consumer products sold in both the EU and UK may require both CE and UKCA marks, and the safety requirements to earn each mark may vary. Less-hazardous products can still be self-certified in most cases. The UKCA certification approval process for higher-risk products is initially likely to take longer as the new process evolves.

Online retailers should ensure that their marketing copy and product descriptions comply with both EU rules and the new UK laws regarding product safety. Compliance with both sets of regulations will vary depending on the product type, but you should pay particular attention to whether additional product information or warnings should be included, and whether there are any restrictions on sales, such as age limits, in place. Your website and checkout process should reflect these restrictions.

Product safety checks

Under the GPSR, products sold to the UK market must be “safe to use”. Manufacturers, importers, distributors and retailers are all under a legal duty to take reasonable measures to ensure products are safe.

What is considered “reasonable” and “safe” will depend on the product type, it’s target market and the level of risk. Power tools, for example, are inherently dangerous. There are no general restrictions on the sale of these tools, but a retailer must still carry out due diligence to ensure the products are manufactured and/or distributed by a reputable entity. For UK-based businesses, Companies House will provide information about the size, structure and history of a company.

The degree of due diligence you must carry out on suppliers has not necessarily increased under the new regulations. If you are importing to the UK from a EU-based business however, you may need to carry out additional checks.

Product recalls

Product recalls in the UK will now be handled by a UK-based process. The details of the system are not completely fleshed out, but the process will be separate from the EU’s current Rapex/Safety Gate system. Businesses selling to the UK and EU will need to adhere to both jurisdictions’ product recall systems.

Even if you are not planning to sell to EU customers, your business may wish to subscribe to EU safety recalls anyway. There may be delays as the UKsystem rolls out, and although the EU recalls will not be binding, they will be useful guidance to ensure your customers are not put at risk by defects. 

Preparing for the changes

Many UK businesses will be affected by the upcoming changes. At the very least, now would be a good time to review your level of exposure, and make changes to safety protocols, labelling and website copy. You may also need to upgrade your liability cover.

  1. Check if your business is affected

Do you import to or from the EU? Do you sell to UK- and EU-based consumers? You should check with suppliers whether they are affected by the product liability changes, and to confirm whether your business is now newly affected by the CPA strict liability regime.

If you sell to EU consumers, or could potentially sell to them, you should either amend your processes to ensure you comply with both EU and UK law, or restrict sales to UK residents only.

  1. Review marketing copy and product labelling

Check what warnings and other notices you must include when selling products online, and what labelling the products must feature. If you sell to both UK and EU consumers, both sets of regulations must be followed.

  1. Review product safety checks

Under the changes, your business may be required to carry out additional safety checks. If you are importing from an EU business, under the GPSR you may now be liable to carry out safety checks and cannot rely on EU suppliers’ own safety guarantees.

  1. Review product liability insurance

Your liability for injuries and property damage arising from defective products is likely to have increased in Jan 2021. If you are now considered an importer into the UK, your business’s liability will have increased significantly.

You should check that your product liability insurance is sufficient to cover foreseeable harm caused by the products you sell, and raise your level of cover as required. You should also review the requirements of your policy to ensure you remain compliant.

The consequences of failing to adhere to the product safety regulations can be significant. GPSR breaches can lead to fines and a criminal conviction. If a product you sell does cause a serious injury, your business could be liable to pay damages totaling £100,000s.

As with many aspects of Brexit and the UK-EU trade deals, the details of many aspects of product safety will be in flux for some time. Now is a good time to conduct a top-down assessment of product safety and product liability, but you should ensure you subscribe to trade body, supplier and regulator newsletters, and stay up to date regarding how the changes evolve and are implemented in practice.

Credit: Chris Salmon, Operations Director of Quittance Legal Services