E.U. Law Tightens Marketplace Selling
As of February 2024, sellers on European Union (E.U.) marketplaces are facing new regulations that significantly tighten the requirements for selling goods online. These changes are a result of the Digital Services Act (DSA), which was enacted by the European Commission in 2022. The DSA aims to address the growing issue of illegal products being sold through online intermediaries, including marketplaces, e-commerce sites, social media platforms, and app stores.
Background on the Digital Services Act
The DSA was introduced to improve the safety and accountability of online platforms. In 2023, E.U. authorities seized 152 million illegal items valued at €3.4 billion ($3.9 billion), a significant increase from 66 million items worth €1.5 billion in 2020. This alarming trend prompted the need for stricter regulations to protect consumers and ensure that online marketplaces operate within the law.
Key Requirements for Sellers
Under the DSA, marketplaces are required to implement stringent seller verification processes. Sellers must provide the following information before they can offer goods to E.U. consumers:
- Business registration documents
- VAT or tax identification numbers
- Physical address
- Email and phone contact details
- Self-certification confirming that products comply with E.U. law
Marketplaces are obligated to suspend sellers who do not comply with these requirements until they provide the necessary documentation. In practice, this means that incomplete documentation during the onboarding process can lead to immediate suspension from the platform.
Transparency and Consumer Protection
To enhance transparency, marketplaces must display certain details of verified sellers to consumers. This typically includes the seller’s business name, address, and contact information on public profile pages. Such measures are designed to foster trust and accountability within the marketplace environment.
Enforcement and Penalties
The DSA imposes significant penalties on marketplaces that fail to comply with its regulations. Non-compliance can result in fines of up to 6% of a marketplace’s global annual sales. This creates a strong incentive for platforms to verify sellers and promptly remove problematic listings. Additionally, trusted flaggers, which include trade associations and consumer protection groups, play a crucial role in identifying illegal products and reporting them to the marketplaces.
Regulatory Investigations
Regulatory scrutiny is increasingly focused on large marketplaces. For instance, in July 2025, the European Commission announced that Temu had breached the DSA by inadequately assessing the risk of illegal products on its platform. Similarly, AliExpress faced investigations and agreed to enhance its trader verification and product monitoring processes. Shein also received inquiries regarding illegal goods and consumer protection practices. Although these investigations target the platforms, the operational responses often affect sellers first.
General Product Safety Regulation (GPSR)
In addition to the DSA, marketplace sellers must comply with the E.U.’s General Product Safety Regulation (GPSR), which is set to take effect in December 2024. The GPSR focuses on product safety and supply-chain accountability, emphasizing product traceability and the identification of responsible economic operators. Together, the DSA and GPSR create a dual compliance framework that governs both platform responsibilities and product safety.
Implications for Sellers
For merchants selling through E.U. marketplaces, the implications of these regulations are clear. They must maintain current registration, tax, and compliance documents, ensuring that their contact information displayed on marketplace profiles is accurate. Selling through E.U. marketplaces is increasingly akin to operating within a regulated retail environment, where verification and transparency are becoming standard practices.
Conclusion
The tightening of marketplace selling regulations in the E.U. reflects a broader commitment to consumer protection and the enforcement of legal standards in online commerce. As the landscape of e-commerce continues to evolve, sellers must adapt to these changes to remain compliant and competitive in the marketplace.
Frequently Asked Questions
The Digital Services Act (DSA) is a regulation enacted by the European Commission aimed at improving the safety and accountability of online platforms, particularly in relation to illegal products being sold online.
Marketplaces that fail to comply with the DSA can face penalties of up to 6% of their global annual sales, which serves as a strong incentive for compliance.
The General Product Safety Regulation (GPSR) requires sellers to ensure product safety and accountability within their supply chains, emphasizing the importance of product traceability and compliance with safety standards.
Note: The regulations surrounding marketplace selling in the E.U. are evolving, and sellers must stay informed to ensure compliance and protect their businesses.
