The European Union (EU) has taken a significant step forward in regulating online marketplaces with the new Digital Services Act (DSA), a pioneering legislation that introduces various requirements for online platforms and other online service providers. One of the key provisions affecting online marketplaces is the "Traceability of Traders", which aims to enhance transparency and accountability in the digital marketplace.
What is the Traceability of Traders?
Under the DSA, online marketplaces are requested to trace their traders ("know your business customer" – Art. 30(1) of the DSA). This requirement addresses the need for online platforms to ensure that traders using their services are easily identifiable and adhere to EU rules and regulations. Here's a breakdown of its key components that marketplaces must do to comply with this requirement.
1. Gathering Trader Information:
Online marketplaces must obtain basic information from their traders, which includes the following:
- Trader's name, address, telephone number, and email address (contact details);
- Copy of identity document or other electronic identification;
- Payment account details;
- If applicable, extract and number from the commercial register or details from a similar public register; and
- A self-certification committing to comply with applicable EU law.
It is important that marketplaces adjust their registration process so that traders are requested to provide and/or update all that information before they are able to access the service. Online platform providers are also obligated to design their interfaces in a way that helps traders fulfil their legal obligations, so the process should be easy and intuitive.
2. Verifying Trader Information:
Traders are responsible for the accuracy of their details, but online marketplaces are required to verify the accuracy and completeness of the information provided by traders. To achieve this, they can use freely available databases (e.g., national trade registers and VAT information exchange systems, which are freely accessible to the public) or paid resources. Online marketplaces can also request traders to provide supporting documents to help with the verification, if needed.
If there is a reason to believe that trader information is inaccurate, incomplete, or outdated, marketplaces must request traders to correct the relevant information. If the trader doesn't provide the requested information, the marketplace should temporarily stop their access to the services until they provide the correct information.
Platform providers must securely store trader information for six months after the contractual relationship ends, after which it must be deleted.
3. Information Disclosure
Once trader information is successfully verified, online marketplace providers are obligated to disclose certain key details:
- Trader's name, address, phone number, and email;
- Where the trader is registered in a trade register or similar public register, trade registration information; and a
- The compliance self-certification provided by the trader.
Conclusion
The Digital Services Act (DSA) will be fully enforceable for all online marketplaces starting from February 17, 2024. Therefore, these service providers should ensure they make the necessary adjustments to their registration, data collection, and verification procedures before this deadline.
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.