Product safety and product liability regimes

In the previous article in this series, we briefly discussed how the EU General Product Safety Directive (GPSD) is set to be replaced by the EU General Product Safety Regulation (GPSR) and how the old EU Product Liability Directive (PLD) will be replaced by the new EU Revised Product Liability Directive (RPLD). But why? In this article, the second of the series, we look at the EU product safety and liability reforms, why reform is needed, and compare them with the UK proposals.

EU Product Safety

The GPSD requires all products to be safe in their normal or reasonably foreseeable usage. Enforcement of the directive is currently left to the EU member states, with sanctions for breach ranging from fines to imprisonment.

Whilst weak enforcement powers are one reason for reform, more significantly, the GPSD is more than 20 years old, and so reform is necessary to account for the changes to products in the modern digital age and the wider desire for greener and ESG-focused initiatives. Essentially, the GPSD is now not adequate for regulating modern product safety.

The new EU GPSR (in force from 13 December 2024) addresses safety in modern products linked to new technologies, sold both online and offline, which present new risks not currently covered by the GPSD. For example, 31% of new safety alerts concern dangerous products sold online. As a result, the GPSR intends to address product safety challenges in online channels with the aim of enhancing market surveillance and making product recalls more effective.

The EU Commission intends to (amongst other things):

• Require makers of products with interconnected or cyber features to ensure the cyber integrity of the product itself and the effect it will have on any products connected to it.
• Revise the Safety Gate system (formerly known as RAPEX) with more measures to improve the detection and awareness of unsafe products.
• Set up a system of product traceability.
• Require businesses to appoint a responsible person in the EU (even if the business is established outside the EU) with responsibility for certain technical and safety information.

EU Product Liability 

The PLD is responsible for imposing strict liability for defective products that have caused a loss to consumers. However, now that it is over 40 years old, there are gaps in the directive that do not account for the new risks created by modern technologies.

The RPLD will significantly expand the range of potential defendants, the applicable products, and the circumstances in which those defendants may be found liable, shifting the legislation's balance further in the consumer’s favour than ever before.

Software, digital and AI service providers, businesses that make substantial modifications to products, authorised representatives, and fulfilment service providers will all become potential defendants under the RPLD.

Further, the following new provisions (amongst others) will broaden the opportunity for and improve the likelihood of success of claims brought by consumers that have suffered loss:

• In certain circumstances, such as where the claimant can establish that the damage was caused by an obvious malfunction of the product during normal use, the burden of proof will be on the defendant to demonstrate that they did comply with the relevant safety requirements.
• Where a product’s manufacturer cannot be identified, a claim may be brought against the distributor and any provider of an online platform that allows consumers to conclude distance contracts with traders.
• A claim may be brought by “a person acting on behalf of one or more injured persons” (which creates the possibility for class action claims).
• Damages can be claimed for intangible harms, such as compensation for loss/corruption of data and medically recognised harm to psychological health.

For example, a manufacturer may be liable for damage caused by the software they have incorporated into a product, including any upgrades or algorithm updates.

The manufacturer cannot avoid liability on the basis that the product was not defective at the time of marketing. However, liability will not apply where the installation of the software was beyond the manufacturer’s control, such as when the customer failed to install a software upgrade.

The EU has responded to the risks and liabilities that have emerged from new technologies by increasing regulation across the board. In contrast, the OPSS’ consultation suggests that the UK is set to diverge from this approach.

UK Product Safety and Liability 

The UK’s existing General Product Safety Regulations 2005 are largely based on the EU’s GPSD. The proposals set out by the OPSS are intended to cement the UK’s departure from the EU where appropriate, and whilst the EU is approaching the matter with increased regulation, the UK intends to create more proportionate legislation to reduce the regulatory burden on lower-risk products and unlock innovation, whilst maintaining high levels of protection for the remainder of products.

The reforms look to increase enforcement and plug enforcement gaps by introducing new enforcement powers for authorities and increasing the use of currently available powers, such as monetary penalties.

To tackle new risks that have developed with new technologies, the OPSS’ consultation suggests several measures including, but not limited to:

• Rolling out digital/electronic labelling more comprehensively so that labels do not need to physically be on products in every circumstance.
• Requiring consumer-facing information on online product listings for higher-risk products.
• Requiring online marketplaces to take specific actions with respect to unsafe product listings.
• Development of a new legal data gateway to create a data-rich source of information about product safety in the UK.

The UK position on product safety and liability reform is yet to be fully outlined. The OPSS’ consultation suggests that the government could adjust the civil product liability regime to ensure effective implementation of the GPSR in the UK. However there is no further information from the government at this time.

It is very unlikely that the UK’s General Product Safety Regulations 2005 and/or the UK’s Consumer Protection Act 1987 will be revised or replaced during 2024. Nevertheless, it will be interesting to see how the UK reforms develop and emerge over time.

Practical steps for businesses supplying products in the EU (even if established in the UK)

In the meantime, businesses supplying products to the EU should:

• Reassess product portfolios, particularly with respect to smart, connected devices, to determine whether those products fall within the scope of the GPSR (but note the GPSR does not apply to pharmaceuticals, medical devices or food).
• Reassess selling practices, including, in particular, online selling practices, to determine if they are now captured by the regime.
• Incorporate cyber security risks as part of basic product safety and compliance requirements.
• Ensure and enhance the focus on compliance with the EU product safety regime across the board to mitigate against the risk of increased enforcement practices.
• Enhance recall efficiency strategies, including traceability and recall plans, to reduce the likelihood of the need for regulator involvement.

Next time 

In the next article in this series, we discuss the reforms adopted or proposed in the EU and UK in response to the risks and situations arising from modern technology, including artificial intelligence.

In the meantime, for further information or guidance on whether any of the reforms or proposed reforms apply to your business, contact Robin Adams using [email protected] or 0191 211 7949.

This article is not legal advice and we accept no responsibility for action taken in reliance on it.