The rise of marketplaces and online platforms is systemic, as shown by the key figures for 2020 published by the French Fédération E-commerce et Vente à Distance (the E-commerce and Distance Selling Federation or "FEVAD") which represents the actors of e-commerce.
Marketplaces and platforms have also become much more diversified: we are witnessing the development of new platforms dedicated to increasingly innovative verticals, such as financial products' marketplaces – and even sometimes insurance – marketplaces for influencers or for recycling industrial waste.
The effervescence of this market and the multiplication of the risks it carries have led French and European legislators, as well as supervisory authorities, to increase the number of regulations applicable to these platforms.
It is therefore imperative for any operator or project leader to address the applicable legal framework, in order to avoid any risks and make the most of its business model.
Thus, the online platform operator must pay particular attention to the following:
- The obligations applicable to any online platform
- The securing of its contractual relations
- The applicable financial regulations in order to ensure the
security of its payments
- The main litigation risks involved when deploying platforms and
marketplaces
- The obligations arising from the European General Data
Protection Regulation (GDPR)
1. Comply with the main obligations applicable to any online platform
1.1. Obligations applicable to a BtoC (business-to-consumer) platform
Obligation No. 1: As part of its relations with its users/consumers, the online platform operator is bound by transparency and loyalty obligations, listed in Section L.111-7 et seq. of the French Consumer Code.
Indeed, the operator must provide consumers with fair, clear and transparent information regarding in particular:
- the modalities of referencing goods or services,
- the existence of a contractual or capital relationship that may influence the referencing of goods or services,
- the quality of the advertiser,
- the rights and obligations of the parties in tax matters,
- the terms for controlling the reviews published on the platform.
Obligation No. 2: When dealing with its professional users, the online platform operator is also bound by transparency and loyalty commitments, stemming from the European "platform to business" (P2B) Regulation of June 20, 2019, applicable since July 12, 2020. This regulation requires in particular:
- The supervision of procedures for suspending or closing sellers' accounts
- The provision of loyal information to users;
- Transparency on the conditions of referencing;
- Transparency on the conditions of access to data, including personal data;
- The spread of codes of good conduct;
- The implementation of an internal complaint handling and mediation system.
Obligation No. 3: The online platform operator must comply with tax and social obligations.
As such, the operator will first have to provide its users with loyal, clear and transparent information about tax and social obligations that apply to people conducting business transactions through their intermediary. This applies to each transaction, but also once a year through an annual summary.
Then, the operator is under the obligation to send an annual summary document to the tax authorities informing them of all the transactions carried out by each user, unless the latter have not exceeded the threshold of 20 transactions, representing more than 3,000 euros.
This summary must be submitted by January 31 following the year in which the transactions summarized in the document were carried out, in accordance with strict specifications.
Obligation No. 4: The services platform operator may be required to take social responsibility.
In theory, the marketplace model has the advantage of enabling independent service providers to be called upon,
- without hiring them as employees: this allows to reduce the charges to be paid, to modulate the payroll, and above all, to make one's partners responsible - even though they are their own "bosses";
- without really subcontracting the service to them i.e., the marketplace operator is not, from the customer's point of view, a service provider: he simply and automatically connects supply (the referenced service providers) with demand (the customers). By standing outside the service provided, the operator isn't accountable for it.
However, in practice, the running of a service marketplace involves various legal risks, in particular:
- the risk of requalification as an employment contract in the event of the existence of a subordination link between the platform and its service providers;
- the risk of having to bear social responsibility for platforms that "determine the characteristics of the service provided or the good sold and set its price";
- the risk of sanctions associated with a lack of transparency in the provision of information towards users.
1.2. Obligations applicable to a BtoB (business-to-business) platform
In the context of a "BtoB" platform project, meant to put professionals in contact with each other, the platform operator is in principle only bound by the above-mentioned tax obligations.
However, it is essential to place the transparency and loyalty obligations applicable to "BtoC" platforms at the core of the platform's commitments, especially in the light of the European Digital Services Act (DSA) and Digital Market Act (DMA) regulations.
2. Deploy a contractual framework that complies with applicable legal obligations
The European P2B Regulation and Section L. 111-7 of the French Consumer Code have intensified the transparency and fairness obligations for online platform operators, who must now pay particular attention to the contractual architecture of their platform or marketplace.
From now on, each online platform operator must provide clear, fair and transparent information on the Terms of Use ("CGU") of the service it offers. Likewise, users must be informed of the terms and conditions for referencing, ranking and de-referencing the content, goods or services to which the platform provides access.
Moreover, if the platform connects consumers and professionals, or if it connects professionals with each other, the operator must allow its professional users to communicate their Terms and Conditions of Sale ("CGV") and legal notices, in accordance with the obligation to inform the end customer.
Finally, any operator must enter into a contractual relationship with every user who interacts on its platform. The conditions of the provision of the online store, and the determination of the responsibilities of each user, can be defined within the Terms of Service ("CGS") (or "Seller" CGU). The drafting of the latter document should particularly take into account relevant case law, in particular the Amazon case of September 2019 (no. 2017050625).
3. Comply with the regulations specific to financial flows
When users (consumer or not) buy a product or service via a marketplace, they submit a purchase order which is relayed by the operator to the seller. The customer then pays for its order, by sending its payment order via the marketplace.
As part of this transaction, the platform operator must keep in mind that it is formally forbidden for any platform to proceed with the collection of sums of money on behalf of others.
The French Autorité de Contrôle Prudentiel et de Résolution ("ACPR"), the authority charged with preserving the stability of the financial system and protecting the customers, is particularly vigilant in ensuring that operators comply with the legislation stemming from European Directive 2015/2366 on payment services in the EU market, which prohibits non-banking institutions from collecting money on behalf of third parties.
Thus, and in the event that they do not meet the exceptions provided by this text, operators have several options:
- Initiate procedures with the ACPR in order to obtain accreditation as a Payment or E-Money Institution allowing them to provide payment services, though such a status can however be cumbersome and costly;
- Take advantage of existing legal exemptions;
- Turn to Payment Service Providers (PSPs) authorized to handle these financial flows or to transmit the order.
In any case, the platform operator must remain particularly vigilant regarding compliance with financial regulations.
4. Consider the main risks inherent to platforms and marketplaces
The online platform operator must be vigilant in three respects.
First, service marketplaces are now particularly prey to the risk of requalification of the contract binding the operator and the independent service provider as an employment contract. The latest decision in this regard is recent: on March 4, 2020, the French Cour de cassation (the French highest court in France) requalified the contract between the Uber platform and its drivers as an employment contract (See decision n° 19-13.316).
Second, the liability of online platform operators is based on the distinction between the status of hosting provider and publisher. Thus, the operator must be aware that it does not systematically act as a simple "intermediary". Indeed, if it is qualified as a publisher, it is liable for the content published by its users.
Recently, the Tribunal Judiciaire of Paris (Paris Court of Justice) qualified the Airbnb platform as a publisher, on the grounds that it provides its users with assistance, which consists in particular in optimizing the presentation or the promotion of offers, and that it has the right to review and withdraw published content.
Third, the French Direction Générale de la Concurrence, de la Consommation et de la Répression des Fraudes ("DGCCRF") has for main mission to ensure the economic protection of consumers. In order to avoid any sanction from this authority, online platform operators have every interest to conduct preventive audits on their platforms in anticipation of possible controls.
5. Ensure GDPR compliance
The implementation of a marketplace involves the interaction of three main actors:
- the operators,
- the sellers,
- and the consumers.
In this context, the main issue is to define the status of each of the actors of the marketplace, who may be data controllers, processors or even joint data controllers when several data controllers jointly determine the purposes and means of the same personal data processing operation.
The determination of the responsibility chain between the different actors who interact on the platform is essential, as it allows to determine the responsibilities of each one involved in the processing of personal data operated via the platform.
The GDPR compliance of a marketplace is essential in light of recent sanctions, such as fines of nearly 100 million euros for Google and 35 million euros for Amazon!
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.
