The EU’s Digital Services Act comes into effect on February 17, 2024, for all digital platforms operating in the EU, including online marketplaces. This guide will cover the essential must-knows about the DSA for online marketplaces, including the main objectives and scope of the DSA and tips for developing a robust compliance strategy.
The European Union’s Digital Services Act (DSA) aims to regulate online platforms and services and create a safer, more transparent digital environment for businesses and consumers within the EU.
The DSA will apply to all digital service providers, including online marketplaces, social media platforms, search engines, and app stores. In this guide, we will focus specifically on the implications of the DSA for online marketplaces.
We’ll cover the basics: the key requirements of the DSA and how it affects marketplace operations, but we’ll also provide practical advice on how to comply with the DSA to ensure that your marketplace is in line with EU regulations.
Table of contents
- Key components of the DSA
- Objectives and scope of the DSA
- Managing user content and data protection
- Making steps toward DSA compliance
- Conducting a thorough review of current policies and procedures to identify any gaps in compliance
- Investing in effective content moderation and product verification systems
- Implementing a robust Know Your Customer (KYC) program
- Providing transparent information about sellers and products listed on the platform
- Implementing efficient redress mechanisms for users
- Partnering with compliance experts (like Trolley)
- Developing a compliance strategy
- Challenges and best practices
- Choose Trolley for DSA compliance
Key components of the DSA
The DSA was implemented with aims to address three main issues that are more and more common online today: illegal content, harmful and counterfeit products, and unfair market practices.
One of the key provisions of the DSA is the responsibility that digital service providers have in removing illegal content from their platforms within a reasonable time frame. This includes:
- Hate speech
- Terrorist content
- Child sexual abuse material
- Intellectual property infringement
Online marketplaces must have clear and efficient procedures in place to monitor and remove illegal content. Failure to do so can result in hefty fines and potential legal action.
Harmful and counterfeit products
The DSA also requires online marketplaces to take measures to prevent the sale of harmful and counterfeit products on their platform.
These measures include implementing a notice-and-action procedure for users to report such products, as well as ensuring product safety and compliance with EU regulations.
Unfair market practices
The DSA also aims to regulate unfair market practices, such as the use of algorithms that promote illegal or harmful content, bias in ranking and recommender systems, and opaque advertising practices. Marketplaces must ensure transparency and fairness in their operations, with non-compliance resulting in fines and sanctions.
Objectives and scope of the DSA
The DSA aims to create a level playing field for all digital service providers operating within the EU. It also seeks to enhance the accountability and transparency of these platforms, ensuring that they act in the best interest of consumers.
These regulations will apply to all digital service providers that have a significant presence in the EU or provide services to EU customers.
This means that even non-EU companies will be subject to the DSA if they offer services or products to EU citizens.
The DSA rules will apply to all platforms starting February 17, 2024.
Very large online platforms (VLOPs) and very large online search engines (VLOSEs), platforms with more than 45 million users in the EU (10% of the EU’s population), must follow stricter rules than smaller platforms, and the DSA rules have applied to them since the end of August 2023.
Main provisions and requirements for digital services
The DSA requires digital service providers to have a designated point of contact for communication with authorities and comply with transparency obligations, such as providing accurate information about their terms and conditions, content moderation policies, and advertising practices.
Marketplaces also have an obligation to implement efficient redress mechanisms for both consumers and businesses who encounter issues on the platform. This includes the removal of illegal or harmful content, as well as resolving disputes between sellers and buyers.
How the DSA impacts your online marketplace
The DSA will have a significant impact on the operations of online marketplaces, as they will be required to implement stricter measures and ensure compliance with EU regulations. Failure to do so can result in heavy fines and penalties.
To comply with the DSA, marketplaces must invest in robust content moderation systems, implement efficient product verification processes, and provide clear information about sellers and products listed on the platform. This will not only ensure compliance but also improve the overall user experience and trust in the platform.
Some of the most significant impacts of the DSA on marketplaces include:
- Increased responsibility in regulating content and products listed on the platform: Marketplaces will need to invest in effective content moderation systems and enhanced product verification processes.
- Stricter compliance measures: Marketplaces must comply with transparency obligations and provide efficient redress mechanisms for consumers and businesses.
- Improved user trust and safety: Under the DSA, users will have more control over what they see on platforms, like personalized recommendations, and ads must be labeled as such. The DSA aims to create a safer digital environment for consumers, which will ultimately improve trust in online marketplaces.
- Stricter measures to prevent the sale of illegal, harmful, and counterfeit products: Marketplaces must ensure that products listed on the platform are safe and comply with EU regulations. They must perform due diligence on the products and services listed on their platform.
- Greater transparency in advertising practices and ranking algorithms: Marketplaces must be transparent in their advertising practices and ensure that algorithms do not promote illegal or harmful content.
- Obligation to provide efficient redress mechanisms for consumers and businesses: Marketplaces must have effective systems in place to address issues and disputes between sellers and buyers.
To comply with the DSA, marketplaces must also regularly review and update their policies and procedures to ensure they align with EU regulations.
Managing user content and data protection
The DSA also places additional value on user privacy and data protection. Marketplaces must establish clear policies on how user content is collected, used, and shared. They must also provide users with control over their personal data and ensure compliance with relevant data protection laws.
In addition to complying with the DSA, marketplaces must also adhere to the General Data Protection Regulation (GDPR), which sets out rules for how personal data is collected and processed within the EU.
Some of the primary data responsibilities for marketplaces include:
- Providing clear information on how user data is collected, used, and shared: Marketplaces must have transparent policies in place to inform users of their data practices.
- Obtaining consent for data collection and processing: Marketplaces must obtain explicit consent from users before collecting and using their personal data.
- Giving users control over their data: Users should be able to access, correct, or delete their personal information on the platform.
- Ensuring security measures are in place to protect user data: Marketplaces must have robust security measures in place to prevent data breaches.
- Appointing a Data Protection Officer (DPO): Marketplaces must appoint a DPO to oversee compliance with data protection laws and handle any related issues.
These measures not only ensure compliance with the DSA and GDPR but also promote a safe and trustworthy user experience on the platform.
Making steps toward DSA compliance
To comply with the DSA, marketplaces must take proactive steps to ensure that their operations align with EU regulations. Some practical measures that marketplaces can take include:
Conducting a thorough review of current policies and procedures to identify any gaps in compliance
To comply with the DSA, marketplaces must first understand their current policies and procedures. A thorough review can help identify any gaps in compliance and allow for necessary adjustments to be made.
Investing in effective content moderation and product verification systems
Marketplaces must invest in efficient content moderation and product verification systems to prevent the sale of illegal or harmful products on their platform, such as mechanisms for users to flag such content.
Implementing a robust Know Your Customer (KYC) program
Marketplaces have an obligation to collect certain information from sellers, including contact details, identification, payment details, and a commitment from sellers to comply with EU law. They must also verify that the collected information is accurate and complete.
Providing transparent information about sellers and products listed on the platform
Transparency is a crucial aspect of DSA compliance. Marketplaces must provide clear and accurate information about sellers and products listed on their platforms to promote trust and prevent fraudulent practices, and must cooperate with “trusted flaggers,” organizations formally recognized as trusted for identifying and reporting illegal content.
Implementing efficient redress mechanisms for users
Marketplaces must have effective systems in place to address issues and disputes between consumers, businesses, and sellers on the platform. This includes providing timely responses and resolutions to complaints.
Partnering with compliance experts (like Trolley)
Navigating the complex requirements of the DSA can be challenging for marketplaces. That’s where compliance experts like Trolley come in. By partnering with Trolley, marketplaces can rely on our expertise and technology to ensure compliance with the DSA and other relevant regulations, so they can focus on their core business operations.
These steps, along with continuous monitoring and updates, can help marketplaces maintain compliance with the DSA and foster a safe and trustworthy digital environment for all users.
Developing a compliance strategy
As part of their DSA compliance efforts, marketplaces must also develop a comprehensive strategy to ensure ongoing alignment with EU regulations. This strategy should include regular reviews and updates of policies and procedures, as well as measures to address any new or emerging requirements.
Steps to take when developing a compliance strategy may include:
- Identifying all relevant regulations and guidelines
- Assessing current policies and procedures for compliance
- Addressing any gaps in compliance through necessary changes and updates
- Implementing technology solutions to aid in compliance efforts
- Training staff on DSA requirements and best practices for data protection and content moderation
By following these steps, marketplaces can position themselves as trusted and compliant digital service providers, gaining a competitive edge in the marketplace.
Integrating DSA requirements into business operations
Complying with the DSA should not be seen as a one-time task, but rather an ongoing effort that should be integrated into all aspects of business operations. This can include:
- Incorporating DSA compliance into product and service development processes
- Regularly reviewing and updating privacy policies and terms of service to align with EU regulations
- Implementing data protection measures throughout the organization, including vendor management and employee training
- Conducting regular audits of compliance efforts and making necessary adjustments
By consistently integrating DSA requirements into business operations, marketplaces can not only maintain compliance but also promote a culture of trust and transparency with their users.
Leveraging technology for compliance
Lightening the load of DSA compliance can also be achieved through the use of technology solutions. Marketplaces can leverage tech tools to automate processes and ensure ongoing compliance with the DSA. Examples of technology that can aid in compliance include:
- Artificial Intelligence (AI) for content moderation and product verification
- Data management systems for efficient processing and storage of user data
- Compliance software to track and manage DSA requirements
By utilizing technology, marketplaces can streamline their compliance efforts and focus on providing a seamless user experience while adhering to EU regulations.
Challenges and best practices
Complying with the DSA presents some challenges for marketplaces, such as:
- Balancing compliance with other regulations, such as the General Data Protection Regulation (GDPR)
- Navigating complex requirements and guidelines
- Ensuring compliance of third-party sellers and vendors
To overcome these challenges, marketplaces can adopt best practices, including:
- Partnering with compliance experts like Trolley for guidance and support
- Staying updated on any changes or updates to the DSA
- Conducting regular audits and reviews of compliance efforts
Through a proactive approach and awareness of best practices, marketplaces can effectively navigate the challenges of DSA compliance.
Choose Trolley for DSA compliance
Complying with the DSA is a legal requirement and crucial for creating a safe and trustworthy online marketplace. Online marketplaces can ensure ongoing alignment with EU regulations by understanding the objectives and requirements of the DSA, conducting thorough reviews, partnering with compliance experts like Trolley, and integrating DSA compliance into business operations.
Trolley’s cloud-based payouts platform offers a comprehensive suite of tools to help marketplaces comply with the DSA and other relevant regulations. Gathering the required data and processing payouts while adhering to DSA requirements can be complex, but Trolley’s technology streamlines these processes, allowing marketplaces to focus on their core business.
Know Your Customer due diligence is an important aspect of DSA compliance. With Trolley Trust, online marketplaces can breathe a sigh of relief as KYC processes are taken care of during onboarding.
Trolley Trust has built-in:
- Identity & document verification: Collect and validate IDs versus 11,000 official government ID templates from over 200 countries.
- Live photo validation: Use the power of image recognition to ensure the uploaded ID is from the actual person submitting it.
- Proof of address and age comparisons: Verify details provided during onboarding, such as address and DOB, with the ID document.
- Monitoring dashboards: Manage the KYC and IDV process from a single screen where you are alerted to actions you may need to take.
With Trolley, marketplaces can reduce the burden of compliance and foster a trusted environment for users. Contact us today to learn more about our marketplace compliance solutions and how we can support your operations.
This article is intended for educational and informational purposes only. Through the publication of this article, Trolley is not offering any legal, taxation, or business advice. We strongly encourage each reader to consult with their relevant lawyer, accountant, or business advisors with respect to the content of this post. Trolley assumes no liability for any actions taken based on the content of this or other articles.