DIGITAL SERVICES ACT (DSA) AND THE OUT-OF-COURT DISPUTE RESOLUTION

Author: Dr. Giovanna Del Bene

 

The Digital Services Act is the new European Regulation on Digital Services (EU Regulation 2022/2065), which innovates the previous liability regime for information society service providers, consisting of the E-commerce Directive (2000/31/CE), now more than two decades old.

 

The DSA entered into force on November 16, 2022 in Italy and will be directly applicable throughout the European Union as of February 17, 2024. In order to overcome any discrepancies in national transposition of the E-commerce Directive, the form of a regulation rather than a directive was chosen, as it allows for direct applicability.

 

The Digital Services Act establishes the principle that what is illegal offline must also be illegal online and has as its primary goal the fight against misinformation and the protection of users. While digital services have made trade easier, critical issues related to the risk of consumer deception, for example, about the purchase of counterfeit goods and the unauthorized use of trademarks or copyrighted material have increased.

 

A first new feature of the Regulation is the creation of new national bodies responsible for overseeing the application of the DSA itself. This figure is called the Digital Services Coordinator, and will be responsible, in each Member State, for supervising the application of the DSA with respect to platforms that have their main establishment in the respective Member State. With Decree-Law 123/2023, published in Official Gazette No. 216 of September 15, 2023, AGCOM (the Italian Competition Authority) was officially designated as the Digital Services Coordinator for Italy.

On the basis of principles of proportionality, appropriateness and respect for the adversarial process, in accordance with the procedures established by its own regulations, AGCOM may impose administrative pecuniary sanctions of up to a maximum of 6% of the annual worldwide turnover in the financial year preceding the notice of initiation of the proceedings on the provider of an intermediary service falling within its sphere of competence, including in its capacity as Digital Services Coordinator, in accordance with the national and European law applicable to the case of offence. In the event of providing inaccurate, incomplete or misleading information, failure to respond to or rectify inaccurate, incomplete or misleading information, and failure to comply with the obligation to submit to an inspection, AGCOM may impose an administrative fine of up to 1% of the worldwide turnover achieved in the previous fiscal year by the provider of an intermediary service or the person concerned. The maximum daily amount of the periodic penalty payment that AGCOM may apply is 5% of the average daily worldwide turnover of the provider of an intermediary service concerned achieved in the previous financial year, calculated from the date specified in the decision in question.

In applying the sanction, AGCOM will take into account, in particular, the seriousness of the act and its consequences, as well as the duration and possible repetition of the violations.

The Digital Services Act includes a number of rather articulated provisions, divided into three main groups and having the following purposes:

– establish the exclusions from liability of intermediary service providers in the case of illegal online content;

– defining the obligations on intermediary service providers;

– finally, rules for implementing the regulation and related penalties.

 

Specifically, a conspicuous number of obligations pertain to online platforms, meaning the legislature understood social networks or those platforms that allow consumers to conclude distance contracts with commercial operators and thus all those e-commerce platforms.

 

With reference to online platforms, the DSA in Article 16 provides the obligation to set up reporting and action mechanisms, which allow any person or entity to notify the presence in the service of specific information that such person or entity believes constitutes illegal content. The provider is obligated not only to give feedback to the reporter but also to inform the reporter about the action taken, in a timely, diligent, nonarbitrary and objective manner. These new reporting procedures enable the provider to make the necessary verifications immediately and proceed promptly to remove the infringing content.

According to Article 17 of the DSA, service providers shall provide all affected service recipients with clear and specific reasons for restrictions imposed on the grounds that the information provided by the service recipient constitutes infringing content or is inconsistent with its general terms and conditions. On the contrary, in case it does not intend to act, the service provider has no obligation to give reasons.

 

According to Article 20 of the DSA, there is an internal system for handling complaints against the decision made by the online platform provider upon receipt of a report or against decisions made by the online platform provider on the grounds that the information provided by recipients constitutes illegal content or is incompatible with the general conditions. Decisions on complaints cannot be made solely by automated means, so supervision by appropriately qualified personnel must be ensured. An appeal and out-of-court dispute resolution is provided against the provider’s decision.

 

According to Article 21 of the DSA, platform providers shall ensure that information regarding the possibility for service recipients to have access to out-of-court dispute resolution is easily accessible on their online interface, clear and user-friendly.

To this end, the Regulations provide for the figure of out-of-court dispute resolution bodies that are certified by the digital services coordinator and guarantee consumers an alternative dispute resolution mode.

The certified ADR body does not have the power to impose a dispute resolution binding on the parties. In addition, according to Article 21, this is without prejudice to the right of the recipient of the service in question to initiate proceedings at any stage to challenge such decisions by online platform providers before a court of law in accordance with applicable law.

 

Out-of-court dispute resolution bodies shall make their decisions available to the parties within a reasonable period of time and no later than 90 calendar days from the receipt of the complaint. In the case of highly complex disputes, the certified ADR body may on its own initiative extend the period of 90 calendar days by an additional period not exceeding 90 days, so as to result in a maximum total duration of 180 days.

 

The Regulations also introduced the figure of the so-called “reliable reporter.” Reports received from these individuals are stipulated to be given priority and to be processed and decided without delay. On the basis of Article 22 of the DSA, the aforementioned qualification is granted, at the request of any entity, by the Coordinator in which the applicant is established, if the following conditions are met:

 

– is demonstrated to have special skills and expertise in the detection, identification and notification of illegal content;

– independence from any online platform provider;

– ability to carry out the activity in a diligent, accurate and objective manner.

 

Reputable reporters shall submit to the Digital Services Coordinator, at least once a year, a report on the reports submitted.

 

According to Article 23 of the DSA, online platform providers, after issuing an advance notice, shall suspend for a reasonable period of time the provision of their services to service recipients who frequently provide manifestly illegal content. In addition, they shall suspend for a reasonable period of time the processing of reports and complaints submitted for reporting and action and the complaint processing systems referred to in Articles 16 and 20 by persons, entities or complainants who frequently submit manifestly unfounded reports or complaints.

 

In deciding on a suspension, providers shall assess the situation on a case-by-case basis and in a timely, diligent and objective manner, taking into account all relevant facts and circumstances that result from the information available to the online platform provider.

 

In this regard, online platform providers shall set out in their general terms and conditions, in a clear and detailed manner, their policy in relation to the aforementioned abuses and provide examples of the facts and circumstances they take into account when assessing whether certain conduct constitutes abuse and in determining the duration of suspension.

 

Pursuant to Article 24 of the DSA, online platform providers must provide, in addition to all the information regarding reports on content moderation activities prescribed by Article 15 of the DSA for all providers, the number of disputes submitted to dispute resolution bodies, the results of those disputes, the average time for their resolution, and the number of suspensions applied under Article 23 of the DSA.

 

Although the purpose of the regulation is to contribute to the proper functioning of the internal market for intermediary services and online platforms by establishing harmonized rules for a safer digital environment, both in terms of protecting the fundamental rights of users and creating a level playing field among businesses, promoting their innovation, growth and competitiveness, the Digital Services Act is not without criticism. With reference, in particular, to the reporting and action provisions described above, some commentators note, among other things, how: there is a lack of a clear definition of “wrongful/illegal”; what kind of qualification the personnel supervising the decisions should have; what exactly is meant by “reasonable rights” applied by the out-of-court resolution body. Then there is the fear, by some authors, that the out-of-court procedure pushes people away from the process, promotes legal uncertainty and the fragmentary nature of decisions, issued moreover by individuals whose professional qualifications are unclear.

 

© THINX Srl  – novembre 2023