Consumer protection Archives | Digital Watch Observatory

EU examines harmful design features in online platforms

The second annual report on systemic risks under the Digital Services Act has highlighted online risks faced by children and young people on very large online platforms and search engines.

The report was published by the Board for Digital Services and developed in cooperation with the European Commission. It provides an overview of recurrent systemic risks in the EU for very large online platforms and search engines.

Risks identified in the report include the spread of illegal content, cyberbullying, grooming and exposure to harmful material such as dangerous viral challenges and adult content.

The report also points to the role of platform design. Interface features and recommender systems can contribute to addiction-like behaviour, increase exposure to harmful content and intensify harmful interactions between users.

Platforms have introduced mitigation measures, including targeted protection tools, content moderation systems and user empowerment features.

The Commission said the report reinforces the role of the DSA as a transparency and accountability tool for understanding how online platforms function and shape risks in society.

The findings will support regulators, civil society, and platforms as the EU continues to monitor DSA implementation and efforts to create a safer online environment for minors.

Why does it matter?

The report shows that the EU platform regulation is moving beyond illegal-content takedown towards a broader assessment of systemic risks created by platform design. For children and young people, recommender systems, interface choices and engagement-driven features can shape exposure to harmful content and unsafe interactions at scale. The DSA reporting process, therefore, provides regulators and civil society with a clearer evidence base for assessing whether very large platforms are doing enough to protect minors.

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FTC seeks comment on AI accuracy policy for model outputs

The US Federal Trade Commission (FTC) is seeking public comment on a proposed policy statement examining whether AI companies may violate consumer protection law by manipulating model outputs in ways that conflict with users’ expectations of objectivity and accuracy.

The proposed statement says AI companies could violate Section 5 of the FTC Act if they deliberately distort AI outputs to pursue undisclosed ideological objectives while marketing their systems as accurate, objective or suitable for specific purposes. Section 5 prohibits unfair or deceptive business practices.

The FTC also questions whether certain state AI laws, specifically Colorado’s Artificial Intelligence Act, could be preempted if they conflict with a federal regulatory framework. According to the Commission, state requirements that compel changes to AI outputs may be incompatible with federal policy.

The proposal follows a December executive order issued by President Donald Trump directing the FTC to examine the legal implications of state laws requiring changes to what the order described as the ‘truthful outputs of AI models.’

The proposed policy statement will be published in the Federal Register, with public comments accepted until 31 July 2026. The Commission approved the notice in a 2–0 vote.

Why does it matter?

The proposal reframes AI output accuracy as a consumer protection issue rather than solely a question of content moderation or AI governance. If adopted, it could expose companies to regulatory scrutiny when they market AI systems as objective or reliable while modifying outputs in ways users are not informed about.

The consultation also highlights growing tension between federal and state approaches to AI regulation in the United States. By questioning whether state laws could be overridden by a federal framework, the FTC is signalling that AI governance may increasingly become the subject of broader legal and constitutional debates over regulatory authority.

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EU introduces €3 duty on low-value e-commerce imports

From 1 July 2026, the European Commission is introducing a temporary €3 customs duty on low-value goods imported into the EU from outside the bloc, primarily through e-commerce platforms. The duty applies to a wide range of commonly purchased goods including clothing, toys, and electronics, covering items worth up to €150.

The duty is charged per customs tariff classification rather than by quantity. For example, purchasing five T-shirts attracts a single €3 charge because they share the same tariff code, whereas buying three T-shirts and a watch incurs two €3 charges because they fall under different classifications. Sellers or importers will declare and pay the duty through the customs process.

The measure is intended to create fairer competition for the EU businesses, improve consumer protection by strengthening oversight of imported goods, reduce customs fraud linked to undervaluation and false declarations, and address the environmental impact of growing volumes of low-value shipments.

The European Commission said the measure forms part of a broader customs reform package aimed at modernising border procedures, strengthening the single market and ensuring that businesses selling into the EU comply with the bloc’s safety and regulatory standards. The duty is described as a temporary measure.

Why does it matter?

The new customs duty reflects the EU’s broader effort to adapt its customs system to the rapid growth of cross-border e-commerce. By introducing a flat charge on low-value imports, the Commission aims to reduce incentives for undervaluation, improve enforcement of product safety rules and create more equal competitive conditions for businesses operating within the single market.

The measure could also influence the business models of major online retailers and marketplaces that rely on high volumes of low-cost imports. Whether the duty succeeds in improving compliance without significantly increasing costs for consumers or slowing legitimate trade will help shape future reforms of the EU’s customs framework.

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Russian draft law includes 48-hour crypto cooling-off rule

Russian lawmakers are considering a 48-hour cooling-off period for certain cryptocurrency transfers as part of a draft law on digital currencies and digital rights.

The measure would apply to non-qualified investors and is intended to protect users from fraud, according to comments from Vladimir Chistyukhin, First Deputy Governor of the Bank of Russia.

Chistyukhin said the cooling-off period would not apply to cryptocurrency trading itself. He clarified that the mechanism is intended for transfers to other accounts and similar operations, rather than brokerage activity.

The proposal forms part of a broader legislative effort to establish a legal framework for the circulation of cryptocurrencies in Russia. The State Duma adopted the government-backed draft law in its first reading in April.

Russian officials have framed the cooling-off mechanism as a targeted investor-protection tool rather than a broader restriction on market activity.

The proposal reflects a regulatory approach focused on reducing fraud risks while allowing parts of the crypto market to operate under a more formal legal framework.

Why does it matter?

The proposal shows how crypto regulation is moving beyond general warnings and enforcement actions towards safeguards built into transaction flows. A cooling-off period can slow down transfers linked to fraud, giving users and intermediaries more time to detect suspicious activity. The narrow scope is also important: by excluding trading and brokerage activities, Russian regulators aim to reduce consumer harm without directly limiting market liquidity or day-to-day trading.

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Vietnam’s new e-commerce law takes effect

Vietnam’s Law on E-commerce came into effect on 1 July 2026, modernising the country’s digital economy framework after more than a decade of rapid growth in online commerce. The law addresses gaps that previous regulations failed to close, particularly around intermediary platforms, cross-border e-commerce, counterfeit goods, commercial fraud, and consumer rights infringements.

Under the new law, e-commerce platforms must verify sellers’ identities, disclose information about sellers, products and transaction terms, proactively identify violations, and establish effective complaint-handling mechanisms. They are also required to retain transaction data, provide it to authorities on request, and strengthen product information requirements, particularly for sensitive goods.

The legislation also promotes greener e-commerce through more efficient logistics and environmentally friendly packaging, while creating new opportunities for SMEs, household businesses and startups. Consumer protections have been strengthened through clearer rules on complaints, refunds, compensation and personal data, with experts expecting consistent enforcement to improve market confidence over time.

Major e-commerce platforms operating in Vietnam have already begun adapting, including by expanding the use of near-field communication (NFC) technology for seller verification and AI to detect counterfeit and intellectual property-infringing products. Although compliance costs may initially increase, the reforms are expected to reward businesses that invest in higher standards and strengthen the long-term development of Vietnam’s digital marketplace.

Why does it matter?

Vietnam’s new law reflects a broader shift towards platform accountability in digital commerce. By requiring marketplaces to verify sellers, retain transaction data and proactively tackle fraud and counterfeit goods, the government is placing greater responsibility on intermediaries to ensure the integrity of online marketplaces.

The legislation also illustrates how digital economy regulation is evolving beyond consumer protection alone. Combining AI-enabled enforcement, stronger data governance and sustainability measures, the framework aims to support long-term growth in e-commerce while increasing trust in Vietnam’s rapidly expanding digital economy.

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CJEU court upholds €4.7 billion fine against Google in Android case

The Court of Justice of the European Union (CJEU) has upheld a €4.1 billion ($4.67 billion) antitrust fine against Google, rejecting the company’s appeal in a long-running case over its Android mobile operating system.

The European Commission imposed the record fine in 2018 after finding that Google had abused its dominant position by requiring smartphone manufacturers to pre-install Google apps and imposing contractual restrictions that limited competition. The ECJ dismissed Google’s appeal, confirming the Commission’s findings.

A lower EU court reduced the penalty from €4.34 billion to €4.1 billion in 2022 while largely upholding the Commission’s decision. Google has argued that Android increases consumer choice and supports developers, and said it modified its contractual arrangements following the original ruling to comply with EU competition rules.

The judgement comes as the EU continues to intensify scrutiny of major technology companies through both competition law and the Digital Markets Act, alongside investigations into digital advertising and other platform practices.

Why does it matter?

The ruling reinforces the European Union’s long-standing approach to digital competition, confirming that dominant technology companies can face substantial penalties when their market position is used to restrict consumer choice or limit competition. It also strengthens the Commission’s record in pursuing landmark antitrust cases against major digital platforms.

The judgment comes as the EU increasingly combines traditional competition enforcement with newer regulatory tools such as the Digital Markets Act. Together, these frameworks signal that European regulators intend to maintain close oversight of large digital platforms and shape how competition operates in digital markets.

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EU customs reform targets low-value online imports

The EU has abolished the customs duty exemption for e-commerce parcels worth less than €150, introducing a temporary €3 duty on low-value items imported directly from non-EU countries.

The measure entered into force on 1 July 2026 and forms part of the wider EU Customs Reform. It is intended to create fairer competition between the EU retailers and non-EU online sellers while strengthening controls on unsafe or non-compliant products.

The previous exemption was designed for an earlier period of limited cross-border online shopping. The Commission said 5.9 billion low-value parcels entered the EU in 2025, representing 97% of all imported items but only 2% of their total value.

The EU authorities argue that the exemption distorted competition and created incentives to undervalue or split shipments to remain below the €150 threshold.

Under the new system, consumers should not have to pay the duty at the time of delivery. Businesses involved in selling and transporting imported goods will be responsible for customs payment and compliance.

The €3 duty is a transitional measure and will remain in place until 1 July 2028. After that, low-value imports will be treated under the standard customs framework, with duties based on product classification, origin and value.

The reform also introduces Product Identifiers, which become mandatory from 1 November 2026 to improve traceability and safety checks. A separate handling fee for imported e-commerce goods is also expected by November 2026.

Why does it matter?

The change addresses one of the biggest pressure points in the EU e-commerce: billions of low-value parcels entering the single market with limited customs duties and weak product-level data. Removing the exemption could reduce unfair advantages for non-EU sellers, strengthen enforcement against unsafe products and give customs authorities better tools to manage mass e-commerce imports. It also shows how the EU is treating online retail as a trade, consumer protection and digital platform accountability issue, not only a customs matter.

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Australian watchdog sues Amazon over Prime Video contract terms

Australia’s consumer watchdog has launched legal action against Amazon, alleging the company used unfair contract terms when introducing advertisements to Prime Video.

The Australian Competition and Consumer Commission claims that Amazon’s standard-form contracts allowed the company to make materially adverse changes to Prime services and contract terms without giving annual subscribers a contractual right to refunds or other meaningful redress.

The case concerns contracts with more than one million annual Amazon Prime subscribers between 1 November 2023 and 18 August 2025.

Prime Video had been delivered largely advertisement-free before 2 July 2024. Amazon then introduced advertisements and required subscribers to pay an additional $2.99 per month to keep watching Prime Video content without ads.

According to the ACCC, more than 850,000 annual Prime subscribers had already paid for their subscription when the change took effect. The regulator alleges that those subscribers received degraded service for the remainder of their prepaid term unless they paid extra for the ad-free option.

The ACCC says the relevant contract terms created a significant imbalance between Amazon and consumers, were not reasonably necessary to protect Amazon’s legitimate interests and could cause consumer detriment.

Amazon has since amended some terms to introduce a right to a pro rata refund where annual Prime subscribers cancel their service in response to materially adverse changes.

The case will test how Australian consumer law applies when digital subscription platforms change paid services after customers have already committed to annual plans.

Why does it matter?

The lawsuit raises a broader consumer protection question in the digital economy: how much flexibility should subscription platforms have to change paid services after customers have already paid? As streaming, cloud, gaming and software services increasingly rely on subscription models, regulators are paying closer attention to whether users receive fair notice, real choice and meaningful remedies when platforms alter service quality, pricing or advertising conditions.

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New UK regime targets systemic stablecoin issuers

The Bank of England and the Financial Conduct Authority have set out how they will jointly regulate stablecoin issuers whose activities could pose risks to UK financial stability.

The joint approach forms part of the UK’s emerging stablecoin regime. Under the planned framework, the FCA will regulate UK-issued qualifying stablecoins, while issuers recognised as systemic by HM Treasury will also be subject to Bank of England oversight.

The authorities said the two-part regime is intended to provide clarity for firms while supporting innovation, consumer protection, market integrity and financial stability.

Stablecoin issuers may become systemic if their coins are widely used in payments and could create risks for the UK financial system. In those cases, the Bank would supervise prudential and financial-stability risks, while the FCA would continue to oversee consumer protection, competition and market integrity issues.

The framework includes transition arrangements for firms moving from FCA-only supervision to joint regulation. The Bank and FCA said this should help issuers scale without facing conflicting or duplicative requirements.

The approach also allows for issuers to be recognised as ‘systemic at launch’ where they are not yet operating at systemic scale but are likely to do so. Such firms could enter a phased supervisory pathway while meeting both FCA and Bank requirements.

The Bank is separately consulting on draft rules for sterling-denominated systemic stablecoin issuers. It intends to finalise its Code of Practice by the end of 2026, with regulated stablecoins expected to operate in the UK from 2027.

Why does it matter?

The UK framework is important because it creates a pathway for stablecoins to move from crypto-market products towards regulated payment instruments. By scaling supervision as issuers grow, the UK aims to support innovation without allowing systemically important stablecoins to develop outside financial stability oversight. The model could influence how other jurisdictions regulate digital money, especially where stablecoins are expected to support retail payments, wholesale settlement or cross-border transactions.

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Central Bank of Azerbaijan submits draft crypto law for review

Azerbaijan has moved closer to regulating its cryptocurrency sector after the Central Bank completed a draft law on virtual assets and crypto markets and submitted it to state authorities for review.

Fidan Tofidi, Director of the Central Bank’s Financial Technologies and Innovations Department, said the legislation could be adopted before the end of the year. She described the framework as a major step for a sector that has so far remained unregulated in the country.

The proposed regime is expected to introduce licensing and supervision for virtual asset service providers operating in Azerbaijan. Regulators have previously said the framework should cover virtual asset markets and the activities of companies providing crypto-related services.

The initiative is part of Azerbaijan’s broader financial-sector development agenda, which includes work on virtual assets, shared know-your-customer mechanisms, supervisory technology and digital financial infrastructure.

Earlier Central Bank discussions on virtual assets focused on regulatory and supervisory approaches, market risks and opportunities, and the experience of countries such as Kazakhstan and Türkiye.

Azerbaijan has also tested crypto-related projects through its regulatory sandbox. One pilot involved a platform for buying, selling, exchanging and storing virtual assets, although the project was suspended after failing to achieve expected test results.

The Central Bank has maintained a cautious stance on a possible central bank digital currency, saying it is monitoring international developments before moving forward.

Why does it matter?

Azerbaijan’s draft law signals a shift from a legal grey area towards formal oversight of crypto markets and virtual asset service providers. Licensing and supervision could give regulators more visibility over market activity, strengthen consumer protection and help address money-laundering and terrorism-financing risks. The move also reflects a wider trend among emerging markets: rather than banning crypto outright, authorities are building frameworks to integrate digital assets into regulated financial systems.

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