With the number of victims from online investment fraud cases rising exorbitantly during the past years, advertising revenue of the big social media platforms and online marketplaces has been exploding during the past years.

Facebook in specific more than doubled its worldwide advertising revenue from USD 39 billion 2017 to more than USD 84 billion in 2020, at the same time thousands of European victims got lured into investment scams by paid-for scam ads on Facebook and lost their life-time savings. With huge financial losses and health issues experienced the size of fraud resprents a threat to our society. 

As a matter of fact, social media enables fraudsters to reach large numbers of people with minimum effort. Fraudsters typically present professional and credible looking online adverts, emails, and websites which advertise fake investment opportunities in cryptocurrency, foreign exchange trading or bonds. Often, fake testimonials are accompanied with a picture of a well-known personality.

Right now the European parliament is finalizing the Digital Services Act, the framework for online platforms for the years to come.  It is a one-time chance, to request a powerful and clear accountability framework for online platforms. Also  Frances Haugen, an ex-Facebook employee and a Whistleblower  warned in her testimony before the EU authorities that the Digital Services Act has to be “strong and the enforcement firm” “otherwise, we will lose this once-in-a-generation opportunity to align the future of technology and democracy".

But so far, the draft for the Digital Services Act misses out finding clear words regarding the civil liability of social media platforms in case they miss out on their defined obligations.

So we request clear and strict liability obligations for illegal content as well as the imposition of general monitoring obligations or active fact-finding obligations for online marketplaces, with relation to illegal advertising content.

In specific our request for changing the Draft of the Digital Services Act includes the following amendments:

Amendment of Article 1 consumer protection must be defined as explicit legal objectives in Article 1.2, building on recital 34.
Amendment of Article 5: In general, the DSA should establish that consumers can exercise against the intermediary service provider all the rights and remedies that would be available against the trader, including compensation for damages, repair,
replacement, price reduction, contract termination or reimbursement of the price paid in addition, specific remedies for consumers shall be foreseen in case the intermediary service provider is in breach of its own obligations listed in this Regulation.In specific Amendment of Article 5.3. is necessary in determining that online marketplaces and traders can be jointly and severally liable,

if not properly fulfilling their due diligence obligations.
If failing to act upon obtaining credible evidence of illegal activities,
for providing misleading information, guarantees, or statements.
The benchmark of an „average and reasonably well-informed consumer” limitation must be deleted as it is not appropriate and would not ensure effective consumer protection.
Amendments of Articles 7 and 22 as well as recitals 28 and 50 are necessary in requesting online marketplaces to undertake spot checks on trader accounts and the products and services they facilitate offering.

Amendment of Article 21 requiring a request for a duty to promptly inform law enforcement or judicial authorities not only when the life or safety of individuals is threatened under criminal law, but also when online platforms become aware of other illegal activities such as fraudulent and scam ads, the sale of illegal products online.

Amendment of Article 22: Article 22.1 needs to clarify that online platforms shall only allow legitimate traders in their platforms; in UK it is proposed that only FCA registered companies can offer investment services.  Platforms covered under the scope must verify that the third-country trader has a European branch or representative, which is in line with existing legislation resp. registered with an appropriate authority (e.g., market surveillance).

Amendment of Article 22.2 needs to make sure platforms conduct regular and diligent checks on traders’ legitimacy and the information they provide as soon as they receive it. Relying on self-certification by the trader will not be enough.

Amendment of Article 22: if platforms fail to meet the obligations under Article 22, they should be able to be held liable towards consumers because of their non-compliance with this DSA obligation.

Article 26.1 should contain a specific risk assessment for online marketplaces. Tackling systemic risks that online marketplaces incur when hosting offers selling unsafe products or non-compliant services should be of paramount importance.

Article 26.2 considers the risk assessment must also include any potential infringement of consumer rights by business active on the platforms and the platforms themselves, including consumer manipulation, unfair subversion or impairment of consumers’ autonomy, decision-making, or choice.

Article 27 should also include mitigation measures for online marketplaces, including random checks on the products and services they facilitate offering or promoting.

Amendment of Article 40 as the country of origin as a jurisdiction principle does not lead to efficient enforcement for consumer and
NGO complaints. In specific situations (criminal and civil cases from consumers and NGOs), authorities from destination countries should be allowed to take up action against larger platforms