OECD outlines strategies to tackle online WEEE “free-riding”

In its latest report, Extended Producer Responsibility (EPR) and the impact of online sales, the Organisation for Economic Co-operation and Development (OECD) confirms that online retail and digital marketplace vendors are showing “large scale” non-compliance with waste electrical and electronic equipment (WEEE) regulations not only across Europe but in other OECD member countries such as the US, Canada and Australia.

The report urges governments to tackle this non-compliance, known as “free-riding” by increasing awareness and non-compliance enforcement actions as well as through establishing stronger, more harmonized regulation in the future.

An increase in online sales; an increase in “free-riding”

The E-commerce revolution has meant that consumers and businesses are now able to buy products from sellers more easily online. In 2016, 17% of all retail sales in the UK were placed online, a proportion which is expected to grow to a quarter of all sales by 2025 (18% - 21% in US by 2025).

It follows that this increased percentage of internet-based sales comes coupled with an increase in the online sale of obligated products such as electronics and batteries as well as packaged items. The report estimates that 5-10 per cent of the OECD EEE market is currently affected by free-riding. In terms of EU EEE that’s between 460,000 and 920,000 tonnes unaccounted for. Estimates for the UK in 2015 UK suggest 7% of EEE sales (133,000 tonnes) were affected by free-riding. WRAP and Valpak attribute this to “companies based abroad selling through market place sites . . . are unaware of the regulations”.

The OECD recommends combating online free-riding is where EPR systems should look for efficiency improvements next and has outlined three categories of measures which governments can take to close these compliance gaps. This is where producers, particularly those trading across country borders using their own online stores as well as online marketplaces should take note.

Awareness, enforcement, stronger regulation

Measures recommended to Raise Awareness and Simplify Tracking of Transactions:

Creation of E-commerce codes of practice with voluntary standards for websites including showing of Producer Responsibility Organisation (PRO) registration details, the legal entity address and contact information and certification to confirm compliance
Multi-seller ‘marketplace’ platforms could be required to undertake efforts to proactively inform sellers on their sites of their obligations regarding EPR
Encourage PRO’s (and Authorised Representatives under EU WEEE Directive) to undertake promotional and awareness raising work overseas, particularly in East Asia
Link EPR registration with other regulatory measures such as when applying for VAT registration of EEE products or CE marks for EU ready EEE products
Explore the use of innovative solutions, such as blockchain technologies and smart contracts to facilitate better tracking of processes and payment

Measures recommended to Strengthen Enforcement:

Require a single electronic register of producers for each jurisdiction and publish it on the competent authority’s website along with a form to report unregistered producers
Encourage, and provide simple mechanisms, to allow PRO’s, and registered producers and distributors, to report any suspected free-riders to the authorities
Co-ordinate enforcement action at the supra-national/national level, e.g. across the EU, across the US, across Canada, to make enforcement more cost-effective
Mechanisms for customs, tax and trading standards officials to work in partnership with the environmental authorities on product regulation and enforcement

Regulatory Measures

The report gives a long list of regulatory measures starting from page 49, recommendations worth noting include:

Establish a harmonised framework for producer registration across a wide range of countries/territories
Build into WEEE legislation the ability to prosecute a company for illegal action in another country or territory
Require all web sites that sell EEE under their own name to show the PRO registration details
Place legal requirement on multi-seller platforms to notify their EEE sellers that EPR registration is required or define multi-seller platforms selling WEEE as producers

As online sales make up more and more of total product sales in the future, addressing rising online WEEE compliance free-riding will become an increasing concern for EPR regimes. Whilst none of the listed measures are yet to be officially confirmed, it is likely there will be changes to enforcement and regulation in the coming months and years to address this growing problem.

To stay up-to-date with any regulatory changes across OECD member countries and further, you can join EC4P newsletter using the form below.