Recommerce Reads - Second-hand doesn’t mean second best: consumer rights in pre-loved goods

United Kingdom

Online second-hand retail is booming, driven by increasingly eco and cost-conscious consumers choosing to shop “second-hand first” for clothes, homewares, electronics, and toys. The second-hand fashion market, in particular, has grown by nearly 50% according to the Ethical Consumer and The Co-operative Bank’s 2023 Ethical Markets report. This growth is particularly driven by environmental concerns, alongside a need to save money, with second-hand apparel being one of the few ethical ways to shop that tends to be more affordable.

Peer-to-peer players (“P2P platforms”), like Depop, are central to the growing second-hand market. In early 2024, Vinted was reported to have turned a profit for the first time; managed marketplace Thrift+ hit a £900,000 crowd fundraiser target; and Vestiaire Collective launched an investment campaign. Traditional retailers (“B2C retailers”) are also entering the market, with opportunities to reduce environmental and social impacts, enhance brand reputation, and capture a share of the resale market. We are witnessing an exciting shift in the mainstream retail market, with these B2C retailers either integrating resale into their existing retail offering such as Reselfridges, or facilitating sales between consumer sellers within their own eco-system, such as Cos Resell.

Despite the many opportunities, consumer-facing recommerce businesses have numerous regulatory challenges to navigate too. In this article, we summarise four of the key consumer regulatory issues for P2P platforms and B2C retailers to be aware of when integrating recommerce or operating in the sector.

1. Recommerce sellers: consumer sellers vs. traders

Many P2P platforms facilitate sales by both traders (i.e. companies or individuals acting for business purposes) and consumers (private individuals not operating a business). P2P platforms need to be aware that different regulatory requirements will apply according to the seller’s capacity on the platform. This will affect the way in which the P2P platform deals with sellers, but also the role that the P2P platform and sellers have in protecting buyers (with differences in how this works in the UK and EU). P2P platforms need to consider how to comply with these different obligations throughout the entire sales process, from pre-purchase to after-sales.

One of these issues is how to identify sellers on the platform. Traders need to give buyers information about their identity before they enter a contract together, in order to comply with consumer protection law. P2P platforms should design their interface to enable traders to provide this information during the sign-up and product listing process (and this is explicitly required in the EU under the Digital Services Act) and ensure that the identity of the trader is clearly visible to consumers (as required by the Platform to Business Regulation in both the UK and EU).

If it is not clear to consumers that the P2P platform is acting as an intermediary for sales on the platform only, this could lead to the P2P platform being treated as the seller and inadvertently responsible for seller obligations and issues with sales.

2. Statutory standards for pre-loved goods

When goods are sold by traders to consumers in the UK, the goods must meet certain standards prescribed by law. The same applies whether the goods being sold are new or second-hand, namely, that the goods must be accurately described, of satisfactory quality, and fit for their intended purpose. What is considered “of satisfactory quality” will depend on what a reasonable person would consider satisfactory, and consumer law recognises that expectations may be lower for second-hand goods than for brand new products. It is common for pre-loved goods to have some “wear and tear”, but the quality and condition of the goods nonetheless needs to be made clear to consumers. In the EU, there are similar rules under the Sales of Goods Directive.

For B2C retailers that sell second-hand goods themselves, transparency is crucial. B2C retailers should ensure detailed product descriptions, clear photographs, and upfront information about any faults or imperfections in second-hand goods are provided to prospective buyers. Providing as much information as possible will reduce the risk of disputes later down the line.

For P2P platforms, a key issue is how to navigate the role as an intermediary in sales of second-hand goods between buyers and different types of sellers. When a buyer purchases goods from a consumer seller, the buyer is not afforded the same rights as they would receive from a trader. Consumer sellers need to ensure that goods they sell meet any description they have provided to the prospective buyer, as otherwise the buyer may be able to seek redress by way of a claim for misrepresentation or breach of contract. Whilst the obligations are less stringent in relation to consumer sellers, the P2P platform nonetheless has a vested interest in ensuring its ecosystem is buyer friendly. P2P platforms should therefore consider prompting all sellers to provide comprehensive information during the listing process, and integrating a communications channel through which prospective buyers can ask the seller questions about products. P2P platforms may also consider integrating a compliant reviews process (although this is a high risk area – see our previous Law-Now article here on incoming changes for online reviews), which can help to police the conduct of sellers on the platform.

3. After-sales rights for second-hand items

Consumers in the UK are entitled to certain after-sales rights to return and get a refund for goods when buying from a trader. Traders in the recommerce sector may be surprised to know that consumers in the UK benefit from the same rights in this context, whether the goods purchased are new or second-hand. For B2C retailers, and traders on P2P platforms, this means that the consumer is entitled to a 14-day “cooling-off” period during which the consumer may return the goods after they have been received (with certain exceptions, such as for goods that have been personalised). After this point, the consumer’s rights include a 30-day period during which they may return an item for a full refund where there is a fault or other issue such as the item not being as described (and further statutory rights apply beyond this). As noted above, expectations for whether a pre-loved piece is “of satisfactory quality” are likely to be lower than for a brand-new item, but second-hand goods should still work, unless a lack of functionality has been made clear to the consumer upfront. This is more reason for B2C retailers to prioritise transparency when listing second-hand goods for sale.

On a P2P platform, buyers are only empowered to ask for their money back from consumer sellers for breach of contract or misrepresentation (for example, where the description for the item was misleading). The reality is that the buyer could be left to negotiate with the consumer seller themselves and consider alternative dispute resolution or small claims court as a next step. In reality, this may not be practical for lower value purchases. Whilst not obligated to, P2P platforms in the UK may offer an internal dispute resolution service to support consumers on the platform to get a refund where they are entitled to one. Otherwise, buyers will quickly lose trust in the platform after their first experience of (for example) an item arriving in worse condition than expected or a delivery issue. P2P platforms must consider how to integrate this solution (for example, via a web-chat functionality), what coverage, eligibility criteria and exclusions to apply, and how to fund this service (typically, by charging a fee to the buyer or seller in connection with each sale). 

4. Operating cross-border recommerce

In this article, we have primarily focused on UK consumer protection legislation. In practice, however, some B2C retailers and P2P platforms will want to enable sales to buyers in neighbouring markets. Those B2C retailers and P2P platforms need to be aware that the legislation of those neighbouring markets may apply if so. Enabling cross border sales will introduce a wider user base, but it can be more challenging to develop a strategy for legal compliance. B2C retailers and P2P platforms will need to weigh up whether to tailor their recommerce solution to each individual market, or to aim for a higher threshold of compliance with one of the stricter jurisdictions. 

Next steps

Consumers are a driving force behind the huge growth in the recommerce sector. Operating a compliant ecosystem will not only reduce the risk of consumer protection enforcement (with some significant changes coming into force later this year – see here), but will also set a recommerce business apart as a trustworthy and enjoyable place to shop second-hand. There are more issues to cover in this area, and we’ll be exploring issues from greenwashing to intellectual property compliance in our upcoming Recommerce Reads series – see more information on the Recommerce webpage.

If you would like to discuss consumer protection compliance in the recommerce sector further, please do not hesitate to contact one of our specialists.