Online marketplaces such as Amazon would be liable for harm caused by defects in products from businesses without a UK presence under reforms to consumer protection law floated today. Law Commission proposals to bring product liability into the digital age would also extend the consumer protection regime to cover psychiatric harm caused by defective software. 

The commission's consultation paper states that the Consumer Protection Act 1987 has not kept pace with how the web and mobile communications have transformed everyday life. The proposals would bring digital systems within scope under a 'broader, more future-proof' definition of product. 

The commission's proposals include: 

  • Expanding the definition of a 'product' to include software, AI systems, the design components and features of social media and other online platforms. Software and AI systems would be treated as products in their own right, whether supplied on or embedded in a device, downloaded from the internet or accessed remotely. Features of social media platforms, including recommendation algorithms, would also be covered.  
  • Extending liability to online marketplaces. 'Fulfilment service providers' would be liable when a UK producer, importer or representative of a defective product cannot be identified. Pure postal and freight transport servies would be exempt. 
  • Clarifying when compensation may be available for psychiatric illness caused by defective products. The proposals cover claims by people directly harmed by defective products, as well as those who develop psychiatric illness after witnessing harm to, or the death of, someone with 'a close tie of love and affection'. To incur liabiity, harm 'must fall within the natural range of reactions of a person of ordinary fortitude'. 

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To preserve a balance between business and consumers, the commission proposes to retain and update defences that allow producers to avoid liability where it would be unfair to impose it. These include a 'development risks' defence, under which a producer would not be liable for a defect that could not have been discovered when the product was supplied.

Professor Solène Rowan, commissioner for commercial and common law, said: 'The law governing defective products was introduced long before smartphones, social media and artificial intelligence became part of everyday life. As technology evolves, the law must evolve with it. Our proposals are designed to ensure that people harmed by defective products can obtain compensation, while providing greater clarity and certainty for businesses developing the products and technologies of the future.’

The consultation closes on Thursday 14 January. Final recommendations for reform will be published in late 2027.