ALLOCATING LEGAL LIABILITY IN CONSUMER-TO-CONSUMER (C2C) E-COMMERCE TRANSACTIONS

INTRODUCTION

The online marketplace has grown so much over the years that it has transformed the general mode of buying and selling of goods and providing services. There are now online platforms that enable consumers to transact directly with each other, eliminating the complex geographical and logistical challenges associated with the traditional marketplace. Platforms such as Jiji, OLX, eBay and Facebook Marketplace are good examples of the online avenue created for individuals to advertise their goods and connect with potential buyers.

However, the newly found convenience of consumer-to-consumer (C2C) e-commerce transactions has created a difficult question of legal liability: where a transaction facilitated by an online platform results in fraud, misrepresentation or financial loss, who should bear liability in law?

A remarkable instance is a buyer who purchases a second-hand car from another individual through an online marketplace. The seller represents that the car is functional, in good condition and not refurbished. However, upon payment and delivery, the buyer discovers that the car is indeed refurbished, materially defective or has latent issues which the buyer could not possibly have known outside the seller’s representations.

The buyer definitely has a claim against the seller, but obtaining a remedy may prove difficult, especially where the seller has provided a false identity to the platform or has previously committed similar fraudulent acts.

The main issue arises when the platform argues that it merely provided the technological infrastructure through which the buyer and seller interacted and should not be liable for representations made by independent users. This raises a tension between protecting online intermediaries from liability for third-party conduct and ensuring that consumers are not left without a remedy for losses suffered from transactions facilitated by those intermediaries.

To my mind, these intermediaries have, if not more, a duty to verify their users, moderate listings, receive complaints, suspend accounts with suspicious activities and restrict access to prohibited content. While these duties do not automatically confer liability on the platforms, they call for a closer examination of the extent to which a breach of such duties may give rise to liability.

Hence, this article examines the allocation of liability in C2C e-commerce transactions, with particular reference to the European Union’s intermediary liability framework and the Nigerian consumer protection regime. It considers the need for a proportionate framework in Nigeria that distinguishes the seller’s responsibilities from those of the platform, arising from breaches of their respective legal duties.

THE EUROPEAN UNION’S INTERMEDIARY LIABILITY FRAMEWORK

The EU E-Commerce Directive, Directive 2000/31/EC, established a boundary for distinguishing the liability of third-party platforms. Article 14 provides conditional protection for hosting service providers where they lack the requisite knowledge of illegal activity or, upon obtaining such knowledge, act expeditiously to remove the information or disable access to it.

I understand the rationale for this protection because online marketplaces may host thousands or even millions of listings uploaded by independent users. Imposing automatic liability for every false representation or unlawful listing would expose these platforms to disproportionate risks and encourage the adverse use of their powers, which may, in turn, affect the digital economy.

Nevertheless, the exemption is conditional and does not establish complete immunity for online intermediaries. Questions concerning an intermediary’s own representations, independent legal obligations, degree of involvement and contribution to the claimant’s loss must be distinguished from liability arising solely from hosting third-party information.

The EU framework subsequently developed through Regulation (EU) 2022/2065, the Digital Services Act as Article 6(3) qualifies the hosting liability exemption in consumer transactions where an online platform allows consumers to conclude distance contracts with traders. Where a platform presents transaction information in a manner that leads an average consumer to believe that the information originates from the platform itself or from a trader acting under its authority or control, the exemption does not apply.

While I believe this qualification is significant, its application to transactions involving traders raises the question of whether it extends to genuinely private C2C transactions. In my view, it does not automatically resolve the position of a buyer dealing with a private individual rather than a trader.

The central question, however, remains whether the protection afforded to these intermediaries adequately addresses the position of a buyer who relies on the integrity of the platform itself and assumes that the platform has conducted the necessary due diligence before proceeding with the transaction.

THE SELLER’S LIABILITY FOR FRAUD AND MISREPRESENTATION

The starting point for allocating liability in C2C e-commerce transactions should ordinarily be the conduct of the seller. A seller who knowingly misrepresents the authenticity, condition, ownership or characteristics of goods, or obtains payment without any intention of effecting delivery, should not escape liability merely because the transaction occurred online.

I align with the definition of e-commerce by the Organisation for Economic Co-operation and Development (OECD), adopted in 2001 and revised in 2009 and 2011, which recognises that e-commerce transactions are contracts regardless of the fact that they are technology-facilitated. Hence, acts arising from these transactions must be capable of invoking contractual remedies.

While the online platform may have provided the digital marketplace, the seller’s responsibility is particularly important in C2C transactions because the seller ordinarily has direct knowledge of the facts surrounding the goods being sold. The buyer’s primary claim should therefore ordinarily lie against the seller, who made the representation, received the benefit of the payment and had direct knowledge of the condition, ownership or authenticity of the goods.

However, identifying the seller as the primary wrongdoer does not completely answer the question of liability. In practice, the buyer may be unable to identify, locate or enforce a claim against the seller, particularly where the seller has used a false identity. The law must therefore look beyond the seller where the platform’s own conduct or omission has contributed to the loss.

WHEN SHOULD THE PLATFORM BEAR LIABILITY?

An online platform should not automatically be liable for every misrepresentation made by its users. Such a rule would effectively make the platform a guarantor of all transactions conducted through its service, irrespective of its knowledge or involvement. It may also discourage the growth of digital commerce by exposing platforms to disproportionate risks.

My take, nevertheless, is that the platform should not be permitted to rely on its intermediary status as a complete defence where liability arises from its own conduct or breach of a legal duty. The proper question is not merely whether the platform hosted the listing, but whether its knowledge, control, representations or failure to act contributed to the buyer’s loss.

However, in seeking to limit their liability, online platforms often rely on their terms and conditions, which may state that they act merely as intermediaries, that representations made by sellers are independent of the platform or that the have no knowledge of, or responsibility for, the accuracy of information provided by their users.

Although terms and conditions accepted by users are deemed binding, it is important to consider that a majority of users accept them without even reading or fully understanding the contents of said terms and conditions. The question therefore, is whether the acceptance of such terms automatically excludes or limits a platform’s liability and to what extent, the existence of the terms and conditions protect these platforms from legal liability.

First, knowledge is important. A platform that receives a specific and credible complaint identifying a fraudulent seller occupies a different position from one that has no reason to suspect wrongdoing. Where the platform is placed on notice of fraudulent conduct and fails to take reasonable action, its continued facilitation of the seller or listing becomes legally significant.

Secondly, the degree of control exercised by the platform is relevant. A platform that merely hosts user-generated listings may stand on a different footing from one that verifies sellers, promotes listings as trustworthy, processes payments or makes assurances about the authenticity of goods. These features do not automatically create liability, but they should affect the assessment of the platform’s role and duties.

Thirdly, the platform’s own representations must be considered. Where a marketplace describes a seller as verified or assures buyers that certain checks have been carried out, a buyer may reasonably rely on those assurances. If the representation is false and causes loss, the dispute may no longer be properly regarded as one arising solely from third-party content.

Finally, the platform’s response to repeated or foreseeable abuse deserves attention. Where several credible complaints identify the same seller as engaging in fraudulent conduct, the continued promotion or facilitation of that seller may raise questions as to whether the platform has breached an applicable duty. Any claim would still require proof of duty, breach, causation and loss.

DUE DILIGENCE AND THE LIMITS OF MONITORING

It would be excessive to require every platform to verify every representation made in every C2C listing. Verification may be costly, technically difficult and disproportionate to the nature or value of some transactions. Platforms may host large volumes of user-generated content, and a blanket duty to investigate every listing before publication could undermine the efficiency of online commerce.

The more defensible approach is to distinguish between a general obligation to guarantee the accuracy of all user-generated content and specific obligations arising from the platform’s conduct, the risks it facilitates and the representations it makes.

A platform may reasonably be expected to provide complaint mechanisms, communicate clear rules against fraudulent listings, respond to credible complaints and take proportionate action against repeat offenders. However, failure to remove a listing immediately upon any allegation should not automatically establish liability. Complaints may be mistaken, disputed or malicious. The appropriate response must therefore depend on the credibility of the complaint, the evidence available and the platform’s knowledge of the alleged misconduct.

6.0. THE NIGERIAN LEGAL POSITION
In Nigeria, the Federal Competition and Consumer Protection Act 2018 provides an important starting point for analysing consumer protection in digital transactions. Section 123 addresses misleading or deceptive representations in relation to goods and services, while section 117 concerns disclosure where products are used, second-hand or reconditioned. These provisions are relevant where a buyer is induced to purchase goods through false statements concerning their condition or authenticity.

However, the application of the Act to a genuinely private C2C transaction requires careful analysis. The fact that one individual sells goods to another individual does not, without more, mean that every obligation imposed on a business applies to that private seller in the same manner. The nature of the seller’s activities and the character of the transaction must be examined.

The position of the online marketplace must also be considered separately. A platform may provide a service to users, make representations about the reliability of sellers, process payments or undertake obligations under its terms and conditions. Whether these circumstances establish liability will depend on the applicable legal provisions and the evidence.

It would therefore be premature to conclude that the Act automatically makes every marketplace liable for fraud committed by a private seller. Equally, it would be premature to conclude that a platform is outside the reach of consumer protection law simply because the seller is an individual.

7.0. CONCLUSION
The allocation of liability in C2C e-commerce should not rest exclusively on the seller or be automatically transferred to the platform. The seller should ordinarily bear primary responsibility for personal fraud and misrepresentation because the seller made the representation and had direct knowledge of the goods. However, the platform should not automatically escape liability where it independently misleads buyers, breaches an applicable legal duty or engages in conduct that materially contributes to the buyer’s loss.

There is therefore a need for a comprehensive legal framework for e-commerce in Nigeria that clearly defines the rights, obligations and liabilities of the parties involved in digital transactions generally. Within that broader framework, a specific framework should address C2C e-commerce, taking into account the peculiar challenges of transactions between private individuals, the position of online intermediaries and the difficulties consumers face in obtaining remedies.

Such a framework should distinguish the seller’s liability for fraud and misrepresentation from the platform’s liability arising from its own representations, knowledge, control or breach of an applicable duty. It should also establish proportionate standards for verification, complaints handling and responses to repeated fraudulent conduct without imposing an unlimited obligation on platforms to guarantee every transaction.

The central challenge for Nigerian law is therefore not simply whether the seller or platform should bear liability, but how responsibility should be allocated according to their respective conduct and legal duties. Clarity on these issues would strengthen consumer confidence, ensure meaningful remedies for losses suffered and protect legitimate intermediary activity without undermining the digital economy.

Amirah Adeyemo, Esq.LL.B, BL, LL.M
Associate, Litigation, Election Petition and Dispute Resolution (LED)