EBA representatives discuss the problem of “grey” electronics and consumer rights protection

04/ 12/ 2024

Representatives of the Household Appliances Committee of the European Business Association participated in a press event titled “Black Friday – A Chance to Save or Mislead? Consumer Rights Violations in Online and Offline Stores.” The event showcased the findings of a monitoring study by the national NGO “Consumer Trust – Test Expertise Centre” on consumer rights compliance in the sale of technically complex household goods. The EBA Household Appliances Committee unites companies engaged in manufacturing household electronics in compliance with international standards. These businesses pay all necessary taxes and customs duties to the state budget and adhere to legal requirements in Ukraine, including those on consumer rights protection, state market surveillance, and technical regulations for various types of equipment. Tackling the issue of illegal imports of household appliances and electronics remains one of the Committee’s key priorities. Viktoriia Kulykova. Head of EBA Committees Department. Unfortunately, the volume of illegally imported equipment that fails to meet Ukrainian legislative requirements is not decreasing. For certain categories, it continues to rise. For instance, during a recent presentation by the official representative of Apple in Ukraine, alarming statistics were shared: the grey market for Apple smartphones grew from 60% in 2021 to 71% in 2023. In 2023 alone, the state budget lost UAH 5.5 billion in unpaid VAT on these devices. The so-called grey or illegal electronics are imported and sold in Ukraine without paying the necessary taxes and often with multiple other legal violations. These products typically fail to meet Ukrainian technical regulations, lack proper Ukrainian-language labelling, and are often sold without fiscal receipts, which are essential for future warranty repairs. The growth of grey electronics has been exacerbated by a moratorium on inspections by state market surveillance and customs authorities, introduced during martial law. For example, the Committee repeatedly highlighted to government authorities that unscrupulous businesses are importing non-energy-efficient gas boilers. These imports contradict the Ukrainian technical regulation on the eco-design of heating appliances, approved by Government Resolution No. 1184, which since August 2022 has prohibited the import of inefficient boilers with high energy consumption. However, market and customs authorities cited the moratorium as a barrier to enforcement. Only in 2024 was this partially addressed, enabling market surveillance representatives to begin investigating violations. As of 1 January 2025, the moratorium on inspections by state market surveillance and non-food product control will be lifted. On the one hand, this will empower customs and market surveillance authorities to enforce compliance with the law. However, businesses fear that inspections will disproportionately target law-abiding companies, penalising them for minor or often unjustified violations, while the shadow market for household appliances and electronics remains largely unchecked. Such practices are already evident under existing exceptions to the moratorium. For instance, companies have been penalised because the Ukrainian conformity mark, the three-leaf clover, was applied to packaging rather than the product itself. Manufacturers’ explanations regarding technical limitations at production facilities are not always taken into account. Meanwhile, inspections conducted by the NGO “Consumer Trust – Test Expertise Centre” reveal that many stores sell products without proper labelling or fiscal receipts. In 2025, the primary goal for inspection authorities should be to establish fair and equal enforcement approaches. This means not only scrutinising white companies but primarily targeting systematic violators who import and sell grey electronics. The consequences of grey imports affect everyone – law-abiding businesses, which operate under unfair competitive conditions; the state, which loses substantial tax revenues; and consumers, who are left unprotected in the event of issues with illegally imported goods.

The EBA Household Appliances Committee unites companies engaged in manufacturing household electronics in compliance with international standards. These businesses pay all necessary taxes and customs duties to the state budget and adhere to legal requirements in Ukraine, including those on consumer rights protection, state market surveillance, and technical regulations for various types of equipment. Tackling the issue of illegal imports of household appliances and electronics remains one of the Committee’s key priorities.

Viktoriia Kulykova Head of EBA Committees Department

Unfortunately, the volume of illegally imported equipment that fails to meet Ukrainian legislative requirements is not decreasing. For certain categories, it continues to rise. For instance, during a recent presentation by the official representative of Apple in Ukraine, alarming statistics were shared: the grey market for Apple smartphones grew from 60% in 2021 to 71% in 2023. In 2023 alone, the state budget lost UAH 5.5 billion in unpaid VAT on these devices.

The so-called “grey” or illegal electronics are imported and sold in Ukraine without paying the necessary taxes and often with multiple other legal violations. These products typically fail to meet Ukrainian technical regulations, lack proper Ukrainian-language labelling, and are often sold without fiscal receipts, which are essential for future warranty repairs.

The growth of “grey” electronics has been exacerbated by a moratorium on inspections by state market surveillance and customs authorities, introduced during martial law. For example, the Committee repeatedly highlighted to government authorities that unscrupulous businesses are importing non-energy-efficient gas boilers. These imports contradict the Ukrainian technical regulation on the eco-design of heating appliances, approved by Government Resolution No. 1184, which since August 2022 has prohibited the import of inefficient boilers with high energy consumption. However, market and customs authorities cited the moratorium as a barrier to enforcement. Only in 2024 was this partially addressed, enabling market surveillance representatives to begin investigating violations.

As of 1 January 2025, the moratorium on inspections by state market surveillance and non-food product control will be lifted. On the one hand, this will empower customs and market surveillance authorities to enforce compliance with the law.

However, businesses fear that inspections will disproportionately target law-abiding companies, penalising them for minor or often unjustified violations, while the shadow market for household appliances and electronics remains largely unchecked. Such practices are already evident under existing exceptions to the moratorium. For instance, companies have been penalised because the Ukrainian conformity mark, the “three-leaf clover,” was applied to packaging rather than the product itself. Manufacturers’ explanations regarding technical limitations at production facilities are not always taken into account.

Meanwhile, inspections conducted by the NGO “Consumer Trust – Test Expertise Centre” reveal that many stores sell products without proper labelling or fiscal receipts.

In 2025, the primary goal for inspection authorities should be to establish fair and equal enforcement approaches. This means not only scrutinising “white” companies but primarily targeting systematic violators who import and sell “grey” electronics. The consequences of “grey” imports affect everyone – law-abiding businesses, which operate under unfair competitive conditions; the state, which loses substantial tax revenues; and consumers, who are left unprotected in the event of issues with illegally imported goods.