E-commerce lawyers will need to pay special attention to the
latest set of proposals from the EU Commission published as a ‘New Deal for
Consumers’. The EU Commission is advocating greater transparency in online
markets and on search results and, perhaps most significantly, more effective
enforcement mechanisms including paving the way for collective actions in all
EU Member States.
The proposals include the following.
1. Strengthening consumer rights online
- More transparency in online market places –When buying
from an online market place, consumers will have to be clearly informed about
whether they are buying products or services from a trader or from a private
person, so they know whether they are protected by consumer rights if something
goes wrong. - More transparency on search results on online
platforms –When searching online, consumers will be clearly informed when
a search result is being paid for by a trader. Moreover, online marketplaces
will have to inform the consumers about the main parameters determining the
ranking of the results. - New consumer rights for “free” digital services –When
paying for a digital service, consumers benefit from certain information rights
and have 14 days to cancel their contract (withdrawal right). The New Deal for
Consumers will now extend this right to ‘free’ digital services for which
consumers provide their personal data, but do not pay with money. This typically
would apply to cloud storage services, social media or email accounts.
2. Giving consumers the tools to enforce their rights and
get compensation
- Representative action, the European way – Under the New
Deal for Consumers it will be possible for a qualified entity, such as a
consumer organisation, to seek redress, such as compensation, replacement or
repair, on behalf of a group of consumers that have been harmed by an illegal
commercial practice. In some Member States, it is already possible for consumers
to launch collective actions in courts, but now this possibility will be
available in all EU countries. - For example, in a Dieselgate-type scenario, victims of
unfair commercial practices, such as misleading advertising by car
manufacturers not in compliance with Union regulatory framework for type
approval of vehicles or environmental legislation will be able to obtain
remedies collectively through a representative action under this Directive.
Such collective redress was previously not provided under Union law. - This model has strong safeguards and is distinctly different
from US-style class actions. Representative actions will not be open to law
firms, but only to entities such as consumer organisations that are non-profit
and fulfil strict eligibility criteria, monitored by a public authority. This
new system will make sure European consumers can fully benefit from their
rights and can obtain compensation, while avoiding the risk of abusive or
unmerited litigation. - Better protection against unfair commercial practices –The
New Deal for Consumers will ensure that consumers in all Member States have the
right to claim individual remedies (eg financial compensation or termination of
contract) when they are affected by unfair commercial practices, such as
aggressive or misleading marketing. This protection currently varies greatly
across the EU.
3. Introducing effective penalties for violations of EU
consumer law
- EU consumer authorities are not well equipped to sanction
practices creating ‘mass harm situations’ that affect a large number of
consumers across the EU. Currently, the level of penalties differs widely
depending on the Member State, and is often too low to actually have a
deterrent effect, particularly on companies operating cross-border and on a
large scale. - Under the proposal, national consumer authorities will have
the power to impose effective, proportionate and dissuasive penalties in a
coordinated manner. For widespread infringements that affect consumers in
several EU Member States, the available maximum fine will be 4 % of the
trader’s annual turnover in each respective Member State. Member
States are free to introduce higher maximum fines.
4. Tackling dual quality of consumer products
The New Deal for Consumers will update the Unfair Commercial
Practices Directive in order to make explicit that national authorities can
assess and address misleading commercial practices involving the marketing of
products as being identical in several EU countries, if their composition or
characteristics are significantly different.
5. Improved conditions for businesses
The New Deal will remove unnecessary burden for businesses,
including by lifting obligations on companies as regards the consumer’s
withdrawal right. For instance, consumers will no longer be allowed to return
products that they have already used instead of merely trying them out, and
traders will no longer have to reimburse the consumers before actually
receiving the returned goods.
The new rules also introduce more flexibility in
the way traders can communicate with consumers, allowing them to also use web
forms or chats instead of e-mail, provided the consumers can keep track of
their communication with the trader.
Next steps and background
The Commission’s proposals will be discussed by the European
Parliament and the Council.
The New Deal for Consumers is composed of two proposals for
Directives:
- A proposal to amend Council
Directive on unfair terms in consumer contracts, Directive
on consumer protection in the indication of the prices of products offered to
consumers, Directive
concerning unfair business-to-consumer commercial practices and Directive
on consumer rights. This proposal’s aim is to ensure better enforcement and
to modernise EU consumer protection rules, in particular in light of digital
developments; - A proposal on representative actions for the protection of
the collective interests of consumers and repealing the Injunctions
Directive 2009/22/EC. This proposal aims to improve tools for stopping
illegal practices and facilitating redress for consumers where many of them are
victims of the same infringement of their rights, in a mass harm situation. - The accompanying Communication includes an action plan to
develop and strengthen coordinated enforcement actions among authorities and
their international cooperation with authorities from key trading partners.
A study
on transparency in online platforms, also now published, supports the
New Deal’s proposals on online market places. It shows that greater online
transparency helps consumers take decisions and increases their trust when
buying online.
More information
Proposal
& legal documents on the New Deal for Consumers
MEMO: A New
Deal for Consumers: Frequently Asked Questions
Factsheets
on the New Deal for Consumers:
– New Deal benefits for
consumers
– New Deal benefits for
businesses
– Functioning of the
collective redress
– Achievements of the Juncker
Commission in the area of consumer protection
– Improved public enforcement
with updated Consumer Protection Cooperation rules
Information
about the evaluation of EU consumer legislation
Information
about collective redress
Behavioural
study on transparency in online platforms
