Commission Proposes ‘New Deal for Consumers’

The European Commission has published proposals for ‘a New Deal for Consumers’ with the declared aim of ensuring that all European consumers fully benefit from their rights under Union law.

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:

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

Dual Food Quality

Information about the evaluation of EU consumer legislation

Information about collective redress

Behavioural study on transparency in online platforms

 


Published: 2018-04-12T11:00:00

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