European Commission overhauls online shopping laws

European Commission overhauls online shopping laws: “The European Commission wants to create an over-arching consumer protection law which it claims will cut costs and red tape for internet retailers. The proposed Consumer Rights Directive would replace four existing EU directives.”

(Via OUT-LAW News.)

IP/08/1474: Brussels, 8 October 2008
Consumers: Commission proposes EU-wide rights for shoppers

The European Commission has today launched proposals for EU-wide rights to make it easier for consumers to shop on the Internet and in the main street. The new proposal will guarantee consumers, wherever they shop in the EU, clear information on price and additional charges and fees before they sign a contract. It will strengthen consumer protection against late delivery and non delivery, as well as setting out tough EU-wide consumer rights on issues from cooling off periods, returns, refunds, repairs and guarantees and unfair contract term. The proposed Consumer Rights Directive simplifies 4 existing EU consumer rights directives into one set of rules. It targets e-commerce as part of a wide ranging overhaul and up grading of existing EU consumer rights online and in the high street. The aim is to boost consumer confidence and at the same time to cut red tape which is holding back business within national borders – denying consumers more choice and competitive offers. A standard set of consumer contract terms will cut compliance costs substantially – by up to 97% for EU wide traders. The proposed directive upgrades existing consumer protection in key areas where there have been large numbers of complaints in recent years – such as pressure selling. It adapts the legislation to new technology and sales methods, for example, m-commerce and online “ebay” auctions. There is a clear requirement in the new proposal for clear information about consumer rights to be displayed at point of sale.

EU Consumer Commissioner Meglena Kuneva said, “With household budgets under strain and purchasing power at the top of citizens’ concerns, it has never been more important for consumers to be able to compare prices and shop around to get the best value on offer. These new rules are designed to strengthen protection and close the loopholes in key areas that are undermining consumer trust. The Single Market has the potential to deliver a lot more choice and opportunities for consumers. But for that we need an EU-wide safety net of rights so consumers have the security they need to shop around with peace of mind.”

Key facts and figures
The Internet is one of the most empowering tools consumers have ever had. It provides a wealth of information regarding products and prices and gives easy access to many more retailers than they could ever have reached before. Already 150 million EU citizens – a third of our population – shops over the internet. So far only 30 million of them shop cross border online in the EU.

Overall, cross border shoppers spend on average € 800 a year, i.e. a total of 24 billion EUR, which demonstrates the enormous potential of the internal market if more people were confident to venture beyond their national borders.

The current rules
The current rules EU consumer protection result from four EU Directives – Unfair contract terms[1], Sales and Guarantees[2], Distance Selling[3], and Doorstep Selling[4]. These Directives contain certain minimum requirements; Member States have added rules in an uncoordinated manner over the years, making EU consumer contract laws a patchwork of 27 sets of differing rules for example: a mix of differing information obligations, differing cooling off periods ranging from 7 to 15 days and differing obligations in relation to refunds and repairs.

The new proposal
The Consumer Rights Directive concerns contracts for sales of goods and services from business-to-consumer (B2C). Generally all contracts are covered, i.e. purchases made in a shop, at a distance or away from business premises.

* Pre-contractual information. The Directive obliges the trader to provide the consumer with a clear set of information requirements, for all consumer contracts so the consumer can make an informed choice, for example, the main characteristics of the product, geographical address and identify of the trader, the price inclusive of taxes, all additional freight, delivery or postal charges;
* Rules on delivery and passing of risk to the consumer (currently not regulated at EU level): A maximum of 30 calendar days for the trader to deliver the good to the consumer from signing the contract. The trader bears the risk and cost of deterioration, loss of the good until the moment the consumer receives the good. For late or non delivery, the consumer will have a right, new in most Member States, to a refund as soon as possible and no later than 7 days from the date of delivery.
* Cooling off periods (distance sales, e.g. Internet sales, mobile phone, catalogue and pressure sales): An EU wide cooling off period of 14 calendar days when you can change your mind. Introduction of an easy to use standard withdrawal form.
* Repairs, replacement, guarantees. To give more certainty there will be one and the same standard set of remedies available to all consumers who have bought a faulty product (i.e. repair or replacement in the first place, followed by the reduction of the price or the reimbursement of money).
* Unfair Contract Terms: a new black list of unfair contract terms which are prohibited across the EU in all cases and an EU wide grey list of contract terms deemed to be unfair if the trader does not prove the contrary.

Protection is also strengthened in many areas, including:
* Online auctions: the Directive requires auctions, including e-auctions, to meet the standard information obligations.
* Pressure Selling; Protection against pressure selling – sales negotiated away from business premises /”direct selling” is significantly strengthened in response to a high number of consumer complaints particularly in pressure selling situations where no or insufficient consumer protection was granted – with a broader new definition of direct selling contracts and other steps to close loopholes

What next?

The Contract Rights Directive must be approved by the European Parliament and EU Governments in the Council of Ministers before coming into law.

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