23. April 2018

EU consumer protection proposals

More proposals to improve EU consumer protection have been published despite the fact that previously published draft Directives are far from reaching enactment.

What's the issue?

The EC's Junker presidency launched its ambitious programme to create a Digital Single Market (DSM), in November 2014. One of the aims was to create a level playing field for sales to consumers across Member States. As a result, two draft Directives on the supply of digital content and the sale of goods online were published, but agreement is yet to be reached on either of them. While trying to get these finalised, the EC has continued to launch proposals.

What's the development?

The EU has published a Communication on a 'New Deal for Consumers'. The new proposals are part of the DSM initiative on updating consumer law but do not include revised versions of the previously published draft Directives on digital content and the sale of goods online. Two new draft legislative proposals have been put forward:

  • Draft Directive on better enforcement and modernisation of EU consumer protection rules; and
  • Draft Directive on representative actions for the protection of the collective interests of consumers. The intention is to facilitate redress for consumers where many consumers are victims of the same infringement in a 'mass harm situation'.

The primary effect of these Directives would be to introduce GDPR-level fines for breaches of consumer protection law (up to 4% annual turnover in all EU countries in which the breach had an impact), and to introduce an EU class action option for consumers.

Other tasks highlighted as a priority for the Commission, to be accomplished by extending the scope of EU consumer laws, include:

  • A clear right for individuals to claim financial compensation where they are harmed by unfair commercial practices such as misleading advertising.
  • Enhanced transparency requirements on online marketplaces so consumers understand who they are buying from and the rationale for the order of search results (including where they are paid for).
  • Ensuring that personal data engages the same rights as financial consideration when exchanged for services or digital content.
  • Removing disproportionate burdens for businesses e.g. removing requirements around method of communication with consumers, and removing the customer's right to cancel distance and off-premises contracts where the consumer has used the goods, other than to try them out in the same way they would in a shop.

Other elements relate to awareness and capacity building, facilitating international cooperation, and dealing with the problem of 'dual quality' consumer goods (mainly food products).

The EC is also looking at preparing consumer policy to deal with likely challenges, including relating to AI and the IoT, mobile e-commerce and sustainable consumption.

What does this mean for you?

Consumer protection may well be the first significant area in which EU and UK law diverge after Brexit. This will either result in UK traders having to apply one set of rules in the UK and another in the UK, or in the UK agreeing to maintain parity with the EU. If, as seems likely, the latter approach is chosen, UK consumer protection law will almost certainly need to be amended. The developments in this area must be closely watched.

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