The rights of consumers in the EU will be better protected under new rules covering misleading seller practices and defective digital content.
Unfair and misleading practices
Under regulations discussed on Tuesday, online comparison sites and marketplaces such as Amazon or AirBnB will have to disclose the parameters employed in their search rankings, as well as the steps they take to ensure the veracity of consumer reviews. Consumers should be able to access clear information regarding who is selling the product they buy and the terms of online purchases.
MEPs on the Internal Market and Consumer Protection Committee (IMCO), which proposed the legislation, agreed to amend the “blacklist” of prohibited behaviours listed in the Unfair Commercial Practices Directive to include:
- Sellers or hosts misleading consumers as to the authenticity of product reviews; and
- Promoting products via paid rankings in search engine query results without the promotional status being made clear to the consumer; and
- The marketing of a product as being identical to a second product sold in another Member State, where this is not the case.
Traders using unfair practices which harm consumers in three or more EU Member States – or two, if the trader is located in a third state – will face a maximum fine of €10 million of four per cent of their annual turnover, whichever is higher.
IMCO member Daniel Dalton, who is steering the legislation through the European Parliament, said: “We included new rules that establish sanctions in the case of unfair commercial practices. I have insisted on those penalties being used to help consumers directly, rather than just being added to the national coffers. This is the action consumers needed in response to the Volkswagen scandal. I am also very pleased that the committee supported my idea to create a European Consumer Rights app. With this app consumers will be able to know about and benefit from their rights wherever they are, even while they are out shopping on European high streets or traveling at the airport”.
The proposal forms part of the New Deal for Consumers package implemented in April 2018; and will be passed to the plenary session of the European Parliament for approval before negotiations with the EU Council can begin.
“Digital contracts” for consumer protection
Negotiators from the European Parliament and Council have provisionally agreed on a raft of measures to protect consumers of digital content, including music, apps, cloud services, games and in-game downloadable content (DLC). The EU-wide “digital contracts” will apply to both consumers who pay for digital products in currency and those who exchange data for content or services.
The text lays out a range of protections for digital consumers, including:
- Where digital content or services are found to be defective and cannot be repaired within a “reasonable” timeframe, the consumer must receive a full refund within 14 days;
- Defects which are discovered within a year of purchase are assumed to have existed at the time of purchase, with the burden of proof on the seller – rather than the buyer – to prove otherwise;
- If a defect becomes apparent in a continuous service or supply, the burden of proof remains on the seller until the end of the contract;
- The guarantee period for continuous supplies must last until the end of the contract, while one-off supplies must carry a guarantee of no less than two years; and
- Sellers supplying subscriptions to digital content may only modify the content if the contract allows it; they must also notify the consumer and allow them to terminate the contract within 30 days of notice.
IMCO rapporteur Evelyne Gebhardt said: “With the sinking cost of electronic gadgets and the growing market for Big Data and targeted marketing, companies have an increased incentive to distribute consumer electronics without charge. Some consumer electronics are sold at the manufacturing price or less. The main purpose of such ‘giveaways’ is to monetise through collection of user-generated content. This provisional deal bolsters consumer rights and increases legal certainty. It addresses the most pressing issues that consumer contracts in the digital sphere face today, such as software updates, changes to digital content or service, and terminating long-term contracts”.
Once the provisional agreement on digital consumers’ rights in the EU has been confirmed by Member States’ representatives, it will be put to a full vote in the European Parliament.