Explanatory Memorandum to COM(2018)185 - Amendment of directives 93/13/EEC, 98/6/EC, 2005/29/EC and 2011/83/EU as regards better enforcement and modernisation of EU consumer protection rules

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dossier COM(2018)185 - Amendment of directives 93/13/EEC, 98/6/EC, 2005/29/EC and 2011/83/EU as regards better enforcement and modernisation of EU ...
source COM(2018)185 EN
date 11-04-2018


1. CONTEXTOFTHEPROPOSAL

1.1. Reasons for and objectives of the proposal

This proposal aims at amending four EU directives that protect the economic interests of consumers. Most of the amendments concern the Unfair Commercial Practices Directive 2005/29/EC1 and the Consumer Rights Directive 2011/83/EU2. Each of the other two Directives – the Unfair Contract Terms Directive 93/13/EEC3 and the Price Indication Directive 98/6/EC4 – are only amended concerning penalties. This proposal is presented together with a proposal on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/EC5.

The Treaties (Articles 114 and 169 TFEU) and the Charter of Fundamental Rights (Article 38) require a high level of consumer protection in the Union. Union consumer legislation also contributes to the proper functioning of the internal market. It aims to ensure that business-to-consumer relations are fair and transparent, which ultimately supports the overall welfare of European consumers and the Union economy.

This proposal is a follow-up to the REFIT Fitness Check of EU Consumer and Marketing law, published on 23 May 2017 (the Fitness Check)6 and the evaluation of the Consumer Rights Directive 2011/83/EU, which was conducted in parallel to the Fitness Check and published on that same day (the CRD Evaluation).7

The Fitness Check and the CRD evaluation concluded that the substantive EU consumer rules included in the four Directives, which are amended by this proposal, are overall fit for purpose. However, the results also stressed the importance of better applying and enforcing the rules and modernising them in line with developments in the digital sphere. It also stressed the importance of reducing regulatory burden in some areas.

Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (OJ L 149, 11.6.2005, p. 22).

Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council (OJ L 304, 22.11.2011, p. 64).

Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ L 95, 21.4.1993, p. 29).

Directive 98/6/EC of the European Parliament and of the Council of 16 February 1998 on consumer protection in the indication of the prices of products offered to consumers (OJ L 80, 18.3.1998, p. 27). COM(2018) 184. Proposal for a Directive of the European Parliament and of the Council on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/EC.

The Fitness Check covered the Unfair Contract Terms Directive 93/13/EEC, Consumer Sales and Guarantees Directive 1999/44/EC, Price Indication Directive 98/6/EC, Unfair Commercial Practices Directive 2005/29/EC and Injunctions Directive 2009/22/EC. For results, see SWD (2017) 208 final and SWD(2017) 209 final of 23.5.2017, available at: ec.europa.eu/newsroom/just.

For results, see COM(2017) 259 final, SWD(2017)169 final and SWD(2017) 170 final of 23.5.2017, available at: ec.europa.eu/newsroom/just.

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Contents

1.

The evaluation findings have been given more importance by recent cross-border


infringements of EU consumer law, in particular, the ‘Dieselgate’ scandal (where car

manufacturers installed technology in cars to cheat emissions tests). Such infringements undermine consumer trust in the Single Market. They have also sparked a debate about whether the EU has strong enough mechanisms in place to handle such issues, enforce consumer protection rules and provide redress to victims.

For these reasons, in the 2017 State of the Union Address, Commission President Jean-Claude Juncker announced the New Deal for Consumer, which aims at strengthening the enforcement of EU consumer law amid a growing risk of EU-wide infringements. T he present proposal, which introduces targeted amendments in four consumer law directives, is a key part of this New Deal . In summary, the proposal aims at making the improvements outlined bel ow.

• More effective, proportionate and dissuasive penalties for widespread cross-border infringements. The recently adopted Regulation (EU) 2017/2394 regulates how national consumer enforcement authorities work together to address cross-border infringements of consumer law. In particular, it focuses on widespread infringements harming consumers in several Member States and widespread infringements with a Union dimension. For this type of widespread infringement, national authorities may need to impose effective, proportionate and dissuasive penalties in a coordinated manner. However, the available penalties for infringements of consumer law are very different across the EU, and are often set at a low level. Under the proposal, national authorities will have the power to impose a fine of at least up to 4 % of a traders turnover for such widespread infringements. More generally, the national authorities should decide on the level of penalties based on common param eters, in particular the cross-border nature of the infringement. These strengthened rules on penalties will be inserted in the four directives concerned.

• Right to individual remedies for consumers. The proposal envisages that consumers will have the right to individual remedies when they are harmed by unfair commercial practices, such as aggressive marketing. In particular, Member States should make both contractual and non - contractual remedies available. As a minimum, the contractual remedies should include the right to contract termination. Non-contractual remedies should, as a minimum, include the right to compensation for damages. These rights will be added to Directive 2005/29/EC on unfair commercial practices.

• More transparency for consumers in online marketplaces. Today, when consumers visit online marketplaces, they are exposed to a variety of offers from third-party suppliers selling on the online marketplace (and offers from the online marketplace itself). Consumers do not always know how the offers they are presented with on the

Regulation (EU) 2017/2394 of the European Parliament and of the Council of 12 December 2017 on cooperation between national authorities responsible for the enforcement of consumer protection laws and repealing Regulation (EC) No 2006/2004 (OJ L 345, 27.12.2017, p.

1). This Regulation will make cross-border public enforcement more effective and give the relevant national authorities a uniform set of powers to work more efficiently together against widespread infringements. It also enables the European Commission to launch and coordinate common enforcement actions to address EU-wide infringements.

The revised CPC Regulation defines widespread infringements as illegal practices that affect at least three EU Member States, and widespread infringement with a Union dimension as practices which harm a large majority of EU consumers, i.e. in two-thirds of Member States or more, and amount to two thirds of the EU population or more.

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online marketplace have been ranked and from whom they are buying (whether from professional traders or other consumers). Many consumers are under the impression that they are buying from the online marketplace and are thus entering into a contract with it. In reality, they may be buying from a third-party supplier listed on the online marketplace who is not a trader. As a result, consumers may falsely think they are dealing with professional traders (hence benefitting from consumer rights). This confusion can cause problems in case something goes wrong with an online purchase, because it is not always easy to establish who is responsible. The proposal introduces additional information requirements in Directive 2011/83/EU, which require online marketplaces to clearly inform consumers about: (a) the main parameters determining ranking of the different offers, (b) whether the contract is concluded with a trader or an individual, (c) whether consumer protection legislation applies and (d) which trader (third party supplier or online marketplace) is responsible for ensuring consumer rights related to the contract (such as the right of withdrawal or legal guarantee).

In addition, consumers using digital applications such as online marketplaces, comparison tools, app stores or search engines expect natural or organic search results based on relevance to their search queries, not on payment by third parties. In line with the 2016 Guidance paper10 on Directive 2005/29/EC, the relevant provisions of that Directive should be clarified to make it clear that online platforms must indicate search results that contain paid placements, i.e. where third parties pay for higher ranking, or paid inclusion, i.e. where third parties pay to be included in the list of search results.

Extending protection of consumers in respect of digital services. The proposal extends the application of Directive 2011/83/EU to digital services for which consumers do not pay money but provide personal data, such as: cloud storage, social media and e-mail accounts. Given the increasing economic value of personal data, those services cannot be regarded as simply ‘free’. Consumers should therefore have the same right to pre-contractual information and to cancel the contract within a 14-day right-of-withdrawal period, regardless of whether they pay for the service with money or provide personal data.

Removing burdens for businesses. The proposal amends Directive 2011/83/EU by granting traders more flexibility in choosing the most appropriate means of communication with consumers. It will allow traders to use new means of online communication, such as web forms or chats as alternative to traditional e-mail as long as the consumer can keep track of the communication with the trader. It also removes two specific obligations on traders about the 14-day right of withdrawal that have proven to constitute a disproportionate burden. The first obligation is the obligation for the trader to accept the right of withdrawal even where a consumer has used an ordered good instead of only trying it out in the same way they could have done in a brick-and-mortar shop. The second obligation is the obligation for the trader to reimburse the consumer even before the trader has received the returned goods back from the consumer.

Clarifying Member States' freedom to adopt rules on certain forms and aspects of off-premises sales. Whilst off-premises sales constitute a legitimate and well established sales channel, the proposal clarifies that Directive 2005/29/EC does not

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Commission Staff Working Document “Guidance on the implementation/ application of Directive 2005/29/EC on Unfair Commercial Practices”, SWD(2016) 163 final of 25.5.2016.


prevent Member States from adopting rules to protect the legitimate interests of consumers with regard to some particularly aggressive or misleading marketing or selling practices in the context of unsolicited visits by a trader to a consumers home or with regard to commercial excursions organised by a trader with the aim or effect of promoting or selling products to consumers, where such restrictions are justified on grounds of public policy or respect for private life.

• Clarifying the rules on misleading marketing of dual quality products. The

proposal amends Directive 2005/29/EC making it explicit that a commercial practice involving the marketing of a product as being identical to the same product marketed in several other Member States, where those products have significantly different composition or characteristics causing or likely to cause the average consumer to take a transactional decision that he would not have taken otherwise, is a misleading commercial practice which com petent authorities should assess and address on a case-by-case basis according to the provisions of the Directive.

1.2. Consistency with existing policy provisions in the policy area

This proposal is consistent with several other legislative and non - legi slative actions in the consumer protection area. In particular, this proposal is consistent with the recently revised Regulation (EU) 2017/2394 on consumer protection cooperation (CPC), which aims at boosting cross-border public enforcement of consumer protection rules. T he strengthened rules on penalties for breaches to EU consumer law provided in this proposal will increase the deterrent effect and effectiveness of the CPC coordinated actions for widespread infringements and widespread infringements with a Union dimension. It was highlighted during the negotiations for the revised CPC Regulation that effective, proportionate and dissuasive penalties in all Member States are essential for the success of the Regulation. However, the co-legislators of the CPC Regulation decided that it was more appropriate to address the need for a strengthened level of penalties as part of the possible revision of substantive EU law11

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consumer


The rules on individual remedies to consumers affected by breaches to the Directive 2005/29/EC will be complementary to the EU efforts to make it easier for consumers to seek redress thanks to the other proposal of the ‘New Deal for Consumers’ package, i.e. the proposal on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/EC. In addition, individual consumers affected by breaches to Directive 2005/29/EC may rely on the proposed remedies also within the small claims procedure and alternative/online dispute resolution. Under the Directive on consumer alternative dispute resolution (ADR)12 EU consumers have access to quality-assured out-of-court dispute-resolution systems for both domestic and cross-border contractual disputes. The Commission has also created an online dispute resolution platform (ODR

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See Recital 16 of the revised CPC Regulation, which reads: '… In view of the findings of the Commission’s Report of the Fitness Check of consumer and marketing law, it might be considered to be necessary to strengthen the level of penalties for breaches of Union consumer law.'

Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR) (OJ L 165, 18.6.2013, p. 63).

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platform). This platform helps consumers and traders resolve their domestic and cross-


border disputes over online purchases of goods and services.

This proposal goes hand-in-hand with efforts to ensure better knowledge of EU consumer law among consumers, traders and legal practitioners. There are several activities planned to achieve this as l isted below.

• In 2018, the Commission will launch an EU-wide awareness-raising campaign on

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consumer rights, which will build on the lessons learnt from a 2014-2016 Consumer


Rights Campaign.14

• The Commission is carrying out a pilot project on training small and medium-sized businesses in the digital age (the ‘ Co nsum er Law Ready ’ initiative15)

• The Commission plans to roll out a number of training activities for judges and other legal practitioners under the revamped European Judicial Training Strategy for

2019-202516.

• To make it easier for all market players to understand their contractual rights and duties, the Commission is coordinating a self-regulatory initiative within the REFIT stakeholder group. The initiative is aimed at more clearly presenting to consumers both mandatory pre-contractu al information and standard terms and conditions.

• To further enhance legal certainty for all market players, the Commission has been working on several guidance documents to ensure better understanding of EU consumer law17 It is about to publish a new Consumer Law Database within the E-Justice Portal. This database will contain EU and national case-law and will also allow access to administrative decisions on EU consumer legislation.

1.3. Consistency with other EU policies

The four consumer law directives amended by this proposal apply across all economic sectors. Due to their general scope, they apply to many aspects of business-to-consumer transactions that are also covered by other EU legislation. The interplay between the different bodies of EU law is regulated by the lex specialis principle. Under this principle, the provisions of the general consumer law directives come into play only when the relevant aspects of business-to-consumer transactions are not disciplined by the provisions of sector-specific EU law. Thus, these general consumer law directives work as a safety net ,

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Available since 15 February 2016, Regulation (EU) No 524/2013 of the European Parliament and of the Council of 21 May 2013 on online dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Regulation on consumer ODR) (OJ L 165, 18.6.2013, p.

1).

See also: ec.europa.eu/newsroom/just.

The ConsumerLawReady training project is being implemented thanks to the financing granted by the IMCO Committee of the European Parliament. A consortium consisting of BEUC, UEAPME and Eurochambres is managing this project on the Commission's behalf. Training material has been prepared, translated and adapted for each Member State. The training of small and medium-sized businesses started in December 2017 and will continue throughout 2018. A dedicated website was created in November 2017: www.consumerlawready.eu">www.consumerlawready.eu.

Strategy under preparation; a Roadmap is available at https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-5432247_en.

Guidance on the Unfair Commercial Practices Directive 2005/29/EC, SWD(2016)163 final of 25.05.2016. Guidance on the application of EU food and consumer protection law to issues of dual quality of products - the specific case of food, 26 September 2017 (C(2017) 6532 final). A new Guidance on the Unfair Contract Terms Directive 93/13/EEC is planned for the end of 2018 and updated Guidance on the Consumer Rights Directive 2011/83/EU in 2019.

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ensuring that a high level of consumer protection can be maintained in all sectors, by complementing and filling gaps in sector-specific Union law.

The proposed amendments that deal with a lack of transparency in business-to-consumer transactions in online marketplaces and of consumer protection for digital services will help complete the Digital Single Market (DSM)18 and will ensure consistency with another important element of the Digital Single Market Strategy, i.e. the Commission's proposal for a Directive on contracts for the supply of digital content.19 That proposal defines consumer rights when the digital content and digital services acquired by the consumer do not conform with the contract, covering also contracts which do not include consumer’s payment in money. Directive 2011/83/EU also applies to the supply of digital content; however, it currently only applies to services, including digital services, provided against monetary payment. According to the Digital Content proposal there is notably a lack of conformity where the content or services do not correspond to the specifications provided as pre-contractual information, and the pre-contractual information requirements are laid down in Directive 2011/83/EU. For the above reasons, it is necessary to align the scope of application of Directive 2011/83/EU to that of the current Digital Content Directive in respect of the definitions of ‘digital content’ and ‘digital services’. The Justice and Home Affairs Council specifically invited the Commission to ensure consistency between Directive 2011/83/EU and the Digital Content proposal, particularly for the definitions of ‘digital content’ and ‘digital services’.20

The amendment of Directive 2011/83/EU to include digital services irrespective of a monetary payment is complementary to the General Data Protection Regulation 2016/679. Specifically, the right to terminate the contract for digital services within the 14-day right-of-withdrawal period will remove the contractual basis for the processing of personal data under the General Data Protection Regulation. This will in turn trigger the application of the rights provided by the General Data Protection Regulation, e.g. the right to be forgotten and the right to data portability.

On the proposed amendment for online marketplaces, the 2016 Communication on Online Platforms said that the Commission ‘will further assess any additional need to update existing consumer protection rules in relation to platforms as part of the regulatory fitness check of EU consumer and marketing law in 2017’.21 In December 2016, the European Economic and Social Committee suggested adapting the pre-contractual information requirements to the needs of consumer buying from e-commerce platforms in general.22 The European Council,

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For further information on Digital Single Market see: https://ec.europa.eu/commission/priorities/digital-single-market_en.

Proposal for a Directive on certain aspects concerning contracts for the supply of digital content, COM(2015)0634 final of 9.12.2015. For further information: https://ec.europa.eu/info/business-economy-euro/doing-business-eu/contract-rules/digital-contracts/digital-contract-rules_en.

Outcome of the Council Meeting 3473rd Council meeting Justice and Home Affairs, Luxembourg, 9 and 10 June 2016, available at: data.consilium.europa.eu/doc/document. It refers to Presidency Note 9768/16 of 2 June 2016, which stresses the need for consistency between the Proposed Directive on Digital Content and Directive 2011/83/EU inviting the Commission to assess the application of that Directive to all types of contracts for the supply of digital content covered by the proposed Directive on Digital Content. The Note is available at:

data.consilium.europa.eu/doc/document.

COM(2016) 288 final of 25 May 2016, page 11: eur-lex.europa.eu/legal-

content/EN/TXT/PDF/?uri=CELEX:52016DC0288&from=EN.

Opinion by the Economic and Social Committee on the Communication on Online Platforms, TEN/601-EESC-2016, webapi.eesc.europa.eu/documentsanonymous.

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on 19 October 2017, underlined ‘the necessity of increased transparency in platforms’ practices and uses’.23

This proposal is complementary to the Commissions action on unfair platform -to- busi ness contract terms and trading practices (the platfo rm -to- busi ness initiative), as announced in the May 2017 mid-term review of the Digital Single Market.24 This proposal and the platform-to-business initiative pursue shared goals of greater transparency and fairness in the transactions that take place on online platforms. This proposal deals with specific problems, already identified by the CRD evaluation, namely that consumers often do not know who their contractual counterpart is, when they shop through online marketplaces. As a result, consumers are often unclear as to whether they can exercise their EU consumer rights, and if so who they need to address to ensure these rights are upheld. Another way in which this proposal and the platfo rm-to-busi n ess initiative are complementary is that they both seek to ensure transparency of the main parameters determ ining ranking in, respectively, platform-to-consumer and platform-to-business relations.

Better EU consumer legislation can also be expected to bring benefits to other EU policy areas where business-to-consumer commercial transactions play an important role. One example is the Commissions work on sustainable consumption, including through the Circular Economy Action Plan , which contains also actions to address misleading environmental claims and planned obsolescence. Although already captured under the UCPD, stronger penalties and tools for redress will allow combating infringements of consumer rights in these areas more effectively.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

Consumer protection is a competence shared between the EU and the Member States. As stipulated in Article 169 of the Treaty on the Functioning of the European Union, the EU must contribute to protecting the economic interests of consumers and to promoting their right to information and education in order to safeguard their interests. This proposal is based on Article 114 of the Treaty on the Functioning of the European Union, (which refers to the completion of the internal market), and Article 169 of the Treaty on the Functioning of the European Union.

• Subsidiarity (for non - e xcl usive competence)

This proposal amends EU consumer protection rules, whose adoption at EU level has been deemed necessary and in line with the principle of subsidiarity. A better functioning internal market cannot be achieved by national laws alone. EU consumer protection rules remain relevant as the internal market deepens, and the number of EU consumer transactions increases between Member States.

From an economic perspective, the behaviour of traders towards consumers is likely to have a large impact on the operation of consumer markets. This is because traders have a very large influence on consumer information and dec isi o n - m aki ng in such markets. Consumer policy

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European Council Conclusions on Migration, Digital Europe, Security and Defence (19 October 2017). Communication COM(2017) 228 final of 10 May 2017: https://ec.europa.eu/digital-single-

market/en/content/mid-term-review-digital-single-market-dsm-good-moment-take-stock.

Communication from the Commission Closing the loop - An EU action plan for the Circular Economy, COM/2015/0614 final of 2.12.2015: eur-lex.europa.eu/legal-

content/EN/TXT/?uri=CELEX%3A52015DC0614.

therefore has the potential to improve market forces. This can help foster competition and improve efficiency.

Within the EU, the volume and intensity of cross-border trade are high enough (in fact, they are higher than in any other large trading area in the world)26 to make this cross-border trade vulnerable to inconsistent — or even merely divergent — policy choices by Member States. Moreover, traders can reach consumers across Member States' borders. This can create problems that national lawmakers and regulators are ill-placed to adequately address in isolation.

This proposal amends the existing EU consumer protection rules. Directive 2005/29/EC ensures full harmonisation of national rules on unfair commercial practices harming consumers' economic interests. Directive 2011/83/EU essentially provides fully harmonised rules on pre-contractual information requirements and rights to withdraw for consumer contracts. New national legislation within the scope of these Directives would go against the fully harmonised acquis that is already in place.

The EU-wide nature of the problem, requiring appropriate enforcement action at EU level, is particularly evident in the case of illegal practices affecting consumers in several EU Member States at the same time. Such widespread infringements of consumer rights have now been legally defined by the revised CPC Regulation, which creates a powerful procedural framework for cooperation between national enforcement authorities. To be fully effective, enforcement across the EU must also be grounded in a common and uniform substantive legal framework. Enforcement of consumer rights and redress opportunities across the EU cannot be made more effective by actions taken exclusively by Member States on their own.

For online trade, it does not seem possible to sufficiently address at national level the problems consumers encounter. In particular, many online marketplaces and providers of digital services trade across Europe and across borders.

The Fitness Check and the CRD evaluation confirmed that the EU consumer and marketing law acquis has helped build a high level of consumer protection across the EU. It has also helped the internal market operate better, and helped reduce costs for businesses that sell products and services across borders. Businesses that sell their products and services in other EU countries benefit from the harmonised legislation that facilitates selling cross-border to consumers in other EU countries.

Directive 2005/29/EC, in particular, has replaced divergent regulations across the EU by providing for a uniform legal framework in all Member States. Its cross-cutting, principle-based approach provides a useful and flexible framework across the EU, while the introduction of the blacklist helped eliminate some unfair practices on various national markets. Similarly, Directive 2011/83/EU has contributed significantly to the functioning of the internal market and ensured a high common level of consumer protection by removing differences between national laws relating to business-to-consumer contracts. It has increased legal certainty for traders and consumers, especially those engaged in cross-border trade. In particular, consumer trust has increased significantly in recent years in the growing market of

cross-border e-commerce.27

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Wold Trade Organization, International Trade Statistics 2015:

www.wto.org/english/res_e/statis_e/its2015_e">https://www.wto.org/english/res_e/statis_e/its2015_e.

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According to the 2017 Consumer Conditions Scoreboard, between 2012 and 2016, the proportion of


consumers who felt confident purchasing goods or services via the internet from retailers or service

providers in another EU country has increased by 24 percentage points to reach 58%.

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The Fitness Check Report said that the greatest contribution made by EU consumer law is its common harmonised rules. These rules enable national enforcement authorities to more effectively address cross-border infringements that harm consumers in several Member States. For instance, without further EU-level action to ensure that fines are effective, proportionate and dissuasive , the existing divergent national systems for fines would likely not be enough to ensure fair competition for compliant traders and would undermine the enforcement cooperation under the revised CPC Regulation. Establishing fairer competition by approximating national rules on fines would also bring EU consumer law more in line with the penalty frameworks for EU competition and data protection law. Synergies between these three fields, particularly in the coordination of enforcement activities, have been increasingly acknowledged at the EU level.

It is also in line with the subsidiarity principle to clarify within Directive 2005/29/EC, Member States freedom to adopt provisions to protect the legitimate interests of consumers from unsolicited visits for direct marketing purposes or commercial excursions, where such restrictions are justified on grounds of public policy or the protection of the respect for private life, as it will ensure that Member States would be allowed to regulate in an area where impact on the Single Market is considered very limited.

• Proportionality

The measures in the proposal are proportionate to the objectives of improving compliance with consumer law and modernisation and burden reduction.

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On penalties, the proposal harmonises the minimum level of penalties by requiring Member


States to introduce fines based on a trader’s turnover only for widespread infringements and

widespread infringements of a Union dimension where such har monisation is clearly necessary to ensure the coordination of penalties required by the revised CPC Regulation. For all other infringements, the proposal limits itself to only setting non - exh austiv e criteria that should be taken into account in the application of specific penalties. For these other infringements, the proposal does not harmonise these penalties and even makes it clear that these criteria do not necessarily apply to minor infringements.

On the requirement in the area of individual remedies for violations of Directive 2005/29/EU, the proposal gives Member States some freedom of manoeuvre on the specific remedies to be made available. The proposal only requires as a minimum the contractual remedy of contract termination and the non -contractu al remedy of compensation of damages. These are the two most common remedies today in the national civil law of the Member States.

The proportionality of the proposed extension of Directive 2011/83/EU to digital services not provided against monetary payment is ensured by aligning the scope of application with that of the future Digital Content Directive, and also exempting the contracts for digital services under which the consumer merely provides personal data from some of the formal requirements of the Directive 2011/83/EU that are only relevant in case of paid-for contracts, i.e. the requirement to obtain the consumer consent for immediate provision of service which

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On 14 March 2017 the European Parliament adopted a resolution on ‘fundamental rights implications of big data: privacy, data protection, non-discrimination, security and law-enforcement’ which included a call for ‘closer cooperation and coherence between different regulators and supervisory competition, consumer protection and data protection authorities at national and EU level’. The European Data Protection Supervisor proposed the establishment of a Digital Clearinghouse to bring together agencies responsible for competition, consumer and data protection and willing to share information and discuss how best to enforce rules in the interests of the individual. The ‘clearinghouse’ met for the first time on 29 May 2017.

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only has consequences in terms of the monetary payment for the services provided during the right of withdrawal period before the exercise of the right of withdrawal


The proposed changes to the rules on online marketplaces are proportionate in the sense that they do not impose on online market places any obligation to monitor or verify the truthfulness of the information provided by third-party suppliers about their trader or non-trader status.

The changes are therefore based on pure sel f - decl a ration and the task of the marketplace is only to ensure that third- party suppliers provide this information on the website and then pass it on to the consumer. As regards ranking transparency, the online marketplace has to inform about the main parameters determining ranking of the offers without prescribing any particular default ranking criteria.

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The proposal also enhances the proportionality of the legislation by reducing regulatory costs for traders where this would not endanger the objective of the legislation as in the case of the


two identified traders’ obligations with regards to the right of withdrawal and the proposed

burden-reduction measures for information requirements. Such changes eliminating unnecessary burden are expected to be particularly beneficial for small enterprises.

• Choice of the instrument

As this proposal amends four existing Directives, the most appropriate instrument is a directive.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER

CONSULTATIONS AND IMPACT ASSESSMENTS

Ex-post evaluations/fitness

checks of existing legislation

This proposal builds on the findings of the Fitness Check of EU Consumer and Marketing Law and the CRD evaluation, both published in May 2017.

The Fitness Check concluded that most of the substantive provisions of the relevant Directives are overall fit for purpose. Although consumer-protection provisions are also laid down in many EU sector-specific instruments, the Fitness Check concluded that the general Directives under analysis and EU sector-specific consumer protection legislation complement one another. The Fitness Check also concluded that stakeholders largely agree that the combination of general and sector-specific rules provides a clear and coherent EU legal framework.

However, the Fitness Check concluded that the effectiveness of the rules is hindered by: (a) the fact that traders and consumers are not aware of them, and (b) insufficient enforcement and consumer-redress opportunities. As far as this proposal is concerned, the Fitness Check recommended future action to improve compliance by strengthening enforcement and making consumer redress easier, in particular by increasing the deterrent effect of penalties for breaches of consumer law and introducing consumer remedies where consumers have been victims of unfair commercial practices infringing Directive 2005/29/EC. The Fitness Check also recommended modernising the regulatory landscape and reducing regulatory burdens by removing unjustified duplications of information requirements between Directive 2005/29/EC and Directive 2011/83/EU.

The CRD evaluation found that Directive 2011/83/EU has contributed positively to the functioning of the business-to-consumer internal market and ensured a high common level of consumer protection. However, it identified some gaps in the rules, in particular due to the developments in the digital economy. The evaluation highlighted a number of areas where legislative amendments could be relevant, including the following:


(a) transparency of transacti ons on online marketplaces;

(b) alignment of the rules governing digital content contracts with the rules for free digital services (such as cloud storage and webmail);

(c) simplification of some of the information requirements in Directive 2005/29/EC and Directive 2011/83/EU that overlap;

(d) reduction of the burden on traders, especially small and medium-sized businesses, in the area of the right of withdrawal from distance and off-premises sales regarding:

consumer’s right to return also goods that have been used beyond what is strictly

necessary and (2) the obligation to reimburse the consumer even before receiving the goods back from the consumer;

(e) modernisation of the means of communication between traders and consumers.

The evaluation also recommended further aware ness- raisi ng activities and guidance documents as follow-up.

• Stakeholder consultations

In preparing the proposal, the Commission consulted with sta keholders via:

• the feedback mechanism on the Inception Im pact Assessment;

• the online public consultation;

• a targeted panel consultation with small and medium-sized businesses;

• targeted consultations with Member States and other stakeholders through surveys and meetings with Directorate-General for Justice and Consumers' networks of Member State authorities and consumer organisations;

• consultation with consumer and business stakeholders via the REFIT Stakeholder Expert Group.

The objective of the consultations was to collect qualitative and quantitative evidence from relevant stakeholder groups (consumers, consumer associations, businesses, business associations, Member States authorities, legal practitioners) and the general public. It was difficult to reach specific types of businesses, such as online marketplaces and providers of

free digital services. The consultations were publicised via regular meetings, Twitter, Facebook, and e-mails to the Directorate-General for Justice and Consumers' networks, and via speeches delivered by the Commissioner and other high-level Commission officials.

The proposal also builds on the consultation activities that were carried out as part of the Fitness Check and CRD evaluation.29

The measures included in the proposal enjoy different levels of support from stakeholders.

The public consultation showed that many consumer associations and public authorities support expressing the maximum level of fines as a percentage of the traders turnover. However, only a few business associations agreed with this idea. By contrast, in the SME panel, no less than 80 % of the respondents considered that the most proportionate, effective

29

For more information on these consultation activities carried out for the Fitness check and the CRD evaluation, see the Annexes to the Report on the Fitness Check and Annexes to the Commission staff working document on the CRD, available at: ec.europa.eu/newsroom/just/item-

detail.cfm?item_id=59332

and dissuasive way of setting the maximum level of fines is by expressing it as a percentage of the tr aders turnover, possibly combined with an absolute amount, whichever is higher.

In the public consultation, a large majority of responding public authorities, consumer associations and consumers said that an EU-wide right to remedies under Directive 2005/29/EU should be introduced to ensure that traders comply better with consumer protection rules. However, support for this idea was low among business associations (35 %) and individual companies (31 %) . In the SME panel consultation, 87 % of respondents were in favour of introducing an EU-wide right to remedies under Directive 2005/29/EU.

Many stakeholders supported new transparency requirements for contracts concluded on online marketplaces. Consumer associations, public authorities, individuals and most companies and business associations agree that consumers buying on online marketplaces should receive the information about the identity and status of the supplier. They also agree that this would increase consumer trust. Also many small and medium-sized businesses are in favour of requirements to inform consumers about the identity and legal status of the contractual partner. There was also support for transparency from business associations. Some major online marketplaces reported that the new rules would reduce costs, while others did not know.

Most stakeholders supported extending Directive 2011/83/EU to cover digital services where no monetary payment is made. Traders supported introducing information requirements to help better inform consumers, but they were divided on introducing a right of withdrawal for these digital services. Business associations did not support introducing a right of withdrawal for digital services where no monetary payment is made.

Business associations supported the deletion of information requirements from Directive 2005/29/EC that overlap with pre-contractual information requirements in Directive 2011/83/ EU. Consumer associations were again st removing information requirements in these cases. Most of the public authorities considered that providing consumers with information about complaint handling was not important at the advertising stage.

Stakeholders largely supported replacing the current requirement for traders to provide an e-mail address with a technologically neutral reference to means of online communication. Stakeholders also largely supported removing the reference to a fax number in Directive

2011/83/EU.

In the public consultation, 35 % of online companies reported that they encountered significant problems due to the above-mentioned specific obligations for traders related to the right of withdrawal. Most business associations confirmed that traders face a disproportionate/unnecessary burden resulting from these obligations. In the SME panel, close to half of self-employed, micro or small companies selling to consumers online reported disproportionate burdens. However, most consumer associations, public authorities and

individuals did not support removing these traders’ obligations.

• Im pact assessment

This proposal is based on an I m pa ct Assess ment (IA)30. The Regulatory Scrutiny Board (RSB) first issued a negative opinion with comprehensive comments on 12 January 2018. After a significant revision of the initial draft, the RSB provided a positive opinion with

30 SWD(2018) 96.

further comments on 9 February 2018.31 Annex I to the IA explains how the RSB comments were addressed.

The Impact Assessment deals separately with options, on the one hand, to improve compliance with the consumer protection law and, on the other hand, related to modernisation and burden reduction.

To improve compliance, three options were considered besides the baseline scenario:

an option of only increasing deterrence and proportionality of public enforcement through stronger rules on penalties and a more effective injunctions procedure;

an option of adding to the measures in (1) the consumer’s right to individual remedies;

an option of adding to the measures in (1) and (2) measures of collective consumer redress.

The preferred option was option 3 which combined all the measures. This proposal addresses parts of the preferred option regarding stronger rules on penalties and rights for consumers to individual remedies for violations of Directive 2005/29/EC. Elements related to injunctions and collective redress are addressed by the parallel proposal on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/EC.

On penalties, the proposal will make the application of penalties more consistent across the EU. It will do this through a list of common, non-exhaustive criteria for assessing the gravity of infringements (except for minor ones). Enforcement authorities would be required to take these criteria into account when deciding whether to impose penalties, and what the level of penalty should be. If the penalty to be imposed is a fine, the authorities would be required to take into account, when setting the amount of the fine, the infringing trader’s turnover, net profits and any fines imposed for the same or similar infringements in other Member States. In cases of ‘widespread infringements’ and ‘widespread infringements with a Union dimension’, as defined in the revised CPC Regulation, fines should be introduced as a mandatory element of penalties, and Member States should set the maximum fine for such infringements at a level that is at least 4 % of the trader's annual turnover.

On individual remedies, the proposal requires Member States to ensure that consumers harmed by unfair commercial practices have access to at least the contractual remedy of contract termination and the non-contractual remedy of compensation for damages. In particular, the ‘Dieselgate’ controversy (where car manufacturers installed technology in cars to cheat emissions tests) has shown that non-contractual remedies, such as the extra-contractual right to compensation for damages, can sometimes be more important for consumers than contractual ones. In the Dieselgate case, many consumers have not been able to claim remedies even in Member States that already provide remedies for victims of unfair commercial practices. This is because the available remedies are only contractual. The remedies can therefore only be applied against the consumers' contractual counterparts, which in this case are usually the car sellers and not the car manufacturers.

On costs of these measures, there could be some initial familiarisation costs for traders. However, in the SME Panel consultation most respondents indicated that strengthening penalties would have no impact on their costs. For individual remedies the median estimated one-off costs, such as costs for legal advice, reported in the SME Panel consultation were EUR 638. The median estimated annual running costs were EUR 655. In the public

SEC(2018) 185.

31

consultation, a majority of the public authorities indicated that costs of administrative and judicial enforcement would increase if rules on penalties are strengthened. There would also be some initial familiarisation costs for national authorities and courts of introducing rights to individual remedies. No public authority provided estimates of increased or decreased enforcement costs. Costs for public enforcement authorities and courts include a possible increase in the number of enforcement and court cases. However, these costs are likely to be off-set by the expected overall reduction in violations of EU consumer law thanks to the increased deterrent effect of stronger penalties and remedies.

The proposal would also bring savings for traders trading cross-border thanks to the increased harm onisation of rules. In particular, there would be increased clarity on the possible consequences for traders in the event of non-compliance. This would lead to lower and more accurate risk-assessment costs.

For modernisation and burden reduction, the IA assessed the options for (a) transparency of online marketplaces, (b) consumer protection in respect of digital services not provided against monetary payment and (c) burden reduction measures that are discussed in the following section on regulatory fitness and simplification.

On the transparency of online marketplaces, the IA assessed the options of promoting self-regulation, co-regulation and legislative amendments to Directive 2011/83/EU imposing additional information requirements on online marketplaces. Very few respondents to the targeted and public consultations provided quantitative cost estimates. Some major online marketplaces reported that new fully harmonised rules on transparency would bring some cost reductions, while others did not know if these rules would bring cost reductions. Out of the four online marketplaces responding to a question on costs, two indicated that the costs for complying with new information requirements (one-off and running costs) would be reasonable, one did not find them reasonable and one did not know.

T he extension of the CRD to free digital services represents a legislative clarification that would entail moderate costs on companies due to adjustments of their website/online interface. Small and medium-sized businesses estimated that the median of the annual costs that would come from extending Directive 2011/83/EU to cover digital services not provided against payment was EUR 33 for p re- contra ctu al information requirements and EUR 50 for the right of withdrawal.

The amendment of Directive 2005/29/EC stating that Member States may adopt provisions to protect the legitimate interests of consumers with regard to particularly aggressive or misleading marketing or selling practices in the context of unsolicited visits by a trader to a consumers home or with regard to commercial excursions organised by a trader with the aim or effect of promoting or selling products to consumers, where such restrictions are justified on grounds of public policy or respect for private life, is necessary to clarify the relationship between the Directive and national rules on such marketing activities.

Some Member States have introduced bans or restrictions on specific types of off-premises selling, such as unsolicited doorstep selling also for reasons of the protection of private life and public policy. Although they go against the fully harmonised nature of Directive 2005/29/EC, such restrictions have no — or very limited — cross-border implications (due to the very nature of off-premises selling). Such restrictions would therefore have no significant impact on the Single Market. The proposed change would recognise the status quo that exi sts in some Member States that have adopted certain restrictions on doorstep selling and/or sales excursions. Any further impact would depend on other Member States making use of this possibility. Therefore, clarifying the possibility for Member States to introduce such restrictions based on public policy or protection of privacy of consumers was deemed not to

have an immediate impact on the Single Market, and is in line with the principle of subsidiarity.

The amendment of Directive 2005/29/EC regarding ‘dual quality’ of products is necessary in

order to provide greater legal clarity for the Member State authorities responsible for enforcing the Directive. The Commission had addressed this matter in the Guidance of 25 May 2016 on the application of Directive 2005/29/EC32 and more recently in the Commission Notice of 26.9.2017 on the application of EU food and consumer protection law to issues of Dual Quality of products – The specific case of food . However, the enforcement experience shows that national authorities would benefit from relying on an explicit set of provisions. These are necessary to enable more effective tackling of commercial practices that involve the marketing of a product as being identical to the same product marketed in several other Member States, where those products have significantly different composition or characteristics causing or likely to cause the average consumer to take a transactional decision that he would not have taken otherwise.

• Regulatory fitness and simplification

As this proposal is made as part of the REFIT programme, ascertaining the regulatory burdens was an important part of the underlying evaluations. These showed that the general EU consumer legislation is not particularly burdensome, both in absolute terms and when compared to other areas of EU regulation . Therefore, in light of the great benefits of EU consumer legislation in protecting consumers and facilitating the Single Market, these evaluations identified only a limited scope in terms of burden reduction.

Because this proposal amends legislation that applies to all traders, including micro-enterprises, there are no substantial reasons to exempt micro-enterprises from the application of this proposal. It is likely that m icro - enterprises will benefit in particular from the proposed burden reduction measures related to the right of withdrawal. This is because these businesses may currently have less flexibility in absorbing losses due to the current obligations. Micro-enterprises are likely to be less affected by the proposed strengthening of rules on penalties for widespread infringements and widespread infringements with a Union dimension, since such infringements are typically done by larger companies, which then become the object of coordinated CPC enforcement actions.

The first amendment concerning the right of withdrawal ends a traders obligation to accept the return of goods even when consumers have used such goods more than permitted. Small and medium-sized businesses reported annual losses on average of EUR 2 223 (median EUR 100) caused by the current obligation to accept such unduly tested goods. T he views from business associations and companies also suggest that traders, and small and medium-sized businesses in particular, will benefit from a reduction of this burden. As regards traders obligation to reimburse consumers before having had the possibility to inspect returned goods, the average estimated annual losses due to current rules reported in the SME Panel consultation were EUR 1 212 (median 0). Views from business associations and companies also sugg est th at traders, and small and medium-sized businesses in particular, will benefit from a reduction of this burden.

11.

Very limited quantitative data were available on the removal of traders obligation to provide information about complaint handling at the advertising stage. However, the views expressed


32 SWD(2016) 163 final.

33 C(2017)6532.

34 For further information, see Chapter 6.2.4. of the Fitness Check Report.

by business associations suggest some to significant savings for companies. On the removal of the obligation on traders to display their fax number and enable more modern means of communication (such as web-form) as alternative to an e-mail address, the fact that many traders already offer these more modern means of communication to consumers (in parallel with an e-mail address) suggests that they are more efficient than e-mail. Removing the obligation to display fax number may not affect costs, as currently it is mandatory information only for those few traders that may still use fax in their communication with consumers.

All the amendments in the proposal are drafted in a te chno logy - neutra l way to ensure that they are not rapidly overtaken by technological developments. Thus, the existing definition of online marketplaces in other EU legislation is being updated to remove specific references to a concrete technology, such as websites and ensure that it is future-proof. Extending Directive 2011/83/EU to digital services not provided for monetary payment would address the current situation of digital transactions for consumers through content-neutra and future-proof rules. This would complement EU data protection rules. Changing Directive 2011/83/EU rules on means of communication will be technologically neutral and therefore future-proof. This is because reference will be made to other means of online communication that enables the consumer to retai n the content of the communication rather than to a specific technol ogy.

• Fundamental rights

The proposal is in accordance with Article 38 of the Charter of Fundamental Rights according to which the EU must ensure a high level of consumer protection. The measures to: (a) improve compliance with consumer protection legislation and (b) modernise the consumer protection rules for online marketplaces and digital services increase the level of consumer protection. The improved individual redress opportunities against unfair commercial practices would also help ensure the right to an effective remedy enshrined in Article 47 of the Charter. Finally, the proposal respects the right to the protection of personal data of individuals enshrined in Article 8 of the Charter and the right of Member States to restrict specific forms

and aspects of off-premises sales to ensure the respect for consumers’ private life is in

accordance with Article 7 of the Charter.

The burden reduction measures for (a) the right of withdrawal, (b) simplification of information requirements and (c) modernisation of the means of communication will contribute to the implementation of Article 16 of the Charter, which guarantees the freedom to conduct a business in accordance with EU law and national laws and practices. At the same time, simplifying information requirements and modernising the means of communication will not result in any substantial reduction of consumer protection. And the measures on the right of withdrawal represent more balanced rights and obligations of traders and consumers.

This is because they will remove unjustified burdens while only affecting a minority of consumers.

4. BUDGETARY IMPLICATIONS

There are no budgetary consequences for the EU budget.

5. OTHERELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements The Commission will evaluate the effectiveness, efficiency, relevance, coherence and EU

12.

added value of this intervention according to the indicators identified in the


Impact

Assessment. These indicators can serve as the basis for the evaluation that should be presented no sooner than 5 years after the entry into application, to ensure that enough data is available after full implementation in all Member States.

Comprehensive statistics on online trade in the EU and more precisely retail online trade are available in the Eurostat database. These could be used as primary sources of data for the evaluation. This will be completed by representative surveys with consumers and retailers in the EU carried out regularly for the Consumer Scoreboards that are published bi-annually. These surveys investigate experiences and perceptions, which are both important factors influencing the behaviour of consumers and businesses in the Single Market. The monitoring will also include a public consultation and targeted surveys with specific groups of stakeholders (consumers, qualified entities, online marketplaces, traders providing digital services without monetary payment). Concerning specifically the business perspective, it will be covered through the retailer survey carried out regularly for the Consumer Conditions Scoreboard as well as targeted surveys to be carried out among online marketplaces and providers of free digital services.

This data collection will also feed into Commissions reporting on the transposition and implementation. In addition, the Commission will remain in close contact with the Member States and with all relevant stakeholders to monitor the effects of the possible legislative act.

To limit the additional admini strati v e burden on Member States and the private sector due to the collection of information used for monitoring, the proposed monitoring indicators rely on existing data sources whenever possible.

Data collection will aim to identify more precisely the extent to which changes in the indicators could be ascribed to the proposal. For example, while giving consumers the same rights throughout the EU should be expected to make them more confident in asserting their rights in cross-border transactions and thus help to reduce consumer detriment, the share of consumers who receive effective remedies will also be influenced by other factors. Such relevant factors are described above under the problem descriptions. The surveys carried out for the Consumer Scoreboards have time series on most indicators, allowing in principle (through statistical analysis) to discern the impact of a particular policy initiative from broader trends.

• Explanatory documents (for directives)

As the proposal introduces specific amendments to four existing directives, Member States should either provide the Commission with the text of the specific amendments to national provisions or, in the absence of such amendments, explain which specific national law provision already implements the amendments provided in the proposal.

• Detailed explanation of the specific provisions of the proposal

Article 1 - Amendments to Directive 2005/29/EC

Article 1 of the proposal amends Directive 2005/29/EC on two main points: it introduces the right to individual remedies for consumers and strengthens the rules on penalties. The proposal also clarifies the application of the existing rules of the Directive regarding hidden

advertising and misleading advertising of ‘dual quality’ products. Finally, the proposal

addresses the issue of national rules concerning specific forms of off-pre mises sales.

As regards individual consumer remedies, a new Article 11a is inserted in Directive 2005/29/EC to require Member States to ensure that certain specific types of contractual and non-contractual remedies for breaches to Directive 2005/29/EC are available under national law. The introduction of rights to individual remedies in that Directive would empower

victims of unfair commercial practices to take action against traders to solve problems created by these traders.

As regards penalties, a list of common, non-exhaustive criteria for assessing the gravity of infringements (except for minor ones) is introduced in Article 13 of the Directive. Enforcement authorities would be required to take these criteria into account when deciding whether to impose penalties and on their level. If the penalty to be imposed is a fine, the authority would be required to take into account, when setting the amount of the fine, the infringing trader’s turnover, net profit as well as any fines imposed for the same infringement in other Member States. In addition, for widespread infringements and widespread infringements with a Union dimension, as defined in the revised CPC Regulation (EU) 2017/2395, Member States will be required to provide in their national law for fines the maximum amount if which should be at least 4% of the infringing trader’s turnover in the Member State or Member States concerned. This means that where national competent authorities co-operating under a CPC coordinated action designate one competent authority to impose a single fine, the maximum fine available in that case should be at least 4% of the trader’s combined turnover in all the Member States concerned.

As regard hidden advertising, consumers using digital applications such as online marketplaces, comparison tools, app stores or search engines expect natural or organic search results based on relevance to their search queries, not on payment by third parties. However, as also the 2016 Guidance paper on Directive 2005/29/EC points out, search results often contain paid placements, where third parties pay for higher ranking, or paid inclusion, where third parties pay to be included in the list of search results. Paid placements and paid inclusions are often not indicated at all, or are only indicated in an ambiguous way not clearly discernible for consumers. The relevant provisions of Directive 2005/29/EC on the prohibition of hidden advertising should therefore be clarified to make it clear that they apply not only to editorial content in media but also to search results in response to the consumer’s online search query.

As regards specific forms of off-premises sales, an amendment to Article 3 of the Directive authorises Member States to adopt provisions to protect the legitimate interests of consumers with regard to aggressive or misleading marketing or selling practices in the context of unsolicited visits by a trader to a consumer's home (in other words, visits which are not made at the request of the consumer, for example, through fixing an appointment with the trader) and with regard to commercial excursions organised by a trader with the aim or effect of promoting or selling products to consumers, where such restrictions are justified on grounds of public policy or the protection of the respect for private life. To ensure full transparency of such measures, Member States will have to notify them to the Commission, which will make such notifications publicly available.

As regards ‘dual quality’ products, an amendment to Article 6(2) of the Directive expressly stipulates that a commercial practice involving the marketing of a product as being identical to the same product marketed in several other Member States, where those products have significantly different composition or characteristics causing or likely to cause the average consumer to take a transactional decision that he would not have taken otherwise, is a misleading commercial practice which competent authorities should assess and address on a case by case basis according to the provisions of the Directive.

Article 2 – Amendments to the Consumer Rights Directive 2011/83/EU

Article 2 of this proposal amends Directive 2011/83/EU on a number of points.

Amendments to Article 2 of Directive 2011/83/EU provide additional definitions of digital content and digital service and the respective contracts for the provision of these products, which are aligned with the definitions in the [Digital Content Directive]. These definitions bring within the scope of application of Directive 2011/83/EU also contracts for the provision of digital services under which the consumer does not pay with money but provides personal data. In line with the [Digital Content proposal for Directive], the definitions of ‘contract for the supply of digital content’ and ‘digital service contract’ clarify that, in the absence of monetary payment, the rights and obligations of Directive 2011/83/EU will not apply where the personal data provided by the consumer is exclusively processed by the trader for supplying the digital content or service or for the trader to comply with legal requirements, and the trader does not process this data for any other purpose. Amendments to Article 2 also introduce a definition of online marketplace which is subject to specific additional pre-contractual information requirements under a new Article 6a.

Article 5 of Directive 2011/83/EU on pre-contractual information requirements for contracts other than off-premises and distance contracts is amended for consistency reasons in order to cover the newly defined digital services alongside the already existing notion of digital content as regards the pre-contractual information requirements about interoperability and functionality.

Article 6 of Directive 2011/83/EU on pre-contractual information requirements for off-premises and distance contracts is amended for consistency reasons in order to cover the newly defined digital services alongside the already existing notion of digital content as regards the pre-contractual information requirements about interoperability and functionality. In addition, Article 6 is amended by removing fax from the list of possible means of communication and enabling traders to use other online means of communication as alternative to the traditional e-mail.

A new Article 6a is inserted in Directive 2011/83/EU providing specific additional pre-contractual information requirements for contracts concluded on online marketplaces, namely: (1) description of the main parameters determining ranking of the different offers, (2) whether the third party offering the product is a trader or not, (3) whether consumer rights stemming from EU consumer law apply to the contract and i if the contract is concluded with a trader, which trader is responsible for ensuring consumer rights stemming from EU consumer law in relation to the contract.

Article 7 of Directive 2011/83/EU setting specific formal requirements for off-premises contracts is amended to specify that the obligation in paragraph 3 on traders to obtain consumer’s express consent for immediate performance of services only applies to services provided against payment. This amendment is necessary in view of the extension of the scope of the Directive to cover also digital services not provided against monetary payment since the obligation of express consent is only relevant in the calculation of the monetary compensation that the consumer must provide to the trader for the use of the services during the right of withdrawal period if the consumer decides to exercise the right of withdrawal.

Article 8 of Directive 2011/83/EU setting specific formal requirements for distance contracts is amended on several points. First, in paragraph 4 a provision is made to exclude the model withdrawal form from the information requirements provided on a means of distance communication used for the conclusion of the contract that allows limited space or time for the provision of the information, including telephone calls. This is necessary because the written model withdrawal form cannot be provided to the consumer by means of the telephone call and it can be impossible to provide in a user friendly way over other means of communication covered by Article 8 i. In these cases, it suffices to make the model

withdrawal form available to the consumer through other means, to include it in the contract confirmation on a durable medium.

such as trader’s website and

described above.

13.

Paragraph 8 is amended in a similar way as Article 7(3)


Article 13 of Directive 2011/83/EU dealing with the trader’s obligations in the event of withdrawal is amended to delete the trader’s obligation to reimburse the consumer even before the trader has received back the returned goods. Consequently, the trader will be always entitled to withhold the reimbursement until the returned goods have arrived and the trader has had a chance to inspect them. References are added to the General Data Protection Regulation and the [Digital Content Directive] as regards the trader’s obligations in respect of the use of the consumer’s data after the termination of the contract.

Article 14 of Directive 2011/83/EU dealing with the obligations of the consumer in the event of withdrawal is amended by removing the right of consumers to return the goods even where those have been used more than necessary to test them subject to the obligation to pay for the diminished value. A provision similar to the respective Digital Content Directive rule is added regarding the consumer’s obligations to refrain from using the digital content or digital services after the termination of the contract. Finally, paragraph 4(b), setting out contractual sanction in the event of trader’s non-respect of the information obligations regarding digital content, is amended for consistency reasons by removing from the list of alternative reasons for this sanction the failure to provide confirmation that consumer has expressly consented and acknowledged the loss of the right of withdrawal in accordance with the exception laid down in Article 16(m). Since Article 14 deals with the consequences of the right of withdrawal, this condition is irrelevant since the express consent and acknowledgement result in effective loss of the right of withdrawal under Article 16(m).

Article 16 dealing with exceptions from the right of withdrawal is amended on several points. First, there is amendment in point (a) to ensure consistency with Article 7(3) and 8(7) as regards the trader’s obligations when consumer wants immediate performance of services. Second, point (m) providing exemption from the right of withdrawal regarding digital content supplied on a tangible medium if the consumer has given prior consent to begin the performance before the expiry of the right of withdrawal period and acknowledged that he thereby loses the right of withdrawal is amended to apply these two conditions only to content provided against payment. This is done in order to ensure consistency with Article 14(4)(b), which provides for a contractual sanction when these requirement are not fulfilled by the trader, namely, the consumer does not have to pay for the digital content consumed. The requirement to obtain consumer’s express consent and acknowledgment is accordingly only relevant for digital content provided against the payment of a price. Finally, a new point (n) is added to exempt from the right of withdrawal goods that the consumer has used more than necessary to test them.

Article 24 of Directive 2011/83/EU on penalties is amended in similar manner as Article 13 on penalties in Directive 2005/29/EC, described above.

Article 3 – Amendments to the Unfair Contract Terms Directive 93/13/EEC

A new Article on penalties is inserted in Directive 93/13/EEC in similar manner as Article 13 on penalties in Directive 2005/29/EC, described above.

Article 4 – Amendments to the Price Indication Directive 98/6/EC

Article 8 on penalties in Directive 98/6/EC is amended in similar manner as Article 13 on penalties in Directive 2005/29/EC, described above.