Consumers turned off by e-shopping, EU report shows

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Online cross-border shopping is still too burdensome for both consumers and traders, an EU report found yesterday (22 October).

The case for savings in cross-border shopping is an easy one to make: the wider the net, the more likely a consumer is to find a bargain. But current conditions for both the consumption and the sale of online goods across borders are turning Europeans off the idea, according to an EU report. 

60% of online purchases failed in an EU-backed test of 11,000 separate orders on cameras, CDs, books and clothes. 

Shoppers participating in the EU survey found that transactions failed because traders refused to sell to the consumer’s country, largely due to technical problems or because a particular payment option was not available. 

The internal market is not working, UK Conservative MEP Malcolm Harbour said after reading the report, which showed that cross-border sales stayed flat at 7% while overall online sales rose from 27% to 33% in two years (2006-2008). 

EU pro-consumer priorities

A single set of rights for the consumer was the promise made by Meglena Kuneva, EU commissioner for consumer affairs, after presenting the report on Thursday (22 October). 

“The wind is blowing the consumers’ way,” the commissioner said. 

The European Commission tabled a proposal for a new Consumer Rights Directive in 2008. Kuneva’s intention is to merge four existing directives into a single rulebook for retailers in the internal market. 

The commissioner said the priority should be to tackle discrepancies in consumer contracts between countries. Traders worry new EU rules would create yet more compliance costs for business but homogenous contract rules are a way to avoid such costs, Kuneva said. 

She will be seeking implementation of the current Services Directive before the end of 2009, which should prevent traders from discriminating against shoppers on national grounds. 

Predominantly online retailers discriminate against shoppers from Belgium, Bulgaria, Latvia, Malta and Romania, according to the report. 

Retailers face compliance maze

On the other side of the spectrum, retailers have to wade through a maze of compliance procedures and negotiate business contracts to carry out cross-border transactions online. 

Retailers still find their sales inhibited by suppliers trying to maintain higher prices for their products by limiting sales to one group or country. 

An EU law on vertical restraint – whereby a supplier can limit a trader from selling to one specific group of consumers – has yielded some results, but the abuse of these rules limits traders to sell to a wider net of consumers, according to eBay. 

“This practice compartmentalises the EU back into 27 member states,” Stefan Krawczyk, eBay’s director of government relations in Brussels told EURACTIV, urging the EU to implement the report’s recommendations as soon as possible. 

Filing VAT invoices and complying to different tax rules of different countries was also flagged as a reason traders either did not have more online sales or were reluctant to boost cross-border trade. 

Currently online traders register for VAT in each country where their sales exceed a certain threshold, with the added burden that the thresholds and tax rates vary between countries. To that end, Kuneva proposed an EU-wide threshold of 150,000 euros.

At present, the contractual rights of EU consumers are set out in four separate directives on unfair contract termssales and guaranteesdistance selling and doorstep selling respectively. These date from the 1980s and 1990s, while many EU countries have since adopted stricter rules themselves. 

By the European Commission's own admission, this has led to "a patchwork of laws" and "a maze of different rights and practices […] which are as unclear to consumers as they are confusing for business". 

The EU tabled a merger of these proposals in 2008 called the Consumer Rights Directive. The new directive seeks to simplify this by merging the existing EU consumer rights directives into one set of rules. 

A clear majority of stakeholders are in favour of increased legal harmonisation and a horizontal legislative instrument on eCommerce, according to the results of a public consultation launched by the Commission. 

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