EU moves to boost online shopping

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The European Commission will present new legislation today (8 October) aimed at making it easier for consumers to shop on the Internet and on the high street alike. But the proposals received a lukewarm reception from consumer organisations for “falling short of expectations”.

The proposed Consumer Rights Directive, details of which have been seen by EURACTIV, will be unveiled by EU Consumer Affairs Commissioner Meglena Kuneva later today. 

Based on the assertion that “the reality today is that the EU-wide retail market does not yet exist even when online cross-border shopping should be practically costless,” the directive aims to “boost consumer confidence and at the same time cut red tape which is holding back business within national borders, denying consumers more choice”. 

It seeks to do so by guaranteeing them “clear information” on price and extra charges before signing contracts, and also sets out consumer rights on returns, refunds, repairs and unfair contracts. 

150 million EU citizens regularly shop over the Internet, but only 30 million Europeans (7% of the population) do so across borders, according to Commission figures. “Many people are just not aware of the opportunities that are out there if they shop around online,” laments the EU executive, which found that 37% of EU citizens feel more confident shopping domestically. 

“The new rules are designed to strengthen protection and close the loopholes in key areas that are undermining consumer trust,” said Commissioner Kuneva. She stressed that an “EU-wide safety net of rights” was required to give consumers “the security they need to shop around with peace of mind” and fulfil the single market’s potential to “deliver a lot more choice and opportunities for consumers”. 

Indeed, while the Commission expects revenue from online sales to hit €291 billion in 2013, it estimates that it will only reach €128 billion in 2008. Only €24 billion-worth of these transactions will take place across borders this year, it estimates, while just one in five EU retailers sells beyond national boundaries. 

The directive concerns business-to-consumer sales contracts for goods and services and specifically covers: 

  • Pre-contractual information: It obliges traders provide the consumer with information on product characteristics, their geographical location and identity and the final price – inclusive of all tax and shipping charges – before purchase. 
  • Delivery rules: For the first time at EU level, it gives the trader a maximum of 30 days to deliver the goods to the consumer. It also makes the trader responsible for loss or deterioration of the product during delivery and gives the consumer the right to a refund for late or non-delivery. After the 30 days have expired, the consumer can be reimbursed within seven days. 
  • ‘Cooling off’ period for distance sales, including via the Internet: It gives consumers throughout the EU a period of 14 days after receipt of the product to change their mind, extended to three months if the trader fails to provide adequate information. 
  • Repairs, replacements and guarantees: It harmonises the remedies available to consumers who have received faulty products. Provided that consumers inform sellers of defects within two months, they may ask for a repair or replacement. 
  • New selling technologies: The directive draws up provisions on sales via mobile phones, for example, where the limited screen size makes it “difficult to comply with existing information obligations”. 

Unfair contract terms 

The directive creates a new ‘black list‘ of contract terms which are prohibited throughout the EU. It prevents the trader from alter the terms of the contract without “a valid specified reason,” for example, as well as protecting traders from mistakes made by agents. 

A ‘grey list‘ of terms deemed unfair unless the trader proves otherwise includes such practices as automatically renewing a subscription contract “where the consumer does not indicate otherwise”. It also forbids energy firms from increasing the price agreed with the consumer upon signing of the contract “without giving the consumer the right to terminate” it. 

The directive must still be approved by MEPs and national governments alike before it can enter into force. 

"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," said EU Consumer Affairs Commissioner Meglena Kuneva

The new directive "guarantees consumers clear information on price and additional charges and fees before they sign a contract" and "strengthen consumer protection against late delivery and non-delivery," the European Commission further stated. 

But Nuria Rodriguez, a legal officer at European consumers' organisation BEUC, told EURACTIV that the proposed directive "falls short of expectations on a large number of issues," saying BEUC would seek to improve the situation for consumers. "Introducing joint liability between the producer of the product and the trader would have improved things much more." 

"BEUC supported the principle of minimum harmonisation, but the directive harmonises everything to the maximum level while providing a low level of protection for the consumer," she said, lamenting that the proposal was "not very well thought out". 

Regarding the directive's focus on online transactions, Rodriguez warned that "there are many more aspects to cross-border shopping than this".

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 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 new Consumer Rights Directive seeks to simplify this by merging the existing EU consumer rights directives into one set of rules. It comes against a background of deteriorating purchasing power and increased budgetary pressure on EU households as the credit crunch which began in the US last year makes its presence felt on European shores (EURACTIV 07/10/08). 

  • The Consumer Rights Directive must be approved by the plenary session of the European Parliament and national governments via the European Council before becoming law.

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