Parliament set to pass new consumer rights bill into law

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Consumers and businesses alike should reap the benefits of new consumer rights legislation in Europe, with years of negotiations set to conclude with the approval by the European Parliament on Thursday (23 June) of the EU's Consumer Rights Directive.  

Last week (16 June), the Parliament's internal market and consumer protection (IMCO) committee backed at first reading a compromise agreement on the draft law reached on 6 June between representatives of all three EU institutions, paving the way for this week's first-reading vote in plenary.

'Win-win' situation for businesses, consumers

"Consumers and businesses will equally win. We are a big step closer to a truly common internal market in Europe," said German centre-right MEP Andreas Schwab (European People's Party), who is steering the directive through the Parliament, ahead of the vote.  

Describing the directive as "a good compromise between necessary consumer rights and justified business interests," Schwab said it would serve as an example of where "more Europe" benefits shoppers and traders alike.

Brussels has been wrestling with the legislation since it was first tabled by the European Commission back in 2008 (see ‘Background').

"More safety for consumers shopping online and common rules for businesses – these are the headlines of the political agreement between the Parliament and the Council on the Consumer Rights Directive," said Schwab.

An EU-wide right for consumers to change their minds about purchase decisions within two weeks and clearer pricing rules for Internet sales were among changes made to the draft legislation by representatives of the European Parliament, the European Commission and member states in trialogue talks earlier this month.

That deal was backed unanimously by the IMCO committee with 28 votes in favour, none against and three abstentions.

Consumer groups satisfied

Consumer groups are pleased that the draft being put to vote will not water down existing legislation in force in EU countries.

"We welcome the fact that legislators have listened to Europe's consumers […] The directive most probably will not cause any significant reduction of consumer rights in EU member states," said Monique Goyens, director-general of European consumers' group BEUC.

But Goyens did express concern over some losses, for example in relation to a shorter period of withdrawal in case consumers are not informed of their rights or as regards consumers having to bear the cost of returning goods in case of withdrawal.

"This directive has taken many hours of arduous negotiation but finally we have reached an agreement that is beneficial to consumers and provides clarity to businesses," said IMCO committee chair Malcolm Harbour MEP, a member of the European Conservatives and Reformists (ECR) group.

"Both shoppers and businesses should be given every encouragement to take advantage of the single market and this directive will significantly assist them," Harbour predicted.

Back in March, an updated version of the EU's Consumer Rights Directive was approved by the Parliament, but MEPs postponed adopting a final position on the new law to buy more time to reach agreement with member states on the most controversial issues. 

The deal to be approved on Thursday contains a 14-day EU-wide withdrawal period for distance and off-premises sales during which consumers may change their minds. If for any reason they regret having made the purchase, they may return it.

Should sellers fail to inform consumers of their withdrawal rights, then the period of withdrawal extends to one year.

The price paid for the good must be refunded to the consumer within 14 days of withdrawal. Moreover, all goods ordered at a distance must be delivered to the buyer within 30 days: otherwise the consumer will have the right to cancel the purchase.

Consumers must be clearly informed about the costs of returning any unwanted goods at the time of purchase so that they can choose the online retailer with the most favourable conditions.

Digital goods are exempt from the withdrawal rules.

Legislation for the digital age

The directive sets out measures to protect consumers from cost traps and contains new rules on contracts concluded electronically. It will also introduce harmonised rules on pre-contractual information to the consumer, even for on-premises contracts.

The trader is responsible for any damage or loss of the good during delivery, negotiators agreed, while the identity and address of the seller must always be clear. 

Lawmakers hope that the directive will put an end to hidden charges and confusion over who consumers are actually buying from, especially when shopping online. Pre-ticked boxes on websites will be banned and traders will no longer be able to charge consumers more for paying by credit card.

"Currently, buying an item from abroad on the Internet can serve up complications or risk for the consumer, and this seed of doubt often puts people off," said Polish MEP Adam Bielan, spokesman on the IMCO committee for the ECR group.

"Many consumers still like to see and hold the products […] they are buying. Now they will have clear rights set out in law to return goods, hopefully at only a small cost," Bielan added.  

Given its unanimous adoption by the committee and the deal struck between all the EU institutions, formal approval by the European Parliament is expected to proceed smoothly.

Hungarian Minister of State for Strategic Affairs Zoltán Cséfalvay last week urged the plenary to adopt the directive at first reading. "This legislation will put consumers more in control of their purchases, protect consumers from unfair practices, enhance consumer choice and increase competition," he said.

Once backed by MEPs in plenary, the final text must still be formally approved by the Council of Ministers – timetabled for July – but given that inter-institutional negotiations have already been concluded successfully, this backing should be a formality.

Once published in the Official Journal of EU law, tentatively timetabled for October, member states will have two years to implement the legislation. 

Andrew Williams

"In times when we are looking for sources of economic growth and job creation, helping to unlock cross-border trade and distance selling can provide a critical contribution to our goals," said Hungarian Minister of State for Strategic Affairs Zoltán Cséfalvay.

"The new EU Consumer Rights Directive will strengthen consumer rights by outlawing Internet fraudsters who trick people into paying for horoscopes or recipes that appear to be offered for free. Shoppers will no longer be trapped into buying unwanted travel insurance or car rentals when purchasing a ticket online. And everyone will have 14 days if they wish to return good bought at a distance, whether by Internet, post or phone," said EU Justice Commissioner Viviane Reding.

"The European Commission will help to ensure that the new rules are implemented swiftly in all member states so that consumers across Europe can have more confidence when shopping, whether online or offline," Reding added.

Polish MEP Adam Bielan, European Conservatives and Reformists (ECR) group spokesman on the IMCO committee, said the Consumer Rights Directive "will give people confidence to shop across the EU's single market safe in the knowledge that their basic rights as consumers are protected".

"The Internet has given shoppers so much more choice but legislation has not kept up. Businesses will now be able to offer their goods and services right across the single market with a much clearer impression of the legal requirements of them," Bielan added.

"We much needed to bring the EU's consumer protection laws into the digital age. The Internet's potential for transforming our shopping experience is only beginning to be realised. With this law we hope to harness the potential of the Internet in further completing the single market," said UK Conservative MEP Malcolm Harbour (ECR), chair of the Parliament's IMCO committee.

French MEP Robert Rochefort (Alliance of Liberals and Democrats for Europe) said "for distance contracts concluded by electronic means (online sales), we foresee a system that ensures that the order corresponds to the consumer's wish (principal characteristics of the good or service, total price, duration if applicable) and that the consumer may check all that before the final validation".

"With these new rules traders must make consumers clearly aware of the total cost, including all additional costs," added Rochefort, who is ALDE shadow rapporteur on the file.

UK Liberal Democrat MEP Diana Wallis, responsible for drafting the opinion of the Parliament's legal committee on the file, said "from a consumer perspective it was important that the Parliament insisted on maintaining the broad ban on pre-ticked boxes, which will also apply to the transport sector". 

"Businesses too will also benefit from greater certainty concerning unfair contract terms in use in other EU member states," Wallis added.

"We are relieved to see that legislators have managed to steer this directive away from its original destination of simply breaking down barriers for business and more towards securing and improving protections for consumers," said Monique Goyens, director-general of European consumers' organisation BEUC.

"We do, however, hold concerns as to some losses, for example in relation to a shorter period of withdrawal in case the consumer was not informed about his rights or as regards' the consumers' bearing of return costs of goods in case of withdrawal," Goyens added.

"Instead of rushing further towards an ‘optional instrument' for European contract law, which is not a good option for consumers, the Commission should now first assess the impact of this directive, which presents a major step further in the approximation of consumer law, particularly relevant for e-commerce transactions. It should then open a genuine discussion with stakeholders of what is needed next," she said.

UEAPME, an association representing SMEs in the EU, warned that the 14-day withdrawal right did not go far enough to take into account the specific needs of small businesses, particularly in respect of urgent repairs and maintenance. 

The proposal for a new Consumer Rights Directive, first tabled by the European Commission in October 2008, seeks to merge the existing four EU consumer rights directives into one set of fully harmonised rules (EURACTIV 08/10/08; EURACTIV 10/10/08).

The proposed directive concerns business-to-consumer (B2C) sales contracts for goods and services and specifically covers issues such as pre-contractual information, delivery rules, 'cooling off' periods for distance sales, repairs, replacements and guarantees as well as new selling technologies.

Just before Christmas, the Belgian EU Presidency angered consumer groups by deleting the most contentious parts of the draft Consumer Rights Directive, including chapters on unfair contract terms and legal guarantees or consumers in the event that a trader breaches a contract, in order to secure a deal on the law before the end of its term at the EU helm.

Belgium's move was formally endorsed by governments on 24 January.

  • July 2011: Formal approval of Consumer Rights Directive by Council of Ministers.
  • Oct. 2011: Tentative date for publication of Consumer Rights Directive in Official Journal of EU law.
  • Before end 2013: Deadline by which member states must have fully implemented Consumer Rights Directive. 

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