Consumer groups are broadly satisfied with new consumer rights legislation in Europe, but SMEs fear the law will increase administrative burdens on small traders. Governments have two years to implement the EU's new Consumer Rights Directive after years of negotiations concluded with its passing into law last week by the European Parliament.
An EU-wide right for consumers to change their minds about purchase decisions within two weeks and clearer rules for Internet sales, including requirements to give buyers precise details on the total price, the exact goods ordered and the trader's contact details were among the highlights of the new law.
'Cost traps' on the Internet whereby customers are misled into believing that offers are free are also outlawed by the directive.
"We wanted to regulate mainly off-premises and distance contracts such as online trading, as this is where the most cross-border sales take place," said German centre-right MEP Andreas Schwab, the European Parliament's chief negotiator on the directive.
The law was backed last Thursday (23 June) with 615 votes in favour and 16 against amid 21 abstentions.
Once it has been formally approved by the Council of Ministers in July – seen as a procedural step given that an inter-institutional deal on the dossier has already been struck – governments will have two years to transpose the legislation into national law.
Lawmakers have been wrestling with the legislation since it was first tabled by the European Commission back in 2008 (see 'Background').
Prior to last week's plenary vote, the Parliament's internal market and consumer protection (IMCO) committee had unanimously backed at first reading a compromise agreement on the draft law reached during trialogue talks between representatives of all three EU institutions, paving the way for last week's first-reading vote in plenary.
Lawmakers hope that the new rules will strengthen protection for online shoppers, particularly by specifying rules on delivery and digital downloads, whilst cutting red tape for small and medium-sized businesses (SMEs).
Brussels has long identified outdated EU consumer rights legislation – which predates the digital revolution – as a major hindrance to cross-border online shopping in the EU, while business cite legislative differences between EU countries as their main reason for not selling across borders.
Policymakers hope the new rules will address shoppers' concerns and give SMEs the legal certainty they need to sell to customers in other countries.
But observers warned that the success of the directive would depend on the ability and willingness of EU nations to assimilate it into national legislation.
"The way in which member states […] transpose the new rules into their national laws will be key to the directive's success in terms of unleashing the cross-border potential of distance selling on and offline," said Suzanne Czech, secretary-general of EMOTA, the association representing e-commerce and distance selling at EU level.
New law 'detrimental' and 'burdensome' for SMEs
Small businesses fear the new Consumer Rights Directive will increase the administrative burden on SMEs, warning that the final text fails to strike the right balance between shoppers' and traders' interests.
"The disappointing compromise rubber-stamped by the Parliament's plenary […] will increase administrative burdens for small traders without striking a fair balance between the needs of consumers and those of businesses," complained Andrea Benassi, secretary-general of UEAPME, the voice of SMEs in Europe.
"The text goes blatantly against the 'Think Small First' principle and will do precious little to increase SMEs' confidence, especially at this time of crisis," he added.
He was echoed by Arnaldo Abruzzini, secretary-general of Eurochambres, who warned that the new directive would be "detrimental" to millions of SMEs throughout Europe, producing uncertainty and hugely disproportionate administrative costs in return for "little or no gain for consumers".
Consumer groups, however, were broadly satisfied with the compromise deal voted into law last week.
"When first presented, this law was entirely geared to reducing obstacles for businesses and would have deprived European consumers of many precious national rights," said Monique Goyens, director-general of European consumers' organisation BEUC.
"Fortunately, the European Parliament and Council have listened to consumer organisations and any significant reduction of consumer rights will now be avoided. This law is a tough compromise and we regret that some national rules will be overruled, but on the whole there will be progress for consumers," Goyens added.
Strengthening digital rights
The new rules stipulate that traders of digital goods must reveal usage restrictions on software, music and video files prior to purchase.
Excessive charges for different payment means will also be scrapped, particularly when paying by credit card online.
Calling company helplines will also become cheaper as the directive bars traders from using premium-rate phone lines for customer services.
With years of negotiations on the controversial directive now having drawn to a close, the ball now lies in the court of member states to ensure that consumers will genuinely benefit from the new rules.