EU rules on eCommerce ‘counter-productive’

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The EU is in corrective mode on eCommerce after it created a web of burdensome rules in order to inspire more consumer confidence, argues the author of a report examining European rules on online shopping.

Patrick van Eecke, a specialist lawyer who was asked by the European Commission to examine laws on cross-border eCommerce, has come to some damning conclusions on EU laws designed to streamline the way cross-border online shopping is done. 

A recent EU survey on current conditions for both the consumption and sale of online goods across borders concluded Europeans are being turned off the idea by payment difficulties and a lack of trust in online shopping (EURACTIV 23/10/09). 

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

eInvoicing 

Van Eecke presented some of his findings to industry representatives at a Brussels eCommerce summit on Tuesday (16 November). 

Businesses wanting to comply with EU invoicing rules, for example, have to fulfil very specific requirements, one of which is an expensive and tricky electronic signature technology, says the lawyer. 

eInvoicing can vary from country to country and gets trickier for cross-border transactions. In Germany, traders face 30 separate security requirements. 

eMoney 

Van Eecke, who is also a professor at Antwerp University, criticised the EU’s eMoney scheme, which would allow businesses to have their own payment schemes. The scheme would allow customers to have an account with an airline, for example, which can be used to pay for services from other retailers. 

But the scheme stumbled on a fundamental flaw this year when the original law defined distributors of eMoney exclusively as financial institutions which provide credit. 

These definitions, which were revised on 16 September, would, for example, prevent airlines from selling flights and effectively turn them into banks, van Eecke argued. 

Secondly, businesses complain that the payment technology is expensive. 

Japan has long outdone the EU in this respect, with over 200 Japanese businesses having implemented eMoney schemes. 

The success of eMoney in Japan, according to the lawyer, comes from the fact that the country monitored its progress before imposing regulations. 

Europe could pioneer new laws on eCommerce but EU legislators have been getting cold feet on making bolder steps, specialist lawyer Patrick van Eecke argues.  The Internet's usefulness could be extended to more businesses such as electronic contracts on real estate and family law, he added. 

But MEPs should focus on data protection, not the user's perceived entitlements, before drafting new laws on ecommerce, said UK Conservative MEP Malcolm Harbour, who chairs the European Parliament's committee on the internal market and consumer protection, in response to van Eecke's analysis. 

Harbour believes that more harmonised rules on eCommerce would arrive "by the backdoor" once businesses feel the competitive pressure from a pending Consumer Rights Directive. The awaited directive would merge four existing proposals and is due to be adopted by the European Council before the end of 2009. 

At present, the contractual rights of EU consumers are set out in four separate directives on unfair contract terms, sales and guarantees, distance 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. 

  • December 2009: Council expected to adopt conclusions on Consumer Rights Directive. 
  • 2010: Publication of final study from online commerce roundtable.

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