European Law Report - Consumer confidence
The EU authorities are striving to confront the current credit crunch which is making its presence felt in Europe by using all means possible. Bearing in mind the ongoing turmoil in financial markets, the European Commission recently deemed it...
The EU authorities are striving to confront the current credit crunch which is making its presence felt in Europe by using all means possible. Bearing in mind the ongoing turmoil in financial markets, the European Commission recently deemed it important to seek to reaffirm consumers' confidence whether shopping domestically or across borders. We must admit that it is now indispensable, more than ever before, to enable consumers to compare prices and to shop around to get the best value for their money. With this objective in mind, the Commission has published a new proposal which seeks to make it easier for consumers to shop around whether on the internet or otherwise.
When it becomes low, this proposed directive will oust four laws currently regulating consumer rights. It will simplify matters for consumers and traders alike by setting out harmonised rights in one set of rules. The directive covers business-to-consumer sales contracts for goods and services. Generally all contracts are covered, that is, purchases made in a shop, at a distance or away from business premises.
It sets out a number of obligations to be fulfilled by traders. In particular, it obliges traders to provide the consumer with an amount of information before purchase. Such information must relate to product characteristics, geographical location and identity and the final price which must be inclusive of all tax and shipping charges.
For the first time ever at an EU level, the proposed law sets out delivery rules in the sense that 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 will have a right to a refund as soon as possible and at any rate no later than seven days from the scheduled date of delivery.
EU consumers are also provided with a "cooling-off period" for distance sales, including via the internet. Consumers are allotted a period of 14 days after receipt of the product to change their minds. This period is extended to three months if the trader fails to provide adequate information. This new proposal also seeks to harmonise the remedies which are available to consumers insofar as repairs, replacements and guarantees are concerned. New selling technologies are also catered for. To this end, the directive sets out provisions on sales via mobile phones, such as where the limited screen size makes it difficult to comply with existing information obligations.
The proposed law creates a new black list of unfair contract terms which are prohibited across the EU in all cases.
For example, terms enabling the trader to unilaterally alter the terms of the contract, including the characteristics of the product, without a valid specified reason are strictly prohibited. An EU-wide grey list of contract terms deemed to be unfair if the trader does not prove the contrary is also included in the proposed directive.
The Commission is envisaging that it is not only the consumer that stands to gain from this legislative overhaul. Considering the fact that traders will be able to use the same contract terms in all EU countries even if trading at a distance, the Commission is estimating that compliance costs for traders will reduce drastically.
Statistics go to show that although 150 million EU citizens regularly shop over the internet, only 30 million Europeans, that is, 7 per cent of the population, do so across borders. Internet ensures that consumers can find, in a few clicks, the product they want at the best price possible.
At a time when European households are facing pressure on their budgets and watching their purchasing power deteriorate, this is a choice which we simply cannot afford to ignore.
However, it stands to reason that consumers will take the plunge only if they have the peace of mind that by shopping online across borders they still get to enjoy rights which are equivalent to those enjoyed domestically. An unharmonised regulatory system has also been identified by traders as being one of the main obstacles to cross-border trade to date. These new rules may indeed be seen as a much-needed boost to consumer confidence at a time when every euro stands to be counted!
Dr Vella Cardona is a practising lawyer and a freelance consultant in EU, intellectual property, consumer protection and competition law. She is also a visiting lecturer at the University of Malta.
When it becomes low, this proposed directive will oust four laws currently regulating consumer rights. It will simplify matters for consumers and traders alike by setting out harmonised rights in one set of rules. The directive covers business-to-consumer sales contracts for goods and services. Generally all contracts are covered, that is, purchases made in a shop, at a distance or away from business premises.
It sets out a number of obligations to be fulfilled by traders. In particular, it obliges traders to provide the consumer with an amount of information before purchase. Such information must relate to product characteristics, geographical location and identity and the final price which must be inclusive of all tax and shipping charges.
For the first time ever at an EU level, the proposed law sets out delivery rules in the sense that 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 will have a right to a refund as soon as possible and at any rate no later than seven days from the scheduled date of delivery.
EU consumers are also provided with a "cooling-off period" for distance sales, including via the internet. Consumers are allotted a period of 14 days after receipt of the product to change their minds. This period is extended to three months if the trader fails to provide adequate information. This new proposal also seeks to harmonise the remedies which are available to consumers insofar as repairs, replacements and guarantees are concerned. New selling technologies are also catered for. To this end, the directive sets out provisions on sales via mobile phones, such as where the limited screen size makes it difficult to comply with existing information obligations.
The proposed law creates a new black list of unfair contract terms which are prohibited across the EU in all cases.
For example, terms enabling the trader to unilaterally alter the terms of the contract, including the characteristics of the product, without a valid specified reason are strictly prohibited. An EU-wide grey list of contract terms deemed to be unfair if the trader does not prove the contrary is also included in the proposed directive.
The Commission is envisaging that it is not only the consumer that stands to gain from this legislative overhaul. Considering the fact that traders will be able to use the same contract terms in all EU countries even if trading at a distance, the Commission is estimating that compliance costs for traders will reduce drastically.
Statistics go to show that although 150 million EU citizens regularly shop over the internet, only 30 million Europeans, that is, 7 per cent of the population, do so across borders. Internet ensures that consumers can find, in a few clicks, the product they want at the best price possible.
At a time when European households are facing pressure on their budgets and watching their purchasing power deteriorate, this is a choice which we simply cannot afford to ignore.
However, it stands to reason that consumers will take the plunge only if they have the peace of mind that by shopping online across borders they still get to enjoy rights which are equivalent to those enjoyed domestically. An unharmonised regulatory system has also been identified by traders as being one of the main obstacles to cross-border trade to date. These new rules may indeed be seen as a much-needed boost to consumer confidence at a time when every euro stands to be counted!
Dr Vella Cardona is a practising lawyer and a freelance consultant in EU, intellectual property, consumer protection and competition law. She is also a visiting lecturer at the University of Malta.