New Deal for Consumers
The “New Deal for Consumers” is an EU proposal to strengthen consumer rights. The New Deal comprises of two proposed EU Directives on:
- better Enforcement and Modernisation of EU consumer protection rules; and
- representative actions for the protection of the collective interests of consumers.
Some of the key effects of the New Deal for Consumers will be to:
- strengthen consumer rights online;
- give consumers the tools to enforce their rights and get compensation;
- clarify that national authorities can address misleading commercial practice of dual quality consumer products; and
- introduce effective penalties for violations of EU consumer law.
The Enforcement and Modernisation Directive 2019/2161 (Omnibus Directive) will make substantive amendments to four existing pieces of consumer protection legislation:
- the Unfair Commercial Practices Directive (2005/29/EC);
- the Consumer Rights Directive (2011/83/EU);
- the Unfair Contract Terms Directive (93/13/EEC); and
- the Price Indications Directive (1998/6/EU).
The main focus of the changes is to improve transparency and outcomes for consumers as they buy goods and services online. Different protections will apply depending on whether the consumer purchases from a seller who is operating as a trader or a private seller. The Omnibus Directive also seeks to identify and regulate fake customer reviews and hidden paid-for advertising.
The most significant feature of the Omnibus Directive is the increased enforcement for breaches of consumer law. The Omnibus Directive seeks to impose fines of not less than 4% of the trader’s annual turnover, or at least €2 million when information on turnover cannot be obtained.
The criteria for determining the appropriate level of fines is similar to that under the GDPR and focuses on:
- the nature, gravity, scale and duration of the infringement;
- whether there has been any action to mitigate damage;
- any financial gains or losses by the seller from infringements of consumer law; and
- whether the trader has any previous allegations made against them.
The Directives are due to be applied from 1 January 2022 and EU Member States will have a two-year period to transpose the requirements into national law. The deadline for the publication of national measures is 28 November 2021. The provisions will apply in each member state from 22 May 2022.
The Goods Package
The “Goods Package” will make it easier to sell a product in another EU Member State and will strengthen the controls by national authorities to ensure that products are safe and comply with EU rules. The Goods Package is comprised of the following regulations:
- Regulation on the Mutual Recognition of Goods (EU) 2019/515
This Regulation is applicable since 19 April 2020.
The objective of this Regulation is to improve the application of the principle of mutual recognition, and therefore ensure that goods lawfully marketed in one EU Member State can be sold in any other EU Member State, as long as they are safe and respect the public interest.
- Regulation on Market Surveillance and Compliance of Products (EU) 2019/1020
One of the core obligations of the new Regulation provides that a product may be placed on the EU market only if there is an economic operator established in the EU who has certain responsibilities under the Regulation.
The implications for non-EU based sellers are two-fold:
- For non-EU based sellers, the full rigours of EU Product Safety rules will apply; and
- For non-EU based sellers who operate as a platform or online interface, there will be obligations to respond to market surveillance authorities’ requests to remove content on the platform.
The Regulation is applicable from 16 July 2021 for the most part, with Articles 29, 30, 31, 32, 33 and 36, establishing the Union Product Compliance Network, to take effect from 1 January 2021.
The Consumer Protection Cooperation Regulation
The Consumer Protection Cooperation Regulation (EU) 2017/2394 came into effect on 17 January 2020. The Regulation aims to provide more stringent policing of cross-border infringements by national consumer protection authorities tasked with ensuring compliance with consumer protection law. The enhanced enforcement powers of the consumer authorities will lead to a coordinated approach across the European Union, which may impact the way in which online traders respond to consumer law infringements.
Some of the key elements are:
- Traders can be required to provide the consumer authorities with access to documents, supply information and have the consumer authorities carry out on-site inspections;
- The consumer authorities will have a new investigatory power to purchase goods or services as a test purchase under the guise of a mystery shopper;
- A competent authority in one EU Member State can request that an authority in another EU Member State take enforcement measures; and
- Member States are obliged to provide mutual assistance and greater powers are given to national authorities for the coordination of cross-border enforcement action.
The Single-Use Plastics Directive
The Single-Use Plastics Directive (EU) 2019/904 bans certain single-use plastic products as well as imposing measures to reduce consumption, extend producer responsibility and design requirements for beverage containers. Some of the key elements of the Single-Use Plastics Directive are:
- Certain prohibited products for which alternatives are available
- Measures to reduce consumption
- Labelling requirements
- Separate recycling collections for single-use plastic bottles
- Extended producer responsibility for supplementary costs associated with certain single-use plastic products
EU Member States must bring laws, regulations, and administrative provisions necessary to comply with this Directive into force by 3 July 2021. This timeframe may be extended to 3 July 2024 for the adoption of measures for certain single-use beverage containers that have caps and lids made of plastic, that they may only be placed on the market if the caps and lids remain attached to the containers during the products’ intended use storage.
The Accessibility Directive
The Accessibility Requirements for Products and Services Directive (EU) 2019/882 introduces accessibility requirements for specific products and services such as phones, computers, payment terminals, banking services and e-commerce services. The key requirements include:
- Consumer products must be capable of being operated by persons with disabilities and have packaging, installation instructions and other product information that is accessible
- Manufacturers of products must demonstrate compliance with the applicable accessibility requirements by drawing up an EU declaration of conformity and affixing a CE mark
- Websites and apps must be easily operable and understandable for persons with disabilities and include accessibility information made available by more than one sensory channel
EU Member States must bring laws, regulations, and administrative provisions necessary to comply with this Directive into force by 28 June 2025.
New Measures Under the Ecodesign Directive
In October 2019, the European Commission adopted new legislative measures under the Ecodesign Directive (2009/125/EC) for energy-related products such as refrigerators, washing machines, dishwashers and televisions. These measures have the aim of increasing the lifecycle of products.
Manufacturers, importers and authorised representatives of these types of products will have various responsibilities under these new measures including the repairability of products, access to repair and maintenance information for certain appliances and the availability of spare parts. The legislation also regulates, for the first time, welding equipment and fridges with a direct sales function.
Digital Content Directive
This Directive will update consumer law for the sale of digital services and digital content.
It will apply to the provision of digital content by a trader for which the consumer pays a price, which could be in the form of providing personal data where it goes beyond the amount of personal data necessary to provide the services.
The concept of digital content captures games, e-books, software applications and films, and digital services which includes streaming and social media services. Goods with digital elements such as smart fridges and electronic will not be within the scope of the Digital Content Directive, and will instead be within the scope of the new Sale of Goods Directive.
Some other notable exclusions include translation services, healthcare, but not healthcare apps, and gambling.
The digital content/service being provided must comply with both subjective criteria, e.g. description and quality in accordance with the contract, and objective criteria, e.g. the good must be fit for the purpose for which it would ordinarily be used.
The Directive is due to come into effect from 1 January 2022.
Sale of Goods Directive
The Sale of Goods Directive (EU) 2019/771 will operate in parallel with the Digital Content Directive, to ensure that there is no gap in consumer law protection where a product has digital elements. The Sale of Goods Directive applies to all contracts for the sale of goods apart from those that fall within the scope of the Digital Content Directive.
As with the Digital Content Directive, the Sale of Goods Directive sets out both subjective and objective criteria for conformity, which must be complied with.
A key feature of the Directive is the remedies available to the consumer. In the event of a lack of conformity, consumers are entitled to a repair, replacement, price reduction or even termination of the contract in certain circumstances.
The consumer also has a two-year guarantee to remedy any defects in goods which are discovered after delivery, though Member States are free to introduce longer liability periods, or indeed shorter periods in the case of second-hand goods.
The deadline for Member States to implement this Directive is 1 July 2021, and the rules will apply to all relevant contracts from 1 January 2022.
Online Platform Regulation
The Online Platform Regulation 2019/1150 (the P2B Regulation) came into effect on 12 July 2020 and will apply in a business-to-business context relating to online platforms and traders. However, this Regulation aims to protect traders that sell online to consumers.
The broad definition attributed to ‘online intermediation services’ means that many e-commerce market places, auction websites, App stores, social media sites etc will be within the scope of the P2B Regulation. It imposes a set of obligations on online platforms for providing updates on changes to terms and conditions in clear language to business users that are easily accessible on a durable medium. It bans certain unfair practices, such as making changes to terms and conditions without good reason or notice, and requires online platforms to fulfil transparency obligations in relation to the parameters for the ranking of search results. In the case where an online platform decides to suspend or terminate an account, it must provide the business user with a statement of reasons within the timeframe specified. The platform will also be required to publish information on its internal complaint handling process and to display details of at least two independent mediators and be willing to engage in mediation in the event of a dispute with a business user.
The P2B Regulation will apply to those which have their place of establishment or residence within the EU and that, through their platform, offers goods or services to customers that are located within the EU. It does not apply where sellers are not established in the EU or where the platform is used to offer goods exclusively to customers located outside of the EU, or to persons who are not consumers.
For more information and expert guidance in navigating these challenging issues, contact a member of our Technology Law team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.