The European Commission (the Commission) launched its ‘New Consumer Agenda’ on 13 November 2020 (the Agenda), to further empower European consumers in the green economy and the digital transformation of the single market. This is an ambitious action plan to reform consumer law, which covers the five-year period 2021 – 2025, and addresses five priority areas:
1. Green Transition
2. Digital Transformation
3. Effective Enforcement and Redress
4. Protecting Vulnerable Consumer Groups
5. Consumer Protection in the Global Context
The Agenda was drawn up against the backdrop of the ongoing COVID-19 pandemic. The pandemic presented challenges for governments across the EU. Simultaneously, it has presented regulators with an opportunity to tackle scams, sharp practices and misleading claims on an urgent basis, and to adapt consumer enforcement to our increasingly online consumption patterns.
The Commission will address three particular issues that it sees as concerns following the pandemic:
Defending consumer rights in the travel sector
Examining long term implications on consumption patterns
Tackling scams and unfair marketing practices
The Commission has prioritised the protection of passenger rights through giving consumers rights to full refunds for trips which are later cancelled in the EU passenger Rights, Regulations and Package Travel Directive. While the Commission does not have the power to impose fines for breaches of consumer law, it will work in tandem with national authorities such as the Competition and Consumer Protection Commission (CCPC) in Ireland to enforce actions on scams and unfair marketing practices.
The green transition
The public consultation identified product durability as a main concern of European consumers. Consumers are willing to pay more for products which will last longer, and when information on durability reaches consumers, sales of that product can almost triple according to Commission findings.
As a result, the Commission aims to better inform consumers on the environmental sustainability of products, including their reparability and durability.
We can expect early action on this front, with the Commission planning a new regulation or directive in 2021 to empower consumers for the green transition. This is intended to give them better protection against practices such as greenwashing and early obsolescence, and a requirement for green claims to be substantiated based on the Environmental Footprint methods.
The Commission sees it as a priority to give consumers an effective right to repair. It proposes as part of the review of the Sales of Goods Directive, recently amended by Directive 2019/771, in 2022 / 2023 to examine whether it can further promote repair over replacement and bring in sector specific repair initiatives.
With a nod to the important Circular Economy Action Plan, the Commission outlines several innovative proposals to encourage consumers to adopt more sustainable consumption behaviours. These include the sharing economy, new business models of goods-as-a-service, repairs provided through community and social economy organisations actions, e.g. repair cafés and encouraging second-hand markets. Sustainability and countering obsolescence are also the drivers for the review of the Ecodesign Directives, extending to new categories of product and delivering on circularity. This review of the Ecodesign Directives is addressed in further detail elsewhere in this issue of the Annual Review.
The digital transformation
The share of online shopping in the EU has almost doubled in the last decade, a trend that we can expect to continue. Novel technologies present challenges for online selling. The Commission will consider whether new legislation is needed to tackle unfair commercial practices online which distort consumer decision making. These would be in addition to the recently adopted laws in the Digital Content Directive and the Omnibus Consumer Directive, indicating how trends in the digital economy are outpacing consumer protection.
The Commission will also update its guidance on the Unfair Commercial Practices Directive and the Consumer Rights Directive.
The Commission is already working on a revision of the General Product Safety Directive, anticipated for 2021, which will tackle challenges posed by connected products, cyber security risks, AI driven products, and direct purchases from non-EU suppliers. There will also be a proposal for a new horizontal act setting requirements for artificial intelligence following its White Paper on AI.
A separate action item is a review of the Consumer Credit Directive, the Payment Account Directive and the Distance Marketing of Financial Services Directive to improve consumer protection in the context of the digitalisation of retail financial services.
The Digital Services Act will establish governance rules for the digital economy as the Commission moves to secure the increasing digital nature of the Single Market, and the Digital Markets Act will address the “gatekeeper” power of certain digital platforms.
Collective Redress, the enhanced national enforcement powers in the Omnibus Directive, coordinated EU wide enforcement priorities, and an expanded toolbox for regulators are all featured in the Commission’s “effective enforcement” plans. The Omnibus Directive gives national regulators power to impose turnover-based, GDPR-style fines for widespread breaches of consumer law, effective from May 2022. The Commission will support Member States in the implementation of the Omnibus Directive and in bringing effective enforcement actions, and will coordinate the efforts of national consumer regulators through the mechanisms of the Consumer Protection Cooperation (CPC) Regulation.
The Consumer Protection Cooperation (CPC) network, which consists of all of the authorities responsible for enforcing consumer protection law in the Member States, proved to be effective in tackling covid-related scams and practices across the EU.
A similar enforcement campaign will apply for greenwashing claims, online influencing techniques, illegal price personalisation practices and other EU wide enforcement priorities, to be identified by CPC network members biennially.
As e-commerce websites have high levels of non-compliance, the Commission proposes to develop new investigation and enforcement tools, using advanced IT solutions, AI, data mining techniques and webcrawlers. The CPC Regulation will be assessed by 2023 as part of the Agenda to ensure authorities have sufficient powers to enforce consumer protections.
The Commission notes that particular consumer groups need specific safeguards, such as children, the elderly, those with disabilities, and financially indebted consumers. Supporting these consumer groups, for example tackling aggressive online commercial practices targeted at children, and offering debt counselling, are action items in the Agenda. There will be a revision of the General Product Safety Directive and new Safety Requirements for standards on childcare products. There will be measures to improve the availability of debt relief services and general support for advice to customers, including those in remote areas.
On the global stage, regulatory support will be offered to EU partner countries and an action plan will be established with China to enhance co-operation on product safety for products sold online.
The changes in EU consumer protection law are coming thick and fast. There are already significant changes adopted in the past two to three years that will be effective between 2020 and 2023, from the Digital Content Directive, the Omnibus Directive, the CPC Regulation and the Collective Redress Directive. The Agenda flags further wide-ranging reforms in consumer protections in the EU in the next 5 years. The Commission’s action list shows that we can expect new or revised laws on many consumer issues, particularly in the green and digital transformation areas and online enforcement.
For more information contact a member of our Product Regulation & Consumer Law team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.