The new EU directive to ‘modernize’ and ensure the effectiveness of consumer protection rules has completed its approval process. (1) Spotlight on dual quality, ecommerce and web. Million-dollar penalties and biblical time frames.
Consumer rights, the needs
The European Commission-as part of the REFIT(REgulatory FITness and performance) program-had conducted a review in 2016-2017 of the adequacy and effectiveness of existing consumer protection rules. (2) Concluding that the remedies provided therein are poorly applied due to the lack of knowledge of the regulations, on the part of professionals and consumers. (3)
Measures already taken at the European level to spread knowledge about these standards and to promote their implementation have proven unfit for purpose. Also due to the shortcomings and uneven implementation in individual member countries of Directives 2005/29/EC(unfair commercial practices) and 2009/22/EC(consumer protection injunctions). (4)
New Deal for Consumers, the initiative
The New Deal for Consumers initiative was announced by the European Commission on 9/13/17. (5) With the aim of strengthening consumer and user protection, also taking into account the increased risks associated with ecommerce and web services. This is the context for this proposed directive (adopted by the Commission on 11.4.18).
‘It is about protecting consumers by resorting to greater transparency and strict enforcement in case of deception. Thanks to this ‘new deal’ consumers will know what they are buying and from whom.
Thanks to this agreement, consumers should no longer be misled by different products being presented as identical. Merchants who continue to cheat will face serious penalties.
The ‘new deal’ will also strengthen online consumer protection by making Internet shopping more transparent.’ (Frans Timmermans – First Vice President of the Commission – and Vera Jourová, Commissioner for Justice, Consumers and Gender Equality. See footnote 6)
The ongoing reform
The new directive acts as an amendment to the previous four:
– dir. 93/13/EEC, on unfair terms in consumer contracts,
– dir. 98/6/EC, on the protection of consumers with regard to the indication of prices of products offered to them,
– dir. 2005/29/EC, on unfair commercial practices,
– dir. 2011/83/EU, on consumer rights
Sanctions, the backbone of reform
Sanctions are the backbone of the reform. Indeed, Directives 98/6/EC, 2005/29/EC and 2011/83/EU already obliged member states to establish ‘effective, proportionate and dissuasive sanctions.’ Towards professionals responsible for nationwide widespread infringements or Union-wide widespread infringements. In fact, however, penalties in different countries have different weights and ranges, often unsuitable to deter rogue operators. (7)
The new text is therefore more specific in requiring member states to take all necessary measures to ensure the effectiveness, proportionality and deterrent efficacy of penalty regimes. Which must consider (at least) the following criteria:
(a) nature, severity, extent and duration of the violation,
(b) any actions taken by the seller or supplier to mitigate the damage suffered by consumers, or to remedy it,
(c) any previous violations committed by the seller or supplier,
(d) financial benefits achieved or losses avoided by the seller or supplier as a result of the violation (where data are available),
(e) penalties imposed on the seller or supplier for similar violation in other member states. Based on the information made available through the procedures established by reg. EU 2017/2394,
(f) any other aggravating, or mitigating, factors applicable to the circumstances of the case.
Million-dollar penalties
Violations related to unfair contract terms, unfair business practices and the infringement of consumer rights should be punished with maximum penalties of at least 4 percent of the seller’s or supplier’s annual turnover in the member state(s) concerned.
Moreover, member states have the option to provide for sanctions of even higher (but not lower, please note) amounts. In cases where information on the annual turnover of the seller or supplier is not available, member states shall introduce the possibility of imposing fines of up to 2 million euros or more.
Dual quality
Misleading commercial practices, under the new directive, also include cases of products presented as the same but of different quality, in different member countries. This is the case of so-called dual quality, which has arisen precisely in the food sector(dual quality food). (8)
It is deceptive ”any marketing activity that promotes a good, in one member state, as identical to a good marketed in other member states, while that good has a significantly different composition or characteristics, except where justified by legitimate and objective factors‘ (new directive, Art. 3.3.c)
Protection of rights in online searches and transactions
In distance contracts, the consumer must be able to have all the necessary references to get in touch with the trader. (9) I.e., name or company name, location and physical address, telephone, fax and/or email, and any other means of communication indicated (e.g., social networking). Date and times of messages should be recorded and stored on durable media.
The identity–professional or private–of the online seller should always be clearly communicated as early as the submission and/or listing of the offer. So that the consumer can better assess the reliability of the supplier. Regardless of feedback, which, as it turns out, is often false and uncontrolled.
The withdrawal period-14 days-can be extended to 30, by member states, for contracts concluded in the context of unsolicited visits or excursions organized by a professional to the home to promote or sell products. For the specific purpose of protecting the legitimate interests of consumers against aggressive or deceptive business or sales practices. (10)
In search engines, marketplaces , and operators on the web in general must always indicate whether the search result is sponsored by a professional. Consumers must also be informed about the parameters that determine the ranking of research results. (11)
Biblical times.
On 8.11.19 the Council approved the text of the measure on which agreement had already been reached last March with the European Parliament and the Commission. Following the formal green light from the Strasbourg Assembly, the directive is published in the Official Gazette and enters into force in the following 20 days.
Biblical times are expected for its implementation, however. Member states have as much as 24 months to introduce the introduced changes of the directive into their laws, ensuring their effective implementation within 30 months. That is, consumers in the EU will receive the increased protection mentioned above in the second half of 2023.
Dario Dongo and Giulia Caddeo
Notes
1) The text of the directive at https://data.consilium.europa.eu/doc/document/PE-83-2019-INIT/en/pdf
2) It is the duty of the European Union to help ensure a high level of consumer protection (TFEU, Articles 169(1) and 2.a, 114)
3) See footnote 1, recital 2
4) Idem c.s., recital 4. Dir. 2005/29/EC was implemented in Italy through the Consumer Code (Legislative Decree 206/05, as amended)
5) V. https://ec. europa.eu/info/law/law-topic/consumers/review-eu-consumer-law-new-deal-consumers_en
6) https://ec.europa.eu/commission/presscorner/detail/it/IP_18_3041
7) See recitals 4 and 6
8) Cf. EC communication 29.9.17. On Dual Quality Food see previous articles https://www.greatitalianfoodtrade.it/etichette/dual-quality-foods-in-europa-l-ungheria-chiede-chiarezza-in-etichetta,
https://www.greatitalianfoodtrade.it/consum-attori/dual-quality-foods-juncker-alza-la-voce, https://www.greatitalianfoodtrade.it/consum-attori/dual-quality-food-prima-analisi-della-commissione-europea
(9) Amendment to Directive 2011/83/EU, Article 6
10) Article 3.4.a, introducing a new Article 6a to Directive 2011/83/EC
11) Art. 3.4.b
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
Graduated in law, master in Food, Law & Finance. You have explored the theme of green procurement and urban food policies in the International Cooperation and Peace sector of the City of Turin.
