On November 8, 2019, the European Union adopted the “Directive Modernizing Consumer Law”. This directive is part of the so-called “New Deal for Consumer” (see here), a package of legislative reforms designed to revise existing EU consumer laws. The main objective of these reforms is to adapt EU consumer protection legislation to the realities of the digital era, as well as to foster transparency and ensure effective enforcement of consumer protection laws.
The directive amends the following existing EU consumer laws:
- Directive on Consumer Rights
- Directive on Unfair Commercial Practices
- Directive on Unfair Contract Terms
- Directive on Price Indication
EU Member States have 2 years to transpose the changes into their national laws. Below we highlight some key updates introduced by the new directive:
- Free services: The Directive on Consumer Rights now explicitly applies to digital content and digital services that are provided free of charge but in exchange for personal data, except where such personal data is only used to supply the digital content or service, or to comply with the law. In this regard, EU lawmakers appear to support the notion that personal data can be used as consideration for a service.
- Functionality, compatibility and interoperability of digital services and content: Traders must provide information on the functionality, compatibility and interoperability of digital content and digital services, including applicable technical protection measures in place.
- Mandatory contact information: Traders must provide their physical address, telephone number and email address. On an optional basis, traders may also provide a contact form on a website, provided it allows the consumer to save the communication.
- Personalized pricing: Traders must inform users when a price is personalized on the basis of automated decision-making.
- User content after withdrawal: If the consumer withdraws from an agreement, the trader is prohibited from using any content (other than personal data) which was provided or created by the consumer when using the digital content or digital service, subject to a few limited exceptions. In addition, in certain circumstances the trader must provide users with access to their content after their withdrawal from the agreement, as well as assist them with porting that content.
- Dual quality of branded food products: Traders are prohibited from marketing non-identical products as identical in different Member States, unless justified by legitimate and objective factors. This only applies to products, not services.
- Rankings explained: Traders who allow users to search for products or services must explain on what basis the search results are ranked. They must also clearly disclose any paid advertising or (direct or indirect) payment to receive a higher ranking. This information must be clearly accessible from the page on which the search results are shown.
- Trustworthy reviews: Traders must inform users on their website or application about how they ensure that reviews posted by consumers are authentic reviews from actual consumers who have used or bought the respective product or service. Traders are prohibited from stating that reviews of a product or service have been submitted by a customer who used or bought the product or service without taking reasonable and proportionate steps to check the accuracy of that statement. Traders are also prohibited from asking a party to submit false reviews or endorsements, or to misrepresent reviews or social endorsements in order to promote products or services.
- Re-selling tickets: Traders are prohibited from reselling tickets if they acquired the tickets by automated means aimed at circumventing measures to restrict the purchase of tickets.
- Price reductions: When announcing a price reduction for a product, traders must indicate the product’s price prior to the reduction. The lower price must be the lowest price for that product during a period of time not shorter than 30 days prior to the reduction (unless Member State laws set out a shorter time period). This only applies to products, not services.
- Trader/not trader: Online marketplaces must indicate whether the person offering a product or service on the marketplace is a trader or not (on the basis of the declaration of that person).
- Applicability of consumer law: Online marketplaces must inform consumers that when the provider of the products, services or digital content offered on the marketplace is not a trader, EU consumer laws do not apply to the agreement between the consumer and the provider. This information should be easily accessible and not merely included in the terms and conditions.
The New Deal for Consumer also includes a proposal for a directive on representative actions for the protection of the collective interests of consumers (“Directive on Representative Actions”) (latest draft here). The adoption of this directive is still pending.
Earlier this year, the EU approved two other directives on consumer rights:
- Directive on certain aspects concerning contracts for the supply of digital content and digital services
- Directive on contracts for the sale of goods
These directives amend the pre-existing rules on conformity of goods and expand these rules to digital content and digital services.