27 Jul iConsumer #2 – Fines and enforcement actions change with the New Deal for Consumers
iConsumer covers the new enforcement measures and 4% turnover fines provided by the new package of EU laws names the New Deal for Consumers.
On 28 December 1979, English punk rock band “The Clash” published their most known and crucial album, “London Calling“. This milestone of rock music contained a track called “Lost in the Supermarket”, that begins like that:
“I’m all lost in the supermarket | I can no longer shop happily | I came in here for that special offer | A guaranteed personality“.
In 1979, the digital revolution was still at the very beginning. Now, things are pretty changed. Indeed, consumers exchange goods and services faster, just by clicking on a button and even without paying. Though, the wording of the Clash is still applicable to the current scenario in which consumers carry out their purchases, since they often have access to few information about services and products and they get little compensation when they’re harmed in their rights online.
Recently, the EU Commission has attempted to challenge this situation by proposing a new set of legislative actions named the “New Deal for Consumers” which was anticipated in this previous blog post. Let’s examine them to see how the law may be changing 40 years after “Lost in the Supermarket”. Will the new EU provisions help consumers and business to find a way in the (digital) supermarket?
The “New Deal for Consumers”
On 11 April 2018, the EU Commission published a new package of proposals that aims at raising the level of protection afforded to consumers and decrease administrative burdens for companies operating at EU level. The Commission grandiosely named its legislative efforts the “New Deal for Consumers”. This package is made up of, inter alia,
- A proposal for a directive that amends Directive 93/13/EEC, Directive 98/6/EC, Directive 2005/29/EC and 2011/83/EU as regards better enforcement and modernisation of EU consumer protection rules; and
- A proposal for a directive repealing Directive 2009/22/EC and implementing representative actions for the protection of the collective interests of consumers.
Below I will focus on the first one of these proposals.
What changes with the directive on better enforcement and modernisation of EU consumer protection rules?
The draft directive on better enforcement and modernisation of EU consumer protection rules aims at introducing 4 major pivotal improvements in the current consumer protection:
1. Better remedies for consumers
EU Member States are required to provide for new strong and effective remedies when consumers are harmed by unfair commercial practices (e.g. aggressive or misleading marketing), both of contractual and non-contractual nature. The first set of redresses shall include at least the possibility of unilateral termination of the contract by consumers. The second suite is more about compensation for damages suffered.
2. The “GDPRish” 4% turnover fines
A way that EU laws are pursuing to make their legislative action effective is imposing higher fines. The EU Commission is well aware of this – do you remember the huge fines of the GDPR? Just to go back to this point, now Member States of the EU shall implement in their national law in cases of “mass harm” to consumers fines equal to at least 4% of the infringing trader’s turnover in the Member State(s) concerned.
3. Fight against “Dual Quality” products
“Dual quality” products are an issue related for the food sector. In our theoretical supermarket, beers bought in Italy and beers of the same brand bought in Romania may taste differently. Indeed, several food companies internationally active use the same brand and packaging for the products, but the quality of the products changes across the different national markets. The Directive proposal on better enforcement and modernisation of EU consumer protection rules attempts to put a stop to this trend, establishing that a commercial practice regarding the marketing of a product as being identical to the same product marketed in several other Member States is a misleading commercial practice where those products have considerably different composition or features provoking or likely to cause consumers to take the decision to purchase such products that s/he would not have taken otherwise.
4. More transparency in a digital environment
As mentioned above, many novelties concern purchases in digital supermarkets (i.e. online marketplaces). Amongst other things, companies will have to give consumers a number of information before providing the product or service online, even in case the latter is given for free. For example, consumers will have to be fully aware whether they are purchasing goods or services from a trader/professional or from a private person, in order to know if they enjoy consumers’ legal protection. Then, digital platforms shall clearly disclose whether a search result is being paid for by a trader. Finally, the “withdrawal right” (i.e. the possibility for consumers of cancelling a contract within 14 days) is extended to zero-price digital services, too.
Next Steps: Finding A Way
Hopefully, the legislative actions of the “New Deal of Consumers” will become law in May 2019. Then, the EU Member States will be required to implement the provisions of the Directive in their domestic legal framework. This will be an important opportunity for business to better valuing consumers law – in The Clash’s words, to make it a “guaranteed personality”.
In the next iConsumer post, I will try to analyse the second proposal for a directive on protection of collective interests of consumers.