14 July 2017
European Commission Sees Need for Action in the Field of Consumer Rights Enforcement and Distance Sales as a Result of EU Consumer Law Review
On 29 May 2017, the European Commission published its final report on the results of its review of EU consumer law (the Fitness Check). The Fitness Check analyses EU consumer law and suggests improvements to the EU regulatory framework. As consumer law aims to balance consumer rights vis-à-vis those of sellers and entities manufacturing consumer goods, with a view to ensuring that consumers are not put at a disadvantage, the review and future related changes to consumer law will be important for Hong Kong traders to take note of.
As part of the Commission’s Regulatory Fitness and Performance programme, a fitness check assesses whether the regulatory framework for a specific policy sector is still fit for purpose. The aim is to identify excessive regulatory burdens, overlaps, gaps, inconsistencies and/or obsolete measures which may have appeared over time and to assess their cumulative impact.
The Fitness Check covered the following consumer law directives:
- Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts;
- Directive 98/6/EC of 16 February 1998 on consumer protection in the indication of the prices of the products offered to consumers;
- Directive 1999/44/EC of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees (the Sales and Guarantees Directive);
- Directive 2005/29/EC of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market (the Unfair Commercial Practices Directive);
- Directive 2006/114/EC of 12 December 2006 concerning misleading and comparative advertising; and
- Directive 2009/22/EC of 23 April 2009 on injunctions for the protection of consumers’ interests.
The Commission also published a separate report evaluating Directive 2011/83/EC of 25 October 2011 on consumer rights (the Consumer Rights Directive).
Hong Kong traders may like to know that the Commission identified insufficient enforcement of existing rules as the main obstacle preventing the achievement of the directives’ goals. This is due, in large part, to a lack of consumer awareness about their rights, and to shortcomings in redressal opportunities.
According to the Commission, an update of the rules is required for clarifying cross-border operations in light of the digital age. In particular, the Commission identified the following issues:
- Divergent enforcement across EU Member States: According to the report, only a few EU Member States offer consumers an efficient civil law remedy in case of breaches of the Unfair Commercial Practices Directive. The Commission stated that, despite the high number of reported infringements of the Unfair Commercial Practices Directive, rights to remedies are regulated differently at the national level and rarely applied in practice. The same is true concerning penalties for breaches of the consumer law and access to individual redress. In addition, EU Member States continue to have divergent approaches towards collective actions and injunction procedures.
- Rules do not take into account the developments of the digital age. For example, the Sales and Guarantees Directive currently does not contain any rules protecting consumers against the provision of defective digital content.
To address these issues, the Fitness Check suggests three strands of potential action:
- Ensuring better knowledge of all rights and duties under EU consumer law. For this purpose, the Commission recently proposed a Regulation on a Single Digital Gateway, which would introduce an obligation on the EU and its Member States to provide up-to-date information to consumers on their rights when buying products or services from another EU country. In addition, a Consumer Law Database is being developed to provide information about laws and practice in respect of a total of 12 EU Directives in the consumer law field;
- Introducing a number of targeted legislative amendments to reduce divergences in implementation. In this respect, the Commission is currently updating guidance on the Unfair Commercial Practices Directive, which forms the legal basis for many coordinated consumer rights enforcement actions at the EU level;
- Simplifying the regulatory landscape where fully justified.
Target areas for follow-up include:
- Extending the level of protection under the Consumer Rights Directive;
- Expanding and strengthening remedies for consumers, in particular by developing EU-wide rights to individual remedies, improving injunction procedures and analysing ongoing assessments of collective redress across the EU;
- Fully harmonising the rules on distance sales. In terms of addressing digital content, the Commission proposed modern digital contract rules which, once adopted, will provide clear rules to better protect consumers. It will also align common rules regarding remedies; and
- Harmonising and increasing sanctions for consumer law breaches. In this regard, the Commission made a proposal to strengthen the cooperation between national consumer protection bodies and the Commission.
Please click on the following for the Results of the Fitness Check.