European Union: Surf’s Up: New Consumer Directive makes Some Waves

Last Updated: 25 February 2014
Article by GVZH Advocates

In Europe, online sales are set to reach 191 billion Euro by the year 2017.1 Faced with these numbers, businesses simply cannot afford to pass up the opportunities presented to them by online channels. Neither can they afford to remain in the dark about developments in the e-commerce regulatory sector. The ever-changing landscape of the world market necessitates a fast reaction time and a keen adaptability for businesses to remain relevant.

The new Directive on Consumer Rights (2011/83/EC) (the "Directive") was adopted by an overwhelming majority of the European Parliament. The deadline for all Member States to transpose the new rules contained in the Directive into their national laws was the 13th December 2013, and Malta was right on cue with its promulgation of the Consumer Rights Regulations by virtue of Legal Notice 439 of 2013, which revoked the Distance Selling Regulations of 2001. The provisions of this new Directive, and the strengthened rights granted to consumers, will apply to contracts concluded between a trader and a consumer after the 13th June of this year. However, online sellers would do well to heed the warnings of the new Directive and get their websites and procedures in line with its consumer-friendly rules before then.  

When does the Directive come into play?

Although the Directive, by its nature, requires transposition into the national laws of the Member States in order to take effect, its provisions allow State legislatures minimal wriggling room. In fact, article 4 prohibits Member States from maintaining or introducing in their own law consumer protection measures which are more or less stringent than those provided for by the Directive, effectively forcing the legislatures' hands to transpose its provisions almost tale quale.

Online sales contracts often have private international law implications in that they raise the question of which law is to govern the contract: is it to be the law chosen by the parties, the law of the country where the seller is based, or the law of the country where the buyer is based? The answer lies amongst the provisions of the Rome I Regulation which allows the parties to consumer contracts to choose the law which is to apply to their agreement, subject however to the principal of "directing activities". This principle is aimed at online traders, and essentially prevents them from choosing a law to govern their contracts with consumers which would put the latter at a disadvantage. According to this principle, where a trader "directs" his business activities to any country, a consumer contract with a person habitually resident in that country must respect the mandatory consumer rights provisions of that country's law, such that the consumer is not in a worse position than if the law of his own country of residence governed the contract. Although the precise meaning of the term "directing activities" remains vague, the preamble to the Directive offers some guidance. It appears that whilst the mere accessibility of a trader's website from a particular country does not, by itself, mean that that trader is directing his activities to that country, the fact that a website solicits the conclusion of contracts (basically, invites consumers to make purchases) and that a contract with a consumer based in that country has actually been completed, is a strong indication that a trader is directing his activities to that particular country. Where that particular country is an EU Member State the provisions of the Directive as transposed in the national law of that State immediately come into play.   

Thus, the Directive, combined with the relevant provisions of Rome I, creates a very level playing field across the EU in terms of consumer protection, meaning that, regardless of where he is based or which law he has chosen to govern his consumer contracts, an online merchant trading with consumers based in the EU must respect the consumer rights provided for by the Directive.

What does the Directive aim to achieve?

Whilst consumer protection, as a necessary precursor to the highly prized 'free movement of goods and services within the internal market', has always been a high priority matter for the EU institutions, it has never assumed more relevance than it does in the present day. With the major retail economies of Europe increasingly relying on online sales to drive growth, businesses are forced to become well-acquainted with the increased consumer protection measures reserved for distance sales. 

The new Directive is squarely aimed at achieving greater consumer protection by harmonising rules relating to consumer information and the right of withdrawal in both distance and off-premises contracts, thus enabling cross-border distance selling, particularly internet selling, to reach its full potential.

Where do Online Sales feature in all of this?

In the context of 'distance contracts' (whether these are concluded via email, mail order, through a website, or by phone) the consumer is at a significant disadvantage in that he cannot verify either the existence of a legitimate retail structure, or the actual state of the goods which he is acquiring. It's not surprising then that the Directive lays down significantly more onerous rules intended to achieve higher levels of consumer protection in the context of online sales. Failure to abide by these rules could result in invalid sales, penalties and consequential losses for online traders.

The question is, are you compliant?

Knowledge is Power: Respect the Buyer's Need to Know

Under the Directive, the consumer's right to know is sacrosanct. Before the consumer makes an order on a website he must have before him the following information, which must be clear and comprehensible. The information provided on a seller's website actually forms part of the distance contract between trader and consumer, so it cannot simply be changed mid-way through a transaction without the consumer having first agreed to such change.

What are you selling?

The consumer needs to know exactly what he's buying. The main characteristics of the goods or services being sold must be described as thoroughly as possible, and this information must show up on the trader's website at the point just before the consumer places his order;

Who are you?

The consumer needs to know who he's dealing with. The trader must provide its name, or trading name, as the case may be;

Where can I reach you?  

The buyer needs to be able to reach the trader if there's a problem with the goods or services, or if he wishes to withdraw from the contract. Thus, the trader must provide his business address and, where applicable, any other address where the buyer can send complaints, as well as a telephone number and email address, where available. The consumer also needs to know how he can communicate complaints to the seller and how he is to be redressed if there's a problem.

Interestingly, the Directive lays down that in the case of a 'public auction', the information referred to in paragraphs (b) and (c) above may be replaced by the equivalent details of the auctioneer. It is noteworthy, however, that online platforms such as Ebay are not considered as public auctions for the purposes of the Directive, as these are not 'a method of sale where goods or services are offered by the trader to the consumers, who attend or are given the possibility to attend the auction in person.' Thus, in a forum such as Ebay, the details of the actual seller must be provided.

How much?  

The trader must also indicate the total price of the goods or services which he is trying to sell. This total price must include taxes, plus all additional freight, delivery or postal charges. If the trader fails to indicate such additional charges, the buyer is not bound to pay for them, which means that the trader will be footing the bill for delivery. Where, for any reason, the total price of the goods or services the seller is offering cannot be calculated in advance, he must at least indicate the manner in which it is to be calculated. Where additional charges, like freight, delivery or postage, cannot be calculated in advance, the trader must at least indicate that such additional charges apply. If he doesn't, the consumer won't be bound to pay them, but the trader will. All of this information must show up on the trader's website at the point just before the consumer places his order.

How shall we do this?

The consumer needs to know how he is going to pay, and how and when the goods or services are going to reach him. On the trader's website, there must be clearly indicated the arrangements for payment, and for delivery in the case of goods, or for performance in the case of services. Delivery restrictions and which means of payment are accepted (such as VISA, Mastercard, Paypal and/or cheque) must be indicated somewhere on the website, and not later than the point at which the customer can begin to place his order. It is noteworthy that traders may not charge consumers fees for the use of a particular means of payment which exceed those borne by the trader.

What if I change my mind?

Where the consumer has a right of withdrawal (as described in some detail later in this article), the trader must let the consumer know how and by when he can exercise this right. He must do this by making available to the buyer the model withdrawal form as set out in Annex I(B) of the Directive. Where in certain circumstances laid down in the Directive, the right of withdrawal is not available to the consumer, the trader must make this clear. If the buyer does have a right to withdraw initially, but can lose such right, then the trader must tell him how he can lose such right.

Who's going to pay if I send it back?

If the buyer is expected to foot the bill for the return of the goods, the trader must make this clear. He must also specify how much this is going to cost the buyer (unless the buyer can return them by normal post). If he fails to provide such information do so, the buyer will not be liable for such costs.

The information in (f) and (g) above may be supplied to the consumer by the trader by means of the model instructions on withdrawal set out in Annex I(A) of the Directive.

What if the goods are faulty?

The trader must remind the buyer of his legal and commercial guarantees, as well as provide him with the details of any after-sales service. Legal guarantees are those granted to the consumer by the law governing the contract between the trader and the consumer and which, in accordance with article 6 of the Rome I Regulation, must not fall short of those granted to the consumer by the law of his country of habitual residence. Commercial guarantees are those which are agreed upon contractually between the trader and consumer, and which apply over and above the applicable legal guarantees.

How long will I be bound for?

If the contract is ongoing, such as in the case of the purchase of a subscription, the buyer needs to know how long he is bound for by the contract. If the contract is indefinite, or is extended automatically, the buyer needs to know how he can terminate it. This information must show up on the website just before the consumer places his order.

Do I need to pay a deposit?

Where the buyer must pay a deposit on his purchase, he needs to know how much he is expected to pay and on what conditions he will forfeit such deposit.

  1. What about digital content?
    The consumer must be informed of the functionality of digital content, including applicable technical protection measures, and of any relevant interoperability with hardware and software.

Don't Play Games: The Obligation to pay must be Explicit

Online traders must ensure that consumers explicitly acknowledge their obligation to pay when placing their order. Thus, it is not sufficient for an online button or similar function to state "Order Now" - this must be changed to the somewhat less catchy, "Order with Obligation to Pay", or to a similarly clear phrase that emphasises that ordering entails an obligation to pay. If the trader fails to comply with this requirement, then the buyer is not bound by his order.

Seal the Deal: Confirmation of the Sale

Confirmation of the sale must be provided to the buyer in writing - an email would suffice for this purpose. This must be provided within a reasonable time after the sale, and at the latest at the time of the delivery of the goods or before the performance of the service begins. It must contain all the information indicated in paragraphs (a) to (k) above. 

The Buyer can Back Out: The Right of Withdrawal

The right of withdrawal referred to in paragraph (f) above is the buyer's right to change his mind and withdraw from an online sale – so long as he does so within a period of 14 days. He may do this without giving any reason, and without incurring any costs, except for the cost of the return. In the case of sales contracts for goods, these 14 days start running only from the moment that the buyer receives physical possession of the goods. Where multiple goods are ordered by the buyer in one order and are delivered separately, the 14 days begin to run from the day on which the buyer acquires physical possession of the last good. In the case of service contracts, or for the supply of digital content, the 14 days begin to run on the day of the conclusion of the contract. Notably, however, the buyer loses his right to withdraw from a contract for the supply of digital content (which is not supplied on a tangible medium such as a CD, DVD etc.) as soon as downloading commences.

If the trader has omitted to provide the consumer with information about his right of withdrawal, the consumer will have 12 months from the end of the initial 14 day withdrawal period within which he can withdraw from the contract. If within those 12 months, the trader provides the necessary information to the consumer about his right to withdraw, the consumer will then have 14 days from the date on which he received such information.

Where the buyer has withdrawn from the contract within the specified time frames, the trader must reimburse all payments received from him, including any delivery costs, within 14 days from the day on which the buyer informed him of his decision to withdraw. Such reimbursement must be made by the same means as the buyer used to make the payment. The trader may however withhold the reimbursement until he receives the goods back, or proof of the return of the goods, whichever is the earliest.

Dinner Jackets and Fine Wines: Exceptions to the Right of Withdrawal

There are certain situations in which it would be an outright injustice to allow the buyer to back out of the sale.  In these cases, the Directive expressly excludes the right of withdrawal. This is the case where the price for the supply of goods or services is dependant on fluctuations in the financial market which may occur during the withdrawal period, such as, for instance, with wine supplied on the basis of a speculative contract, where the value is dependant on fluctuations in the market ("vin en primeur"). It stands to reason, also, that there should be an exception to the right of withdrawal in the case of sales of clearly personalised goods, or of goods made to the consumer's specifications, such as tailored suits or curtains. The online purchaser of a newspaper, periodical or magazine is also deprived of his right to withdraw from the contract, because the value of these articles would undoubtedly be affected by the passing of even a short period of time. The exception to this rule is the conclusion of a contract for a subscription for such publications. Consumers should be 100% certain before booking hotels, holiday villas or cultural or sporting events online – cancelling these bookings could result in a vacancy difficult to fill if the right of withdrawal were allowed to be exercised. The same goes for car rental and catering services.

Get me to the Church on Time ... or I Want my Money Back!

The Directive bears more good news for online shoppers – if the trader fails to deliver the goods to the consumer at the time agreed upon, or by not later than 30 days from the conclusion of the contract, the consumer shall call upon him to make the delivery within an additional period of time appropriate to the circumstances. If the trader fails to deliver the goods within that additional period of time, the consumer shall be entitled to terminate the contract and the trader shall be liable to reimburse all sums paid under the contract without delay. Where the trader has outright refused to deliver the goods, or where the delivery within the agreed period is essential, taking into account all the circumstances surrounding the conclusion of the contract – such as in the case of a wedding dress where the trader has been informed of the date of the wedding - or where the customer has informed the trader that delivery by a specified date is essential, the customer need not provide an additional period of time for the delivery, but may simply terminate the contract immediately.

When you assume...

Those notorious pre-ticked boxes binding consumers to pay for taxi services, hotel rooms, insurance and all other manner of extra goods and services have been definitely banned by the Directive. Any additional payments must be expressly consented to by the buyer, and if this consent has been inferred in some way (including through the use of pre-ticked boxes), the buyer shall have the right to be reimbursed for this payment.

Footnote

1 Figures based on Forbes' projections for US and EU Commerce for 2012 – 2017; accessible at http://www.forbes.com/sites/forrester/2013/03/14/us-online-retail-sales-to-reach-370b-by-2017-e191b-in-europe

www.csb-advocates.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions