Consumer protection within the EU:
From the Green Paper to the Proposal for a Directive on consumer’s rights
 

In order to efficiently protect consumers within the internal market it is very important to reduce differences between Member States’ legislations. In the commercial field, in fact, a simplification would allow both consumers and traders to fully benefit from the advantages offered by the market, especially after the introduction of the Euro and with regard to specific sectors, such as the electronic commerce.

Indeed, the huge spread of the e-commerce gave traders and consumers the possibility to buy in safety any type of good from all over the world by simply using the web. However, the presence of a different legislative mark for each member State represents a barrier to further progress: traders have technical and economic difficult in complying with the national rules of all those Countries they are interested to invest in, consumers waste advantageous opportunities for the fear of not being duly protected. The outcomes of this situation are, obviously, a loss of effectiveness in cross borders commerce.

In order to solve this inconvenient, in February 2007 the European Commission issued a Green Paper on the Review of the Consumer Acquis, stating that:

1)   Most of the Directives adopted weren’t in step with market developments (e.g. mp3 download or on line auctions) and
some fields were lacking of a suitable protection (e.g. the software).

2)   Due to the fact that the directive in force allows Member States to give national citizens a higher level of protection than the one provided from the EU, internal legislations in each EU Country can be very different, also regarding very relevant topics (e.g. the deadline for the consumer to exercise the right of withdrawal).

3)   Consumers still have lots of doubts in buying goods from other EU Countries, because in the field of cross border trade they still think they can’t benefit from a level of protection as high as inside national borders.

In order to contribute to a better functioning of the business to-consumer internal market by enhancing consumer confidence in the internal market and reducing business reluctance to trade cross-border, on 8 October 2008 the European Commission adopted a Proposal for a Directive on consumer’s rights, aimed at decreasing the fragmentation, tightening up the regulatory framework and providing consumers with a high common level of protection and adequate information about their rights.

The proposal is based on a full harmonization of European consumer contract law and it is aimed to create a single set of rules ensuring a high common level of protection across the Community and allowing traders to sell to consumers in 27 Member States as they would do at home, reducing traders' compliance costs while granting consumers a high level of protection.

The proposal aims at revising Directive 85/577/EEC on contracts negotiated away from business premises, Directive 93/13/EEC on unfair terms in consumer contracts, Directive 97/7/EC on distance contracts, Directive 1999/44/EC on consumer sales and guarantees. These four Directives provide for consumer contractual rights. The proposal merges these four Directives into a single horizontal instrument regulating the common aspects in a systematic fashion, simplifying and updating the existing rules, removing inconsistencies and closing gaps.

Unfair commercial practices
 

According to the Directive 29/2005/CE, of the 11 May 2005, are to be considered forbidden all those practices which are likely to materially distort consumers’ economic behavior with regard to a specific product.

In particular, unfair commercial practices can be either misleading (by actions or omissions) or aggressive:

1)     A commercial practice shall be regarded as misleading (by actions) if, in its factual context, taking account of all its features and circumstances and the limitations of the communication medium, it omits material information that the average consumer needs, according to the context, to take an informed transactional decision and thereby causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise. It shall also be regarded as misleading (by omissions) when a trader hides or provides in an unclear, unintelligible, ambiguous or untimely manner such material information as referred to in that paragraph or fails to identify the commercial intent of the commercial practice if not already apparent from the context, and where, in either case, this causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise.

2)     A commercial practice shall be regarded as aggressive if, in its factual context, taking account of all its features and circumstances, by harassment, coercion, including the use of physical force, or undue influence, it significantly impairs or is likely to significantly impair the average consumer's freedom of choice or conduct with regard to the product and thereby causes him or is likely to cause him to take a transactional decision that he would not have taken otherwise.

The type of consumer the definitions above are referred to is an “average consumer” but it’s a statistic reference: where a commercial practice is specifically aimed at a particular group of consumers, such as children, the impact of the commercial practice must be assessed from the perspective of the average member of that group.

In order to get easier for Member States to recognize whether a commercial practice is unfair and avoid misinterpretations, the Directive 2005/29/EC – Annex I and II - set up a list of 31 practices that are to be considered prohibited under all circumstances:

- Misleading commercial practices:

1)     claiming to be a signatory to a code of conduct when the trader is not;

2)     displaying a trust mark, quality mark or equivalent without having obtained the necessary authorisation;

3)     claiming that a code of conduct has an endorsement from a public or other body which it does not have;

4)     claiming that a trader or a product has been approved, endorsed or authorised by a public or private body when he/it has not or making such a claim without complying with the terms of the approval, endorsement or authorisation;

5)     making an invitation to purchase products at a specified price without disclosing the existence of any reasonable grounds the trader may have for believing that he will not be able to offer for supply or to procure another trader to supply, those products or equivalent products at that price for a period that is, and in quantities that are, reasonable having regard to the product, the scale of advertising of the product and the price offered (bait advertising);

6)     making an invitation to purchase products at a specified price and then:

a)   refusing to show the advertised item to consumers; or

b)   refusing to take orders for it or deliver it within a reasonable time; or

c)    demonstrating a defective sample of it, with the intention of promoting a different product (bait and switch);

7)     falsely stating that a product will only be available for a very limited time, or that it will only be available on particular terms for a very limited time, in order to elicit an immediate decision and deprive consumers of sufficient opportunity or time to make an informed choice;

8)     undertaking to provide after-sales service to consumers with whom the trader has communicated prior to a transaction in a language which is not an official language of the Member State where the trader is located and then making such service available only in another language without clearly disclosing this to the consumer before the consumer is committed to the transaction;

9)     stating or otherwise creating the impression that a product can legally be sold when it cannot;

10)  presenting rights given to consumers in law as a distinctive feature of the trader's offer;

11) using editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content or by images or sounds clearly identifiable by the consumer (advertorial);

12) making a materially inaccurate claim concerning the nature and extent of the risk to the personal security of the consumer or his family if the consumer does not purchase the product;

13) promoting a product similar to a product made by a particular manufacturer in such a manner as deliberately to mislead the consumer into believing that the product is made by that same manufacturer when it is not;

14) establishing, operating or promoting a pyramid promotional scheme where a consumer gives consideration for the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme rather than from the sale or consumption of products;

15) claiming that the trader is about to cease trading or move premises when he is not;

16) claiming that products are able to facilitate winning in games of chance;

17) falsely claiming that a product is able to cure illnesses, dysfunction or malformations;

18) passing on materially inaccurate information on market conditions or on the possibility of finding the product with the intention of inducing the consumer to acquire the product at conditions less favorable than normal market conditions;

19) claiming in a commercial practice to offer a competition or prize promotion without awarding the prizes described or a reasonable equivalent;

20) describing a product as "gratis", "free", "without charge" or similar if the consumer has to pay anything other than the unavoidable cost of responding to the commercial practice and collecting or paying for delivery of the item;

21) including in marketing material an invoice or similar document seeking payment which gives the consumer the impression that he has already ordered the marketed product when he has not;

22) falsely claiming or creating the impression that the trader is not acting for purposes relating to his trade, business, craft or profession, or falsely representing oneself as a consumer;

23) creating the false impression that after-sales service in relation to a product is available in a Member State other than the one in which the product is sold.

- Aggressive commercial practices:

1)     creating the impression that the consumer cannot leave the premises until a contract is formed;

2)     conducting personal visits to the consumer's home ignoring the consumer's request to leave or not to return except in circumstances and to the extent justified, under national law, to enforce a contractual obligation;

3)     making persistent and unwanted solicitations by telephone, fax, e-mail or other remote media except in circumstances and to the extent justified under national law to enforce a contractual obligation;

4)     requiring a consumer who wishes to claim on an insurance policy to produce documents which could not reasonably be considered relevant as to whether the claim was valid, or failing systematically to respond to pertinent correspondence, in order to dissuade a consumer from exercising his contractual rights;

5)     including in an advertisement a direct exhortation to children to buy advertised products or persuade their parents or other adults to buy advertised products for them;

6)     demanding immediate or deferred payment for or the return or safekeeping of products supplied by the trader, but not solicited by the consumer (inertia selling);

7)     explicitly informing a consumer that if he does not buy the product or service, the trader's job or livelihood will be in jeopardy;

8)     creating the false impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact either:

a)   there is no prize or other equivalent benefit, or

b)   taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost.

Solvit: Problem solving in the single market
 

SOLVIT is an on-line problem solving network in which EU Member States work together to solve, without legal proceedings, problems caused by the misapplication of Internal Market law by public authorities. There is a SOLVIT centre in every European Union Member State. SOLVIT Centres can help with handling complaints from both citizens and businesses. They are part of the national administration and are committed to providing real solutions to problems within ten weeks. Using SOLVIT is free of charge.

How does SOLVIT work?

When you submit a case to SOLVIT, your local SOLVIT Centre (known as the "Home" SOLVIT Centre) will first check the details of your application to make sure that it does indeed concern the misapplication of Internal Market rules and that all the necessary information has been made available. It will then enter your case into an on-line database, and it will be forwarded automatically to the SOLVIT Centre in the other Member State where the problem has occurred (known as the "Lead" SOLVIT Centre). The two SOLVIT Centres will work together to try to solve the problem and your Home SOLVIT Centre will keep you informed of progress.

Further networks for the out of court settlement of cross borders disputes

Apart from Solvit, there are other networks for the out of court settlement of cross borders disputes between consumers and traders:

-      FIN-Net: aims to facilitate out of court resolution of disputes when the consumer and the financial services provider (bank, insurance company, etc.) come from different EU countries. It offers the consumer an alternative way to solve disputes quickly, cheaply and easily.

-       ECC-Net: helps consumers specifically with cross-border disputes, giving information and advice on problems with shopping across borders and intervening when problems arise.

'Services' Directive

The Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market falls under the framework of the 'Lisbon Strategy', which aims at removing barriers to the free movement of services within the internal market.

The Directive 2006/123/EC  aims to facilitate freedom of establishment for providers in other Member States and the freedom of provision of services between Member States. It also aims to increase the choice offered to recipients and improve the quality of services both for consumers and businesses using these services.

The Directive establishes a general legal framework for any service provided for economic return (with the exception of excluded sectors) while taking the specific nature of certain activities or professions into account.

The following services are excluded:

• non-economic services of general interest;
• financial services (including those such as banking, credit, insurance and re-insurance, occupational or personal pensions, securities, investment funds and payments);
• electronic communications services with respect to matters covered by Directives;
• transport services, including port services;
• services of temporary work agencies;
• healthcare services;
• audiovisual services;
• gambling;
• activities which are connected with the exercise of official authority ;
• certain social services (relating to social housing, childcare and aid for persons in need);
• private security services;
• services provided by notaries and bailiffs, who are appointed by an official act of government.

This Directive requires the Member States to examine and, if need be, simplify the procedures and formalities applicable to access a service activity and to exercise them.

In particular, the Directive includes:

• putting in place points of single contact at which a provider may complete all the necessary formalities to fulfil various duties;
• the obligation to make this possible on-line.

To ease freedom of establishment, the Directive:

• includes the obligation to evaluate the compatibility of the authorisation schemes in light of the principles of non-discrimination and proportionality and to maintain certain principles regarding the conditions and procedures of authorisation applicable to service activities;
• repeals certain legal requirements that remain in the legislation of some Member States and that are no longer justifiable, such as requirements on nationality;
• contains the obligation to evaluate the compatibility of a certain number of other legal requirements in light of the principles of non-discrimination and proportionality.

 The Directive proposes four main objectives for creating an internal services market:

1)   To ease freedom of establishment for providers and the freedom of provision of services in the EU:

the Directive stipulates that the Member States must guarantee freedom of access to the service activity and freedom to exercise such activity throughout their territory. The Member State to which the service provider moves to become established may only enforce its own requirements inasmuch as these are non-discriminatory, proportional and justified for reasons of public order, public safety, public health or environmental protection.

2)   To strengthen rights of recipients of services as users of the latter:

the Directive affirms the right of recipients to use the services of other Member States and establishes the right of recipients to obtain information on the rules applicable to providers, whatever their location may be, and on the services offered by a service provider.

3)   To promote the quality of services:

the Directive aims to strengthen the quality of services and encourage European codes of conduct to be drawn up, in particular by professional bodies or associations.

4)   To establish effective administrative cooperation among the Member States:

The Directive lays down a legal obligation requiring the Member States to cooperate each other in order to ensure efficient control of service activities while avoiding a multiplication of monitoring. Therefore, the Directive establish an alert mechanism between Member States and constitutes the basis for developing an electronic system for the exchange of information.