The European Court of Justice's (ECJ) recent ruling on the interpretation of the E-Commerce Directive (2000/31/EC) (the Directive) has the potential to significantly impact the way that e-businesses are run.
Article 5(1) of the Directive requires a provider of online services to provide the following information before a contract can be entered into via their website:
(a) the name of the service provider;
(b) the geographic address at which the service provider is established; and
(c) the details of the service provider, including his e-mail address, which allows him to be contacted rapidly and communicated with in a direct and effective manner.
In the case, which was a reference from a German court, the German Federation of Consumer's Associations (Bundesverband der Verbraucherzentralen under Verbraucherverbände – 'BVV') asked the ECJ to consider the interpretation of Article 5(1)(c) of the Directive.
The case had been brought in Germany by the BVV against Deutsche Internet Versicherung AG (DIV), a company which sells insurance via the internet. DIV did not provide a contact telephone number to customers who had not yet entered into a contract, instead offering an online enquiry template for potential customers, who would then receive an email response. The BVV alleged that this mechanism was not sufficiently 'rapid' or 'direct and effective' to comply with Article 5(1)(c) of the Directive.
The German regional appeal court held that the direct contact required to comply with the Directive could be achieved by electronic means. There was no involvement of a third party in dealing with enquiries, and an answer arrived rapidly to the customer's email address within 30 to 60 minutes.
However, the BVV appealed to the German Federal Court of Justice who referred the interpretation of Article 5(1)(c) to the ECJ for a preliminary ruling.
The ECJ Ruling
The ECJ held that the requirement under the Directive for a service provider to supply recipients of a service information which would allow them to be contacted rapidly and in a direct and effective manner could be met through the provision of an electronic enquiry template, with an e-mail response from the provider.
The reasoning behind this was that 'direct' communication was taken to mean 'the absence of an intermediary' as opposed to requiring a verbal exchange. For 'effective communication', an instantaneous response was not required, provided that adequate information could be obtained within a period compatible with the needs or legitimate expectations of the recipient.
In this case, the service provider responded to consumers within 30 to 60 minutes of receiving an enquiry, therefore the requirements of the Directive were met.
The ECJ went on to rule, however, that providing an electronic response would not be 'effective' within the meaning of the Directive in the situation where the consumer requested a response via a non-electronic means as he was unable to access the electronic response, for example when on holiday or while travelling.
The ECJ's ruling clearly protects the interest of consumers in ensuring that they are able to receive an effective and prompt response to queries when dealing with e-businesses. However, the decision leaves a number of questions unanswered.
Firstly, the ECJ did not consider the limits to which a response time could be extended within which it would still be regarded as sufficiently effective. For example, for a small business, would 24 or even 48 hours suffice as the consumer would not expect a more rapid response in this situation? Moreover, the court did not look at the content or quality of the response, although it is unlikely that an automated response generated on receipt of an enquiry would be sufficient. The ECJ's comment that the Directive requires service providers to offer an alternative medium of response to suit customers going on holiday also leaves uncertainty as to how accommodating a business can reasonably be expected to be.
A strict interpretation of the requirements of the Directive could be extremely costly for e-businesses, who are able to keep their costs down and prices competitive by reducing overheads by conducting their businesses via the web.
In the UK, the wording of the E-Commerce Regulations, which implement the Directive into UK law, are practically identical to the EU Regulations. However, realistically, individual consumers are unlikely to suffer loss from the speed, or lack of it, of an e-business breaching the Directive that would prompt them to bring a court action. Arguably, the increased financial costs of achieving strict compliance with the Directive being passed on to all consumers outweighs the cost of the inconvenience of a slightly slower response time to an individual consumer's query.