Reports in 2013 about online business transactions across EU national borders revealed some disturbing facts. According to the 2013 Flash Eurobarometer reports (nos. 358 and 359, 2013), retailer and consumer attitudes regarding cross-border transactions were similar: only 36 percent of European consumers felt confident enough to make cross-border online purchases, while an alarming 40 percent of retailers felt that compliance with the varying national consumer protection rules would be too costly for business. Accordingly, only 25 percent made any effort to reach out to consumers beyond their national borders.
Recognizing a huge untapped potential for economic growth in online sales, the European Union reviewed existing Directives dealing with consumer protection to identify options to improve the exploitation of such potentials. As a result, the European legislature has decided to standardize and simplify rules and guidelines, especially with regard to mandatory information requirements. It has amended Directives 93/13/ EEC and 1999/44/EC and repealed Council Directive 85/577/ EEC and Directive 97/7/EC. In their stead, it adopted the Directive of the European Parliament and of the Council of October 25, 2011 on Consumer Rights (Directive 2011/83/ EU – Consumer Rights Directive).
Member states within the European Union were mandated to have implemented the Consumer Rights Directive into their respective national laws by June 13, 2014.
The scope of the Consumer Rights Directive in general covers all contracts between a trader and a consumer but explicitly excludes several contracts, such as contracts for social services, healthcare, gambling or financial services (Article 3).
The Consumer Rights Directive is organized into six chapters. Chapters two to four are particularly pertinent, setting up the playing field for retailers and consumers and the rules and guidelines both parties must adhere to. Chapter two lays out specifics for “non-distance” and “on-premises” transactions – e.g. transactions at the retailer’s established place of business, such as the retailer’s shop, market stall or fair stand. Chapter three spells out the rules for “distance” and “off-premises” transactions (these include transactions by phone, mail order, e-mail, Internet or, alternatively, on the consumer’s doorstep or any other place away from the retailer’s established place of business). Additionally, Chapter three governs the consumer’s right to withdraw from distance and off-premises contracts. Chapter four covers – among others – legal questions regarding time and execution of delivery (Article 18), as well as fees a retailer is allowed to pass onto the consumer (Article 19), fees for communication by telephone (Article 21) and the condition of the consumer’s express – i.e. no-default settings – prior consent for any payments additional to the regular remuneration (Article 22).
What does this mean for online retailers? Here is a brief summary of some major changes that will affect businesses operating online.
- Implementation of further fundamental information obligations with respect to consumer contracts depending on whether the sale has been made on- premises, off-premises or at a distance. The new obligations comprise, among other things early information on delivery restrictions and on the means of payment which are accepted – e.g. information on guarantees including the applicable conditions or the interoperability and compatibility of technical products.
- Far-reaching amendments and harmonization of laws on distance selling, e.g. revision of the right of withdrawal. An EU-wide model withdrawal form, which although not mandatory, provides for uniform instructions and information exchange between retailers and consumers no matter where business is conducted within the EU. Non-compliance with the obligation to inform the consumer about these rights will lead to an extension of the withdrawal period to 12 months from the end of the initial withdrawal period. The direct costs of returning the goods in the course of a withdrawal can be imposed on the consumer, provided he or she is informed about it correctly.
- Final prices must be indicated, including tax, and where such prices cannot be reasonably calculated, the manner in which the price will be calculated must be provided, including all additional freight, delivery or postal charges. Additional price elements may not be added by default settings which the consumer is required to reject. Extra fees and surcharges associated with using certain payment methods (for example credit card and debit card fees or telephone fees) are not permitted in excess of what retailers are themselves subject to payment for.
- The seller must provide a confirmation of the contract concluded on a durable medium (email suffices) within a reasonable time after the conclusion of the contract, i.e. at the latest at the time of delivery.
Taking into consideration all the above, it is important to note that the Consumer Rights Directive itself allows member states to refrain from applying it for transactions off-premises which are not in excess of €50. The Consumer Rights Directive specifically provides that member states may define an even lower value in their national legislation.
Beside the extensive regulation of off-premises and distance sales, the Consumer Rights Directive stipulates for the first time comprehensive information requirements for on-premises sales. These include information on the main characteristics of the goods, the identity and the contact details of the retailer, the total price (see above), arrangements for payment, delivery and performance, the retailers complaint handling policy as well as a reminder on the guarantee of conformity for goods and the conditions of after-sales services and commercial guarantees.
However, EU member states are free to not apply such obligations to contracts on day-to-day transactions, which are performed immediately at the time of their conclusion. Hence, classical fashion business in retail stores will not be affected in all member states.
Below, we look at how the Consumer Rights Directive has been implemented into the national laws of selected member states.