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Brussels, 22 July 2003

No hiding place for rogue traders: Commission proposes EU-wide network of national watchdogs

Unscrupulous traders will no longer be able to evade consumer protection authorities by targeting consumers living in other EU countries. The Commission has adopted a proposal for a regulation which will link up national enforcement authorities and enable them to take co-ordinated action against rogue traders who abuse the freedom of the EU's Internal Market in order to deceive consumers. The regulation will remove existing barriers to information exchange and cooperation and empowers enforcement authorities to seek and obtain action from their counterparts in other Member States. Following the recently adopted proposal for a Directive on Unfair Commercial Practices (see IP/03/857), today's proposal forms part of the Commission's drive to improve enforcement in the Internal Market (see IP/03/645), as set out in the Internal Market Strategy 2003-2006. The proposal will now be forwarded to the European Parliament and the Council as well as to the European Economic and Social Committee and the Committee of the Regions. It will be adopted through co-decision and could enter into force in 2005.

Health and Consumer Protection Commissioner David Byrne said: "Catching rogue traders is hard enough in a single Member State but it becomes almost impossible when they relocate to another country. Cross-border rip-off merchants undermine confidence in the Internal Market. This is a problem for business and the economy as well as for consumers. We know that consumers are reluctant to shop in other EU countries if they feel their rights are not going to be protected. Co-operation between national consumer protection authorities is the best way to catch these cross-border rogue traders. This, coupled with common rules guaranteeing high standards of consumer protection EU-wide, can help give consumers and honest businesses the confidence they need to take full advantage of the Internal Market."

Cross-border scams: a growing problem

Cross-border problems are growing as rogue traders adapt to new technologies and opportunities. For example, the European Advertising Standards Alliance (EASA) estimates that around 63% of the cross-border complaints received between 1992 and 2002 concerned rogue or peripheral traders, and this rises to about 86% for direct mail. Recent examples of rogue traders operating in the Internal Market include misleading and threatening clairvoyancy services, deceptive prize draws, mailings concerning unsolicited goods 'waiting' for consumers, unsolicited first aid kits accompanied by demands for payment, direct marketing of slimming products to children and misleading marketing by 'holiday clubs'. These problems and the inability of national systems to deal with them have also been recognised at an international level. The Organisation for Economic Cooperation and Development (OECD) has recently adopted a recommendation underlining the need for action.

Seamless co-operation between Member State authorities

The aim of the regulation proposed by the Commission is to enable national authorities to exchange information and cooperate with counterparts in other Member States as easily and seamlessly as with other authorities in their own country. The regulation will guarantee that each Member State effectively enforces EU law in its territory on behalf of all European consumers. This should boost the confidence of consumers and business in the Internal Market following the EU's enlargement in 2004. It should also give national governments confidence to open up the Internal Market further.

The proposal seeks to tackle the barriers to effective cooperation between national enforcement authorities when dealing with traders targeting consumers across internal EU borders, through the Internet, by direct mail, telephone or other methods. Existing national systems of enforcement are not geared up to the challenges posed by rogue traders who operate across borders. Existing informal cooperation initiatives, such as the International Consumer Protection Enforcement Network (Europe), face legal barriers such as rules in many countries restricting the sharing of information with other national authorities.

The regulation will require each Member State to designate a public enforcement authority to be part of a mutual assistance network. Each of these competent authorities will then be able to call on other members of the network for assistance in investigating a possible breach of consumer laws, finding information or, ultimately, ensuring a rogue trader is stopped. In return for receiving these rights, each competent authority will, in turn, be obliged to provide assistance to its counterparts in other Member States. This reciprocity ensures a balance between the benefits and responsibilities of each member of the network. Rogue traders who break the law will, therefore, be detected, investigated and stopped quickly and effectively before they cause widespread harm to consumers and honest traders.

The regulation also sets out 'soft' supporting measures to foster expertise, trust and cooperation between competent authorities as well as the possibility of international cooperation agreements between the EU and third countries.

Scope of the co-operation

The regulation will apply only to cross-border breaches of EU consumer protection laws and not to domestic transactions. Health and Safety issues are not included. Only the public authorities designated by the Member States will acquire the rights and responsibilities provided in the proposal. The existing rights and obligations of consumers, businesses and consumer associations are unchanged. In order to protect honest traders, investigated by mistake, all communications between the competent authorities will remain confidential. Similar EU legal instruments can be found in customs, taxation, competition and financial services.

Further Information

The adoption by the Commission today of its proposal for a Regulation on Enforcement Cooperation follows its Green Paper on EU Consumer Protection in October 2001 (see MEMO/01/307) and the Follow-up to the Green Paper in 2002 (see IP/02/842, IP/02/1683 and MEMO/02/135).

At an informal ministerial meeting on EU consumer protection, held during the Greek Presidency, a large majority of participants strongly supported the idea of a regulation. Further information can be found at:

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