IP/07/158

Brussels, 8 February 2007

Consumers: Commission acts to boost confidence in digital world

A major new drive to fundamentally overhaul core EU consumer rules – including guarantees, refunds, cooling off periods - to adapt them to the challenges of a fast changing digital world has been launched today with the adoption of a European Commission Green Paper reviewing the existing rules. Consumer spending (households and non-profile institutions) accounts for a total of 58% of EU GDP. Consumer confidence is a key factor determining how and when consumers spend their money in different sectors of the economy. All the evidence is that consumers are not yet "comfortable" enough in the digital and online world to seize its full potential. Only tiny fraction - 6% of EU consumers - are currently shopping online cross border. With the help of the feedback from the Green Paper, the Commission aims to boost consumer confidence in the EU Single Market, with a single and simple set of rules which empower consumers to know their rights, make sound choices and ensure adequate protection when things go wrong. Clear legal rules will also incentivise operators, particularly SMEs to venture beyond borders un-tapping the potential for integration for the retail side of the market. The Green Paper invites comments and contains over 28 concrete suggestions (cutting across 8 Directives) for possible new action.

“There is an urgent need for action, the world is moving so fast and Europe risks lagging behind", said Meglena Kuneva, the new EU Commissioner for Consumer Affairs, in her first press conference in Brussels. "We need a root and branch review of consumer rules. At the moment, consumers are not getting a fair deal on line, and complex rules are holding back the next generation of bright business ideas. We must find new solutions to new challenges. The question is can we afford to have 27 mini-online markets in Europe, denying consumers choice, opportunity and competitive prices. We need to inject a new sense of consumer confidence into the e-shopping world so it becomes a trusted market space. The rules of the game have changed, it's time for consumer policy to respond."

The current situation

Recent evidence shows hundreds of complaints about online cross border shopping coming to European Consumer Centres (ECC) each year – with particular problems with non-delivery, late delivery, cooling off periods, returning goods and getting refunds topping the list.

Areas for action

Existing rules have served consumers well but they have evolved over 15-20 years. There is effectively a patchwork of different national rules, with EU basic standards topped up to different levels in different countries. There are also a whole new set of challenges in the online world which are not being dealt with effectively so consumers are not getting a fair deal and businesses are facing a maze of complex rules.

The Green Paper consults on possible action on 28 issues including:

• Reinforcing the notion of delivery for cross border purchases (the biggest online consumer complaint area) strengthening the protection given to consumers and the increasing clarity surrounding their rights on late delivery, no delivery and partial delivery.
• Clarifying and simplifying the rules on how to return products – the current EU wide standards differ greatly from notifying the seller by email to an obligation to use registered mail.
• Also setting common rules on the right and costs of returning goods – the arrangements currently vary from free of charge to the consumer bearing all the costs of returning the goods.
• Simplifying with common rules the remedies available to consumers. At the moment reduction of price or termination of contract can only be invoked if repair or replacement are impossible or disproportionate. It is difficult for consumers, particularly at a distance, to asses if a seller's claim that a particular remedy would be disproportionate or not. The Green Paper is considering a system where consumers could chose freely among remedies.
• Clarify, with common EU wide standards, rules covering "cooling off periods" - your right to send something back within a period of time if you have second thoughts and you decide that you don't want it.
• And there are new challenges that need to be addressed, Should current guarantees and rights that cover products be extended to certain services – the Consumer who buys a CD from a shop has a guarantee if it does not work a consumer who downloads music from the internet does not enjoy that protection. The rules should also be clarified to end uncertainty around the exception of "second hand goods sold at public auctions" from the current Sales Directive.

What next?

The consultation on the "Green Paper on the Review of the Consumer Acquis" will last 3 months. During this time the Consumer Commissioner will take the consultation "on the road." She will meet with a wide range of stakeholders – from women's groups, to older consumers, consumer organisations, SMEs, Members of the European Parliament, Member State Governments and major retailers. Proposals for specific initiatives - regulatory and otherwise – to remedy existing problems and shortcomings will then be brought forward.

See MEMO/07/48 for details of basic EU consumer rights and the most common