Brussels, 8 February 2007
Which Directives are part of this Review?
The review encompasses all EU consumer contract law, with the exception of specific rules in sector-specific legislation. The following directives are particularly concerned: the Unfair Contract Terms Directive and the Directive on Sale of Consumer Goods and Guarantees, the Distance Selling Directive, the Doorstep Selling Directive, the Package Travel Directive, the Timeshare Directive, the Directive on Injunctions and the Price Indication Directive.
What EU rights do I already have as a consumer?
These 8 EU Directives set out some of the most basic rights we take for granted. In short, the basic rights are as follows:
For a more detailed summary of what your rights are see
Why is there a need for a review?
The world in which consumers make their choices has also been fundamentally transformed in recent years. Our consumers have also moved on – with online e-consumption meaning distant markets are now just a click way. Whereas in the early days of the Single Market in 1992, direct cross border business to consumer (retail shopping) was a small part of the internal market – mainly confined to shopping holidays, shopping trips, mail order distance sales etc, the internet has transformed the potential for direct consumer to business transactions between different Member States.
A lack of consumer confidence and complex and unclear rules are holding consumer and business back from seizing this potential - only 6% of consumers in 2006 bought an online purchase cross border. Several of the eight directives which are now many years old need to be updated in order to meet new problems and challenges. Existing consumer contract rules directives are also based on minimum harmonisation, which means that EU Member States are allowed to adopt stricter rules in their national legislation as long as the minimum level laid down in the directives is respected. That has produced a patchwork of different standards across the EU leaving business and consumers not sure of what standards will apply.
What kind of problems are people having on line?
A 2005 study by the European Consumer Network (EU consumer advice centres) on cross border complaints showed that :
See "The European Online Marketplace: Consumer Complaints 2005. A summary and analysis of consumer complaints reported to the European Consumer Centre Network" for more detail and for national examples. http://www.eccdublin.ie/publications/reports/ecc_reports/eur_online_marketplace_20052.pdf
Can you give some case studies or examples?
Germany: A client based in Germany ordered clothing items totalling £200 from a UK trader. Once the item arrived he discovered that it was the wrong size and not as he thought when he first ordered it. He returned the jacket following the instructions given by the trader but did not received a refund of monies paid three months later. In fact, he has a right to change his mind within a minimum of 7 days. (Cooling off period not respected)
Portugal: A Portuguese based client purchased an iPod from a French web-trader. Four days after delivery the item became faulty and the client immediately contacted the trader. There was some dispute about what action the trader was willing to take and the consumer approached the national ECC, who was able to explain that she was entitled to a repair or replacement. Subsequently the trader was persuaded to provide a full refund for the faulty item. (Problems with range of remedies available)
Sweden: A Swedish consumer ordered and paid in advance for a DVD-player from an Italian webt¬rader. A DVD-player was delivered but it was not the one ordered by the consumer. The DVD-player was therefore sent back to the seller by the consumer, who demanded the immediate delivery of the ordered item. Following this, however, the consumer did not receive any response to questions put to the seller regarding either delivery or a refund. The consumer filed a complaint with ECC Sweden, who wrote to the seller but also received no response. After a letter of reminder that was also ignored. (Product non-conformity)
Czech Republic: A Czech consumer bought a Plasma TV set from a German webtrader at an internet auction. The consumer was very pleased with the auction since the price was rather good and approxi¬mately 400 Euro lower than at other auctions for the same Plasma TV. The company promised the consumer that they would send him the TV within a few days of receiving the payment. The consumer paid the requested amount in advance to the webtrader’s bank account. The webtrader had previously informed the consumer that the transport cost would be 79 Euro for international delivery. But the trader suddenly demanded an extra 45 Euro for delivery to the Czech Republic. The consumer protested against this supplementary charge but paid in order to avoid problems. (additional charges)
What do consumers say is holding them back?
Surveys show that consumers attribute their lack of confidence in cross border shopping to a variety of factors. Their primary belief is that it is harder to resolve problems related to making complaints, returns, price reductions, guarantees etc (71%). Around two in three consumers believe that: there is a greater risk of falling victim to a scam or fraud (68%); there is a greater chance of having delivery problems with goods or services (66%); there are more problems returning a product they bought at a distance within the "cooling-off" period (65%). At the same time (64%) of consumers think that it is harder to trust the safety of goods and services when buying cross border, while (56%) think that sellers in other countries are less likely to respect consumer protection laws. Only 57% of consumers have seen a cross border offer.
Survey data: "Eurobarometer on Consumer Protection in the Internal Market. Commission Eurobarometer September 2006
What about businesses?
The current rules are also causing a block for business: Most EU retailers sell to customers in shops, but a very significant proportion of retailers (employing at least 10 persons) are engaged in Internet based sales (57%) Two thirds (66%) of EU retailers only sell in their domestic market.
Only, three-in-ten retailers in the EU (29%) sell cross-border, using distant sales methods, to at least one other EU country, but only one-in-five (19%) advertise cross-border. Compared to actual sales activities, a surprisingly high number of retail enterprises are “prepared” to sell on a cross-border basis. Almost half of the EU retailers (48%) consider they are currently prepared to sell to consumers in different Member States. Eighteen percent of all EU retailers also consider being prepared to make cross-border sales to 10 or more Member States, while only 5 percent report that they actually do it.
The most important obstacle to cross-border trade identified by the retailers is the perceived insecurity of transactions i.e. fraud or non-payment (61% of respondents that answered the question consider it is a fairly important or very important obstacle). Other obstacles do not differ much in terms of perceived importance: retailers are concerned about different national fiscal regulations, VAT rules (58%), the difficulty to resolve complaints and conflicts cross-border (57%), the differences in national laws regulating consumer transactions (cooling off periods, refunds, deliveries, withdrawals etc) and the difficulties in ensuring an efficient after-sales service (55%) and, finally, the extra costs arising from cross-border delivery (51%). Only the costs arising from language differences clearly stand out as being less important (43%).
Survey data: "Business Attitudes toward cross-border sales and consumer protection. Commission Eurobarometer February 2007
Is this only review about the online world?
No, the review looks at these consumer rules in all aspects of the internal market – There are gaps and shortcomings that need to be remedied online and in they real world.
The focus on the online and digital aspects in the Review launched with the Green Paper is because, with the digital revolution, there is so much potential for the online Internal Market to really offer consumers more quality and choice and competitive prices – but it’s a new environment and the rules need especially to adapt to that.
So how much is retail online shopping expected to grow?
Online shopping is set to boom. Industry analysts forecast online retail sales in Europe to more than double in the next five years to reach 263 billion in 2011 as the number of online shoppers grows to 174 million. (Forrester Research)
Fuelled by improved supply and aided by comparison shopping sites a more confident online shopper will increase his overage yearly net retail spending to €1,500. In the UK, net consumers will outspend even their US counterparts online. The winning net purchase categories are travel, clothes, groceries and consumer electronics, all above 10 billion per year mark
Will the EU get left behind?
Yes, this is about lost potential. EU online shopping is developing with national markets. In the last 12 months, 27% of EU citizens made an e-commerce purchase and 50% of those with internet access at home did so but mainly within national markets. But 27 mini markets seem to be emerging. This is a huge opportunity lost.
Online confidence has not yet developed on a cross-border basis. Only 6% of EU citizens made an online purchase from a company in another Member State.
Do you have any figures for national online markets?
Figures released in January from a London industry researcher on European online holiday shopping activity in the U.K., France and Germany. According to the analysis, of the three countries studied, Germans spent the most online during the holiday period -- an estimated 5.4 billion EUR from 30 October - 31 December, 2006. U.K. consumers spent an estimated 4.0 billion EUR online during the same period, and the French spent an estimated 1.9 billion EUR. This compares to an estimated 18.8 billion EUR ($24.6 billion) spent in the U.S. during the holiday shopping period (1 November to 31 December). In fact according to figures released by IMRG, an e-retail association in Britain, UK online spending experienced a massive 54% increase during the Christmas holiday period from 2005 to 2006.
With only 6% of EU consumers shopping from suppliers beyond their national borders this kind of potential growth is simply not taking hold EU wide.
Will the Commission revise all 8 Directives?
The Green Paper asks the question, should the revision should be carried out tackling each specific directive one by one, or with a cross-sector approach, by regrouping issues present in different directives into a single legal instrument. It also consults on to what extent the legislation should be harmonised throughout the EU. It furthermore consults stakeholders on more specific issues - both those common to several directives, e.g. cooling off periods and information requirements, and those more specifically concerning sales contracts.