This article was originally published on the ESRC Just Energy website.
In April 2018, the European Commission proposed the so-called “New Deal for Consumers” in order to strengthen EU consumer rights and enforcement. These legislative proposals aim to provide a toolbox of future-proof and comprehensive responses to a series of legal challenges such as the ones that affected European consumers in recent years. In particular, the ‘Dieselgate’ scandal affected millions of consumers throughout Europe and the US, but because of the existing legal frameworks, EU consumers and national authorities were much less able to get compensation and impose penalties on Volkswagen than their counterparts in the USA.
The proposal will amend four of the seven horizontal Directives that make up the core of EU consumer legislation and apply to all sectors of economy: the Unfair Commercial Practices Directive (UCPD), the Consumer Rights Directive (CRD), the Unfair Contract Terms Directive (UCTD) and the Price Indication Directive (PID).
The 2017 Fitness check and the subsequent evaluation of Directive 2011/83/EU showed that the majority of EU consumer rules remain fit for purpose, but that they need to be better enforced and modernised. The Injunctions Directive has not been forceful enough (procedures are too costly, lengthy and complex) and has had too little impact on consumer redress. Collective redress is still limited because of complex and/or rigid procedures in many member states. Indeed, nine countries do not provide any possibility to claim compensation in mass harm situations collectively.
In order to respond to this problem, the ‘New Deal for Consumers’ will empower qualified entities to launch ‘representative actions’ on behalf of consumers, including at trans-national level, and introduce stronger sanctioning powers for member states’ consumer authorities. The representative actions proposal will replace the current Injunctions Directive while complementing the regulation on consumer protection cooperation and the alternative dispute resolution for consumer disputes directive.
National consumer authorities will be empowered to sanction harder the companies at fault, especially multinational corporations. Safeguards presented by the European Commission guarantee that collective redress cases will benefit consumers first and will not to lead to private enforcement nor give “more business for law firms”.
The proposal is also taking a bold step to adapt EU consumer protection legislation to the digital economy and help consumers purchase online goods, services or digital contents safely. For instance, consumers will have to identify if the third party selling the item is a professional or another consumer. The nature of the third party determines if consumer laws apply and if the third party supplier or the online marketplace is responsible for granting consumers the rights stemming from to the contract, such as the right of withdrawal or legal guarantee.
Advertising on search engines will also have to be apparent, addressing a recurring issue regarding sales and commercial practices. Online marketplaces will have to display the main parameters determining the ranking of the results. Interestingly, consumers will benefit from the same information rights and have 14 days to cancel their contract when buying a digital service ‘for free’ (or rather with their data, such as cloud storage services, social media or email accounts).
The 2017 Consumer Conditions Scoreboard reports that in 2016, a fifth of consumers encountered at least one problem which could have become a complaint. In 2016, a third of those who could have complained decided not to because they thought the problem was not worth the time or the money. Of those who did complain, 63.4 per cent were satisfied with the way their complaint was handled. The European Commission hopes that the measures of the New Deal will have an impact on the level of protection and redress for all consumers throughout Europe.