Fitness Check: Consumer Protection Legislation – How Healthy is It?

26.09.2017

What was the “Fitness Check”?
On 29 May 2017 the European Commission (the “Commission”) published its “Fitness Check” of the following six key consumer protection and advertising protection directives:
• The Misleading and Comparative Advertising Directive (2006/114/EC) – which prohibits advertising that misleads traders and regulates comparative advertising.
• The Unfair Commercial Practices Directive (2005/29/EC) – which prohibits misleading and aggressive commercial practices.
• The Price Indication Directive (98/6/EC) – which deals with the indication of the selling price and the price per unit of measurement of products offered to consumers.
• The Unfair Contract Terms Directive (93/13/EEC) – which protects against the use by traders of standard contract terms which create a significant imbalance in the parties’ rights and obligations to the detriment of the consumer.
• The Sales and Guarantees Directive (1999/44/EC) – which sets the rules for when products are in conformity with the contract and deals with commercial guarantees.
• The Injunctions Directive (2009/22/EC) – which enables injunctions to be obtained if a trader’s practice breaches EU consumer law.
The Commission also published a separate report evaluating Directive 2011/83/EC of 25 October 2011 on consumer rights (the “Consumer Rights Directive”).
The purpose of the study, which commenced in January 2016, was to establish the effectiveness, efficiency, coherence, relevance and EU added value of the above legislation. The Commission also wanted to assess the relationship between the Consumer Rights Directive and existing sector specific consumer protection rules in passenger transport, electronic communications, energy and consumer financial services in addition to the relevant rules in the E Commerce Directive and Services Directive.
In addition, the Commission wanted to examine the extent to which the Directives enhance consumers’ trust and confidence and removed regulatory obstacles which unjustifiably hindered cross-border trade. The study was a country analyses by legal experts in all 28 Member States and involved a review of academic literature, an evaluation of case law, interviews, public consultations and surveys.
What did the Commission find?
Overall, the Commission found that the legislative framework has been considered broadly fit for purpose. The Commission held that the Unfair Commercial Practices Directive and the Unfair Contract Terms Directive have been successful in creating a comprehensive EU legislative framework in those areas and in providing added value. It was noted that these two Directives have significantly increased consumer protection in those Member States where none or a less comprehensive previous framework existed before.
It was also determined that the Misleading and Comparative Advertising Directive is also effective for protecting businesses, with only a limited number of business-to-business misleading practices reportedly being a cause for concern. Similarly, the Price Indication Directive was considered to be generally effective in providing added value in relation to better unit price information. Finally, the Injunctions Directive was determined to have contributed much to the enforcement of EU consumer law at national level, although it was noted that more needs to be done to ensure consumer law is enforced effectively in Member States.
The Commission did, however, identify some issues which are impacting the effectiveness of the Directives including:
• A lack of awareness of consumer rights;
• Some shortcomings in available remedies.
• Insufficient enforcement across Member States (with penalties set at differing levels).
• Consumers are generally reluctant to initiate proceedings, particularly when their loss is small.
What further action is recommended?
While the fitness check overall considered the Directives to be fit for purpose, even in the context of the digitalisation of expansion of online trade, there are still recommendations arising. Given that the Directives should be capable of addressing the identified difficulties, the proposed recommendations and follow up are largely focused on awareness raising to ensure that the framework is understood adequately by all. The Fitness Check determined that improving the overall effectiveness, efficiency and coherence of the Directives requires three strands of action:
1. Ensuring that not only consumers, traders and their associations, but also judges and legal practitioners have a better knowledge of all rights and duties under this part of EU consumer and marketing law;
2. Ensuring stepped up enforcement, easier redress when the substantive law provisions are breached and reducing divergences in implementation;
3. Considering targeted amendments to simplify the regulatory landscape where this is justified.
The areas particularly targeted for follow up include the following:
1. Extending the level of protection under the Consumer Rights Directive;
2. Expanding and strengthening remedies for consumers, in particular by developing EU-wide rights to individual remedies, an improvement of injunction procedures and analysing assessments of collective redress across the EU;
3. Harmonising the rules on distance selling fully;
4. Harmonising and increasing sanctions for consumer law breaches.
In summary, the Consumer Protection legislation is generally healthy and fit for purpose, however, further actions are required to ensure it is appropriately and consistently understood and implemented across all Member States. The recommendations give an indication of the likely scope of changes that may be proposed although the detail and timeframe of any legislative changes are not yet known.
For the full results of the Fitness Check please see here.