European Union: Online Traders Falling Short Of EU Law Standards For Consumer Protection

The EU Consumer Rights Directive (the Directive) came into force in 2011 and was implemented in the UK by the Consumer Contracts (Information, Cancellations and Additional Charges) Regulations 2013. Its aim is to protect consumers when shopping 'away from business premises', and is often most applicable when shopping online. It sets out minimum information requirements that traders must adhere to, such as identifying the trader and the total price of the goods or services (including taxes and additional charges), and providing access to an online dispute resolution (ODR) platform. All information must be presented in a 'clear and comprehensible' manner for consumers. The full list of information requirements can be found at Article 6 of the Directive.

In order to assess compliance with the Directive, the European Commission, with the help of the Consumer Protection Cooperation network across Europe (CPC), annually instructs consumer protection authorities in different countries to undertake an EU wide screening (which they call a 'sweep') of online traders' websites. The latest sweep assessed traders offering a variety of goods, services and digital content, including clothing, computer software and entertainment tickets, whilst previous sweeps have reviewed sites providing services and price comparison tools in the travel sector. The CPC then analyses the different information requirements to establish where 'irregularities' of non-compliance exist, and presents a report showing compliance across the EU.Where potential breaches of the legislation are identified, the relevant consumer protection authorities will contact the responsible traders to corroborate compliance and at worst, can impose injunctions and/or financial penalties. Unfortunately, the results from the most recent screening paint a bleak picture of consumer power online.

Compliance 'irregularities'

60% of the websites that were analysed showed 'irregularities' of compliance with the information requirements. This means that more than half were not totally compliant, posing a risk to consumers being misinformed or even misled when purchasing goods and services online.

38% of the websites screened failed to adequately show the trader's registered address. In addition, a further 6% of such non-compliant traders were not identifiable on their websites at all. Not providing such information reduces the accountability of traders, and means consumers have no reassurance that the seller is genuine or certainty about which country they are purchasing from.

Fee & ODR information

The Directive stipulates that the total price inclusive of taxes and additional charges must be presented to the consumer at the point of offering the goods or services for sale. If additional charges cannot be calculated at that exact point (e.g. if postage and packaging depends on the size and quantity of goods ordered), then an indication of what such additional charges could be must be presented to the consumer.

However, over a third of the screened sites did not provide sufficient information on fees, with offending traders failing to disclose extra costs until after the consumer had selected the goods or services to purchase (and only when they were in the consumer's 'basket' and proceeding to payment). Consumers are therefore at risk of being lured into a transaction that is more expensive than originally anticipated.

Moreover, 59% of the sites showed a failure to provide access to an ODR platform. Traders must provide access so that if consumers wish to raise a dispute (e.g. in relation to the quality of goods or services), they can use the ODR platform to resolve the issue easily and inexpensively outside of court proceedings. Such platforms are an effective way to protect consumers who, generally, cannot afford to bring claims against traders, and so more than half of sites failing to comply is incredibly detrimental to consumer strength online.

Following this latest publication Věra Jourová, the Commissioner for Justice, Consumers and Gender Equality, commented:

"more than half of the websites show irregularities, in particular on how prices and discounts are advertised. This must stop as the consumers are often led to confusion and higher price than intended ... Online traders need to fully respect EU consumer rules. National consumer authorities, with the assistance of the Commission, will now take the necessary steps to stop such unfair business practices".

We have not yet seen reports of any sanctions being imposed as a result of the latest sweep, however, the results are a good reminder for traders to ensure they are compliant and provide the best quality service for their customers across the EU. For consumers, it is worth looking out for key pieces of information online, such as the name and origin of the seller and a potential ODR platform, to increase their security of purchase.

Squire Patton Boggs has significant experience advising consumer-facing businesses on issues of regulatory compliance, including defences against regulatory action. If there are issues you would like to discuss, please contact Emma Ball.

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