Sat. Oct 5th, 2024

EU Commission evaluates benefits and limitations of online consumer protection (updated)

Oct 3, 2024 , , , , , ,
online, shopping, ecommerce
How to to better protect consumers online? Photo by Tumisu on Pixabay

Brussels, 3 October 2024

Today, the Commission published the findings of the Digital Fairness Fitness Check, which evaluates whether the current EU consumer protection laws are fit for purpose to ensure a high level of protection in the digital environment. The Fitness Check covered three core Directives: the Unfair Commercial Practices Directive, the Consumer Rights Directive, and the Unfair Contract Terms Directive. The results show that these rules remain both relevant and necessary to ensure a high level of consumer protection and effective functioning of the Digital Single Market. However, it also shows that consumers behave differently online than offline. Moreover, technological developments and increased tracking of online behaviour enable businesses to more effectively persuade consumers online. This highlights the need for rules that are better adapted to the specific harmful practices and challenges that consumers face online.

Key findings
  • The three Directives have provided a degree of regulatory certainty and consumer trust to support the development of a diverse digital market, but consumers do not always feel fully in control of their online experience due to practices such as:
    • dark patterns in online interfaces that can unfairly influence their decisions, for example, by putting unnecessary pressure on consumers through false urgency claims;
    • addictive design of digital services that pushes consumers to keep using the service or spending more money, such as, gambling-like features in video games;
    • personalised targeting that takes advantage of consumers’ vulnerabilities, such as showing targeted advertising that exploits personal problems, financial challenges or negative mental states;
    • difficulties with managing digital subscriptions, for example, when companies make it excessively hard to unsubscribe;
    • problematic commercial practices of social media influencers. Some of these practices may already go against existing EU consumer law and other EU law, for example, the Digital Services Act and the Audiovisual Media Services Directive.
  • Consumers are losing time and money – the various harmful commercial practices online cost EU consumers at least €7.9 billion per year. At the same time, the cost for businesses to comply with EU consumer law is much lower, not exceeding €737 million per year.
  • Fragmented national laws: The effectiveness of EU consumer protection is undermined by insufficient enforcement , legal uncertainty, the increasing risk of regulatory fragmentation across Member States’ national approaches, and the lack of incentives for businesses to aim for the highest standard of protection.

The Fitness Check shows that we need to take further action to make the digital environment fair for consumers. This includes tackling the most harmful practices such as dark patterns. Increased legal certainty could prevent regulatory fragmentation and promote fair growth. There is scope for simplifying existing rules, without compromising the level of protection. It is also fundamental to ensure the coherent application and effective enforcement of EU consumer law and the EU digital rulebook, including the Digital Services Act, which prohibits several unfair practices on online platforms. All of this will be on the Commission’s agenda in the upcoming mandate.

Next steps

The Fitness Check provides a state of play and points to areas for improvement, which can be further analysed and built upon in the future. It does not establish recommendations on the exact format and content of future Commission action. The Commission consulted the public through several consultation activities, including a  Call for Evidence  and a public consultation.

In the mission letter addressed to Commissioner-designate for Democracy, Justice and the Rule of Law, President von der Leyen refers to the need to develop “a Digital Fairness Act to tackle unethical techniques and commercial practices related to dark patterns, marketing by social media influencers, the addictive design of digital products and online profiling especially when consumer vulnerabilities are exploited for commercial purposes”.

Background

EU consumers are among the most protected in the world, online and offline. EU consumer protection laws aim at empowering consumers to play an active role and fully benefit from the Digital Single Market.

In response to the emerging concerns about the lack of digital fairness for consumers, the Commission announced in the New Consumer Agenda that it will analyse whether additional legislation or other action is needed in the medium-term in order to ensure equal fairness online and offline. In 2022, the Commission launched a Fitness Check of EU consumer law on digital fairness in order to evaluate the situation.

More information
Quote(s)

Consumers must be able to rely on the same conditions for protection either they buy online or in the shop in their street. To further protect them in the digital age, our laws must evolve as swiftly as the technology we use. The findings of the Digital Fairness Fitness Check show that while our current rules are strong, they must be adapted to the technology to shield consumers from the unique risks they might be facing while shopping online.

Věra Jourová, Vice-President for Values and Transparency

The increased scale, speed, and potency of digital technologies has fundamentally changed the relation between consumers and traders. We know that there can be power imbalance or confusion about one’s responsibilities. Over the past years, we have accomplished a lot for consumers to better regulate the digital sphere, but our efforts cannot stop here. Our Fitness Check shows that we must step up action at the European level to achieve a fair digital economy where consumers are empowered and businesses can rely on a level playing field that fosters fair growth.

Didier Reynders, EU Commissioner for Justice

Source – EU Commission

 

Questions and Answers on the Digital Fairness Fitness Check

Brussels, 3 October 2024

What is the scope of the Fitness Check?  

As part of the Better Regulation agenda, a Fitness Check is a comprehensive evaluation of the extent to which a set of EU laws have contributed to achieve EU policy objectives. This exercise is useful to identify regulatory overlaps, inconsistencies, synergies, digitalisation potential and cumulative impacts. The Better Regulation agenda ensures evidence-based and transparent EU law-making based on the views of those impacted. The Commission evaluates and improves EU laws on a regular basis, focusing on delivering where it matters the most. The evaluation is carried out by the responsible Commission department in consultation of all relevant services and the Regulatory Scrutiny Board.

This Digital Fairness Fitness Check evaluates three EU consumer law Directives, the Unfair Commercial Practices Directive, the Consumer Rights Directive, and the Unfair Contract Terms Directive. These form the core of the framework of EU consumer protection that most traders and consumer-facing sectors must comply with. For the purposes of this Fitness Check, the Commission uses the concept of ‘digital fairness’ to refer to a high level of consumer protection, enshrined in Article 169 TFEU, that should be ensured in the digital environment.

The Fitness Check covers the five key evaluation criteria specified in the Better Regulation guidelines, namely: effectiveness (progress towards achievement of objectives), efficiency (cost-effectiveness and proportionality of costs to benefits, potential for simplification),  relevance (to current and emerging needs, fitness for purpose given regulatory and technological developments), coherence (internal and external with other EU or Member States’ policies) and EU added-value (the potency to yield results beyond what Member States could achieve alone).

What are some examples of problematic practices? 
  • Dark patterns are commercial practices deployed through the structure, design or functionalities of digital interfaces or system architecture that can influence consumers to take decisions they would not have taken otherwise. For example, companies could be presenting choices in a non-neutral manner, using fake countdown timers to create urgency or using emotional manipulation to make consumers second-guess their indicated choice. The Commission’s 2022 dark patterns study showed that 97% of the most popular websites and apps used by EU consumers deployed at least one dark pattern. The most common ones involved hiding information, creating false hierarchies in choice architectures, repeatedly making the same request and difficult cancellations.
  • In the context of the exponential growth of the digital subscription economy and ‘freemium’ business models, consumers increasingly encounter problems with the renewal and cancellations of their digital contracts. In the Fitness Check consumer survey, 40% of consumers considered that the design of the website or app made cancelling the subscription very difficult and 29% reported often having their free trial automatically extended into a paid subscription.
  • As consumers navigate the attention economy, concerns have increased regarding specific interface designs and functionalities that could induce digital addiction. In the Fitness Check consumer survey, 31% of consumers reported spending more time or money than they intended because of specific features such as the autoplay of videos, receiving rewards for continuous use or being penalised for inactivity.
  • Specific concerns have also arisen with products such as video games that increasingly involve the sale of virtual items, including gambling-simulating features such as loot boxes, and the use intermediate in-app virtual currencies, which can distort the real value of the transaction for consumers and encourage them to spend more than they intended.
  • Commercial practices can be personalised using data about consumers and their preferences. These practices include behavioural advertising, search result ranking, recommendations, prices and many other uses, which can offer many benefits for consumers. However, the 2023 Consumer Conditions Scoreboard found that 70% of consumers are concerned about how their personal data is used and shared. In the Fitness Check consumer survey, 37% of consumers had the impression that a company had knowledge about their vulnerabilities and used it for commercial purposes.
How is this related to other EU digital legislation, such as the Digital Services Act? 

The EU recently adopted landmark legislation such as the Digital Services Act, the Digital Markets Act and the Artificial Intelligence Act. These rules are complementary to EU consumer protection law and address several problems that consumers face with regards to risks related to online platforms, including marketplaces, and AI systems. In particular, the Digital Services Act and the Digital Markets Act prohibit dark patterns by regulated entities. The effective implementation of this digital rulebook is a key priority for the Commission and its enforcement continues at full speed.

The Fitness Check assessed the interplay between these rules and EU consumer law, showing that the current digital rulebook does not cover all traders and, therefore, does not address all problematic business-to-consumer commercial practices. Moreover, there has been an increase in the complexity of applying consumer protection rules in the digital area in conjunction with other digital legislation. The Fitness Check points to the need to take further action to ensure a consistent application of EU consumer law and the broader digital rulebook.

How will this influence future action at EU level? 

The Fitness Check is an evaluation, not a legislative proposal. The Fitness Check contains an evaluation of the state of play and points to areas for improvement, which can be further analysed and built upon in the future. It does not establish recommendations on the exact format and content of future Commission action.

The next Commission will propose specific measures, with reflections towards a Digital Fairness Act to tackle unsolved unethical techniques and commercial practices related to dark patterns, marketing by social media influencers, the addictive design of digital products and online profiling especially when consumer vulnerabilities are exploited for commercial purposes.

More information 

Source – EU Commission

 

EU-Abgeordnete Anna Vavazzini: Fairness by Design – Verbraucher online vor Manipulation schützen

Gerade hat die Europäische Kommission ihren Fitness Check zur Digitalen Fairness veröffentlicht, in dem Problemfelder und Handlungsoptionen aufgezeigt werden, um Verbraucherinnen und Verbraucher in der digitalen Welt besser zu schützen. Die Studie ist der erste Schritt der von Ursula von der Leyen angekündigten Maßnahmen im digitalen Verbraucherschutz.

Das kommentiert die Grüne Europaabgeordnete Anna Cavazzini, Vorsitzende des Ausschusses für Binnenmarkt und Verbraucherschutz:

“In der digitalen Welt herrscht ein massives Machtungleichgewicht. Verbraucherinnen und Verbrauchern sind durch Algorithmen, manipulative oder süchtig machende Designs, unklare Vertragsabschlüsse, personalisierte Empfehlungen und Preisgestaltung auf Online-Marktplätzen und Social Media großen Tech-Konzernen quasi schutzlos ausgesetzt. Ich begrüße ausdrücklich, dass die Europäische Kommission diese große Lücke im Verbraucherschutz schließen möchte. Denn einfach mehr Information und mehr Kennzeichnung führt in dem ohnehin schon riesigen Informationsfluss, der online auf Verbraucherinnen und Verbraucher einprasselt, längst nicht mehr zu einer informierten Kaufentscheidung, sondern mitten hinein in einen Sog von Influencer-Werbung und In-App-Käufen.

Die heute veröffentlichte Studie ist der erste Schritt, Verbraucherinnen und Verbrauchern online die gleichen Rechte zu garantieren wie an der Ladentheke. Wir brauchen Fairness by Design, was sogenannte Dark Patterns und abhängig machende Designs vom digitalen Binnenmarkt verbannt. Verbraucherinnen und Verbraucher müssen das Recht bekommen, nicht von ungeliebten Notifications und Werbung gestört oder von Apps getrackt zu werden. Mit einem Kündigungsbutton müssen Verträge online genauso einfach zu kündigen sein, wie sie abgeschlossen wurden. Und schließlich müssen wir den Kern des Machtungleichgewichts angehen: Mit einer Umkehr der Beweislast darf es nicht länger an den Verbraucherinnen und Verbrauchern liegen, manipulative oder unfaire Handelspraktiken nachzuweisen.”

Quelle – Grüne/EFA (per E-Mail) 

 

CCIA Europe: Evaluation of Current EU Rules Doesn’t Justify More Red Tape 

4 October 2024

Brussels, BELGIUM – Following a so-called ‘fitness check’ of EU consumer law, the European Commission last night published a new report that examines whether the same level of ‘fairness’ can be found online and offline. 

The digital technology sector cautions that pending proper implementation and evaluation of recently agreed rules, the Commission should refrain from considering another layer of red tape. Authored over the last two years, today’s report will inform the next Commissioner on whether or not there’s a need to update EU consumer protection law. 

While a Digital Fairness Act is already mentioned in the mission letter for Commissioner-designate Michael McGrath, it is simply too early to assess what kind of improvements the current rules would need, as the Regulatory Scrutiny Board also points out.

The Computer & Communications Industry Association (CCIA Europe) actively contributed to the fitness check consultations. The Association shares the Commission’s goal to uphold a high level of consumer protection in the European Union.

However, CCIA Europe believes that proposing new rules, like the aforementioned Act, without proper enforcement of existing rules will not solve any of the identified potential gaps. 

For example, the issue of deceptive design, often called “dark patterns”, has already been addressed in consumer law, as well as EU rules on data protection and intermediary liability. Focusing on their enforcement, notably by further empowering the Consumer Protection Cooperation Network, will deliver faster and better results than creating more rules

The report talks about online and offline gaps in consumer protection. For the online world, however, it should be noted that this evaluation took place over a period of time when new digital legislation was still being adopted or had just started to be implemented. 

It will take several years before it is possible to assess how landmark laws such as the Digital Services Act, the Digital Markets Act, and the Artificial Intelligence Act are going to impact personalisation, influencer marketing, and online product and service design at large.

European consumers’ trust in online services has been steadily increasing, and new rules should not lead to making their online experience less enjoyable. The fitness check should also support consumer opinions with more objective and descriptive data.

CCIA Europe looks forward to hearing McGrath clarify the next Commission’s political views on consumer protection policies during the upcoming hearings in the European Parliament. 

The following can be attributed to CCIA Europe’s Senior Policy Manager, Mathilde Adjutor:

“Today’s report on ‘digital fairness’ should only be seen as a first step in evaluating how fit EU consumer protection rules are for the online world. The European Commission should consider all possibilities, and especially coordinated enforcement of existing consumer laws and digital rulebooks, before proposing more red tape.”

About CCIA Europe

The Computer & Communications Industry Association (CCIA) is an international, not-for-profit association representing a broad cross section of computer, communications, and internet industry firms. 

As an advocate for a thriving European digital economy, CCIA Europe has been actively contributing to EU policy making since 2009.

CCIA’s Brussels-based team seeks to improve understanding of our industry and share the tech sector’s collective expertise, with a view to fostering balanced and well-informed policy making in Europe.

Source – CCIA Europe

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