Newly adopted draft consumer rights Directive seeks to improve transparency of online marketplaces

The Permanent Representatives Committee of the Council of the European Union has agreed on the Council’s position on a draft directive which amends four existing EU directives protecting consumers’ interests and which will have an impact on the supply of digital services in Europe.

The draft Directive covers a wide range of topics. It amends the Unfair Commercial Practices Directive 2005/29/EC (UCPD), the Consumer Rights Directive 2011/83/EU (CRD), the Unfair Contract Terms Directive 93/13/EEC (UCTD) and the Price Indication Directive 98/6/EC (PID). It was proposed as part of the European Commission’s ‘New Deal for Consumers’.

The Directive aims to provide for more transparency for consumers in online marketplaces. It requires online marketplaces to clearly inform consumers about: (a) the main parameters determining ranking of the different offers, (b) whether the contract is concluded with a trader or an individual, (c) whether consumer protection legislation applies and (d) which trader (third party supplier or online marketplace) is responsible for ensuring consumer rights related to the contract (such as cancellation rights or guarantees).

In addition, the Directive requires:

• digital applications such as online marketplaces, comparison tools, app stores and search engines to indicate to their users which search results contain ‘paid placements’ where third parties pay for higher ranking, or ‘paid inclusion’ where third parties pay to be included in the list of search results
• the protection of consumers relating to ‘free’ digital services, namely digital services for which consumers do not pay money but provide personal data, such as: cloud storage, social media and email accounts

The Directive also includes provisions on:

• the enhanced harmonisation of rules on penalties; national authorities will in particular have the power to impose a fine of at least up to 4% of a trader’s turnover for widespread cross-border infringements when enforcing the UCPD, the CRD and the UCTD
• a right to individual remedies for consumers when they are harmed by unfair commercial practices, such as aggressive marketing (this is covered in the UK by the Consumer Protection (Amendment) Regulations 2014)
• the removal of disproportionate burdens imposed on businesses by existing legislation, such as outdated means of communication
• clarifications regarding member states’ freedom to adopt rules to protect the legitimate interests of consumers with regard to some particularly aggressive or misleading marketing or selling practices in the context of off-premises sales
• clarifications regarding the way misleading marketing of ‘dual quality’ products should be dealt with by EU member states

Next steps

The Romanian Presidency of the Council will now explore with the European Parliament the possibility of agreeing to adopt the Directive at first reading.