Protection of the EU’s consumers is going to be more efficient by updating and modernizing existing rules in line with the modern digital challenges. The direction of changes would fit into the consumers’ increased expectations for goods and services’ quality with the corresponding changes in the national economies. With the support of the EU institutions, consumers would indirectly “transform” companies to be more digital and green, while safeguarding consumers’ free and safe choice…
Consumers in the EU member states are facing one of the major challenges, especially in the digital world which have revolutionized shopping, services and/or financial markets. Thus the EU is stepping up consumer protection on several directions: a) making it easier for consumers to avoid risks related to having a credit, b) making stronger rules for product safety in place, and c) put more responsibility on market players to make it more difficult for bad actors to hide behind insufficient legal rules.
In November 2020, the Commission started some advances in the continental “consumer agenda”, with an objective to empower consumers with all the rights they could have within the rapidly changing digital environment.
A relevant, proportional and effective proposal for consumers, in the first legislative part, included revision of the General Product Safety Directive from 2002, which will become a regulation. In the second legal part, it includes a revision of the EU-wide rules on consumer credit from 2008.
Both are addressing a rapidly developing challenge in digitalisation, which the pandemic only fuelled. At the time of the Product Safety Directive (2002), only 9% of Europeans purchased online; today, this figure is over 70%. The consumers also buy more and more technology related products, such as wireless earplugs and/or gaming consoles; thus, too many flawed or unsafe products are being available online and no one feels responsible for their quality and possible removal.
Besides, the pandemic accelerated the negative sides of the process: e.g. a flood of deceptive and even dangerous products that were supposed to help keeping people safe from the coronavirus; some of them very expensive, which affected consumers’ financial situation. At the same time, the access to credit has become easier with a possibility to borrow money just with few mobile phones’ clicks. Being good in principle, the situation did not provide adequate protection to consumers: already before the pandemic, one in ten EU consumers had arrears (delays) on mortgage or rent, utility bills or hire purchase.
The number of over-indebted households is expected to increase in the post-pandemic period: a recent Commission’s survey (March 2021) showed that on average 38% of consumers have had concerns on how they are going to pay their bills next month; the situation varies greatly among the EU member states -from 7% to 71%.
While addressing these gaps, present proposals suggest that the online marketplaces selling digital products will have the responsibility to ensure that all the products are safe, regardless where they come from. With the revision of the consumer credit directive, the EU will secure that information related to credits must be presented in a clearer way so that customers would know what they are signing up for. Thus, the financial institutions cannot hide behind the wall of legal language or put the consumer under overload of information.
New EU consumers’ agenda
Both proposals are part of the New Consumer Agenda, launched in 2020, aiming to update the overall strategic framework of the EU consumer policy.
The New Consumer Agenda presents a vision for EU consumer policy from 2020 to 2025 focusing on five key priority areas:
- Green transition: the Commission aims to ensure that sustainable products are available to consumers on the EU market and that consumers have better information to be able to make an informed choice. Presently, the Commission publishes proposal to equip consumers with better information on the sustainability of products and to fight practices, such as green washing or early obsolescence. The Commission will also promote repair and encourage more sustainable and “circular” products. The “green transition” will work with the national economic operators to encourage their pledges in support of sustainable consumption.
- Digital transformation: the digital transformation is radically changing consumers’ lives offering new opportunities but also presenting them with challenges. The Commission aims to tackle online commercial practices that disregard consumers’ right to make an informed choice, abuse their behavioral biases or distort their decision-making processes, such as dark patterns and hidden advertising. In addition, consumers’ interests need to be duly taken into account when setting rules governing the digital economy and requirements for Artificial Intelligence (AI). To adapt current rules to the ongoing digitalisation and the increase of connected products, the Commission provides for a review of the product safety directive, as there is a need to reinforce consumer protection regarding digitalisation of retail financial services; hence, the directives for consumer credit and marketing of financial services will be reviewed.
- Effective enforcement of consumer rights: while enforcement of consumer rights is the responsibility of the EU states, the Commission has a coordinating and supporting role. The Commission will assist the member states in the timely implementation and enforcement of consumer law, including through the Consumer Protection Cooperation network. The Commission will also support national authorities, i.e. by deploying innovative e-tools to strengthen national authorities’ capacity to tackle illegal online commercial practices and identify unsafe products.
- Specific needs of certain consumer groups: consumers in certain situations can be particularly vulnerable and need specific safeguards, e.g. children, older people or those with disabilities. The Commission will look into requirements for childcare product standards. In relation to those with financial vulnerabilities, exacerbated by the pandemic, the Commission will increase funding for improved debt advice in the EU states. The Commission will also support initiatives providing local advice on how to access information, both online and offline.
- International cooperation: in a globalised world in which online purchases transcend borders, cooperation with international partners has become crucial. The Commission will develop an Action Plan with China in 2021 to enhance the safety of products sold online. As of 2021, the Commission will also develop regulatory support, technical assistance and capacity building for all EU partner regions.
Two main legal proposals
The European Commission has proposed revisions of two sets of EU rules to enhance consumer rights in a world reshaped by digitalisation and the present pandemic. The Commission is reinforcing its safety net for consumers, for example, by making sure that dangerous products are recalled from the market or that credit offers are presented to consumers in a clear way, easily readable on digital devices. The proposal updates both the existing General Product Safety Directive as well as the EU rules on consumer credit to safeguard consumers.
Commissioner for Justice, D. Reynders underlined that the pandemic crisis impacted consumers in multiple ways with many suffering financial difficulties. The digitalisation was accelerated by the pandemic while leading to a surge of online shopping and profoundly changing the financial sector. The Commission sees it as its duty to safeguard consumers, in particular, the most vulnerable: with the suggested revision of the existing EU rules on consumer credit and general product safety the EU would fulfill its duty.
- a) General Product Safety Regulation
The General Product Safety Regulation will address risks related to new technology products, such as cybersecurity risks, and to online shopping by introducing product safety rules for online marketplaces. It will ensure that all products reaching EU consumers, through online marketplaces (or from the neighbourhood shop) are safe, whether coming from or within the EU. The new Regulation will make certain that marketplaces fulfill their duties so that consumers do not end up with dangerous products in their hands.
The revision of the Consumer Credit Directive provides that information related to credits must be presented in a clear way, adapted to the digital devices so that consumers understand what they are signing up for. Furthermore, the Directive will improve rules with which creditworthiness, i.e. whether or not a consumer will be able to repay the credit, is assessed. The General Product Safety Directive has been in force since 200; it ensures that only safe products are sold on the EU single market. However, too many unsafe products still circulate on the EU market, creating an uneven playing field for businesses and an important cost for society and consumers. In addition, the rules need to be updated to address challenges linked to new technologies and online sales. New General Product Safety Regulation will replace the existing General Product Safety Directive and will turn it into a Regulation. The Directive is now 20 years old, and a revision was necessary and long awaited by both consumers and businesses. The states need improved rules and control of online sales channels and in particular the traffic of unsafe products on online platforms. In that context, it was critical to ensure that this new Regulation fully builds on the horizontal approach of the Digital Services Act.
The original Directive’s version sees in: https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:32008L0048; it was partly amended in 2008.
On another side, the regulation will ask the EU member states to promote financial education and to ensure that debt advice is made available to consumers; the proposals will be discussed by Council and Parliament for final adoption.
- b) Consumer Credit Directive Proposal
Initial Directive 2008/48/EC on credit agreements for consumers*) established a harmonised EU framework for consumer credit and provided a solid framework for fair access to credit for European consumers. However, since entering into force in 2008, the digitalisation has profoundly changed the decision-making process and the habits of consumers in general; the present revision aims to address these draw-backs.
*) The 2008 Directive in: https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:32008L0048
More information in the following links: Directive 2001/95/EC on general product safety (GPSD); Directive 2008/48/EC on credit agreements for consumers; Proposal for a Regulation on General Product Safety; Proposal for a Directive on consumer credits; Factsheet General Product Safety; Factsheet Consumer Credit; European Consumer Centres Network; Safety Gate