New consumer protection legislation proposed by the European Commission will increase the regulatory burden for business—and introduce stiff penalties for those who get it wrong.
The “New Deal for Consumers” will introduce a new directive on collective redress and amend four other consumer directives: the Unfair Commercial Practices Directive; the Consumer Rights Directive; the Unfair Contract Terms Directive and the Price Indication Directive.
The New Deal will empower qualified entities—such as consumer organisations—to launch representative actions on behalf of consumers. It will also introduce stronger sanctioning powers for member states’ consumer authorities; extend consumers’ protection when they are online; and clarify that dual-quality practices misleading consumers are prohibited (for example, people being sold lower quality food in other countries, despite packaging and branding being identical).
Under the proposed new law, consumers will have to be clearly informed about whether they are buying products or services online from a trader or from a private seller, so they know whether they are protected by consumer rights if something goes wrong.
And when searching online, consumers will have to be told when a search result is being paid for by a trader and what the main parameters determining the ranking of the results are. The New Deal will also extend consumer rights with regard to “free” digital services—where consumers provide their personal data, but do not pay with money—giving them the same withdrawal and information rights as they enjoy when paying for a digital service.
Frans Timmermans, first vice-president of the European Commission, said: “Today’s New Deal is about delivering a fairer Single Market that benefits consumers and businesses. The majority of traders who play fair will see burdens lifted. The handful of traders who deliberately abuse European consumers’ trust will be sanctioned with tougher fines.”
For widespread infringements that affect consumers in several EU member states, the available maximum fine will be 4% of the trader’s annual turnover in each affected member state. Member states are however, free to introduce higher maximum fines.