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Focus on Regulation

“New Deal for Consumers” – draft package adopted by the European Commission

The European Commission has adopted a “New Deal for Consumers” package which aims to empower consumers, promote fairness and build trust across the single market.

The package was adopted by the Commission in response to an evaluation on EU consumer protection and marketing directives. The evaluation found such laws need to be better applied, enforced and modernised for the digital age.

The new package published on 11 April 2018 includes two new proposed directives (the “Directives“):

  • a directive on better enforcement and modernisation of EU consumer protection rules; and
  • a directive on representative actions for the protection of the collective interests of consumers.

The Directives could have a significant impact on the enforcement and protection of consumer rights. Consumer facing businesses will need to be mindful of the Directives as they progress through the EU legislative process.

The main aims of the package include:

  • Modernising consumer rules to respond to current challenges.

The proposals seek to extend consumer protections to “free services” (such as cloud storage and social media accounts) where consumers provide their personal data, rather than monetary payment in return for services. The Commission is also looking to remove disproportionate burdens for traders, for example, traders could choose more flexible means of communicating with consumers e.g. via web chats.

  • Better redress opportunities for consumers and supporting effective enforcement of public authorities. 

The “New Deal for Consumers” package would allow consumers to claim through mass representative actions in “mass harm situations” (i.e. situations that affect large numbers of consumers in the EU). The proposals would also allow national authorities to impose a fine of at least 4% of the trader’s turnover for widespread cross-border infringements.

  • Improving awareness of consumer rights and helping traders to comply with their obligations.

The Commission is looking to run campaigns to help Europeans become more aware of their consumer rights. Such campaigns will focus on Member States where consumers’ knowledge of their rights is at the lowest. The proposals also seek to introduce a number of online tools to assist traders understand what they need to do to comply with their obligations.

  • Ensuring equal treatment of consumers and empowering national authorities to tackle issues with “dual quality” of consumer products.

The Commission has already adopted guidelines on the application of EU food and consumer laws to address the issue of “dual quality” products. The “New Deal for Consumers” package looks to make it difficult and costly for traders who mislead consumers by marketing “dual quality” goods by introducing stricter penalties for illegal practices, individual remedies for misled consumers and collective redress mechanisms.

  • Increasing cooperation with partner countries outside the EU.

The proposals look to increase international cooperation with partners outside the EU. For example, the Commission intends to co-ordinate consumer protection enforcement with key jurisdictions such as US, Canada and potentially China.

  • Preparing consumer policy for future challenges.

The proposals highlight Artificial Intelligence, the Internet of Things and Mobile e-commerce as emerging challenges for consumer protection law. The Commission states it will continue to monitor consumer markets and develop behavioural insights to inform its policymaking on future challenges.

The “New Deal for Consumers” package is a priority for this Commission which seeks to finalise the Directives before May 2019. The UK has also recently published a green paper on modernising consumer markets (see our blog here).

The new package documents are available here.