Newsletter - TerraLex Connections
By Giedre Rimkunaite-Manke*
As of mid-June 2014, changes in consumer protection laws were to be introduced by all Member States of the European Union. Such changes are likely to stir up particular interest among online traders for whom some of the requirements for distance selling of goods or services will have to be changed.
EU Consumer Protection Reform
In fact, the EU consumer protection reform took place a couple of years ago when a new Directive was adopted by the European Parliament and the Council at the end of 2011.1 The Directive was to be implemented in all Member States by mid-June this year. The Directive is based on the principle of full harmonization, which means that equal consumer protection must be ensured throughout all Member States. This is particularly important for e-commerce trade, which usually goes beyond the boundaries of one state. Now consumers will know that they have identical rights in all Member States whereas traders will have no need to adapt to the peculiarities of national law of each Member State.
Right of Withdrawal
After the reform, consumers will continue to enjoy the right of withdrawal from a distance contract without having to give a reason therefor. In other words, consumers will continue to be allowed to send the goods purchased by them online back to the trader or to cancel the services ordered. Before the reform, the period of withdrawal varies amongst the Member States. Now a uniform period of 14 calendar days after the day on which the goods are delivered to the consumer will apply.
On the other hand, the right of withdrawal will not apply without exceptions, a list of which has even been expanded to solve certain ambiguities that have hitherto existed in consumer protection regulation. This is in fact good news for the traders. However, in order to make such exceptions applicable, certain additional requirements must be satisfied in some of the cases. This primarily concerns distance contracts for sale or supply of software, e-books, music and other digital content. Bearing in mind that it was possible for the hitherto applicable legislation to have different interpretations, it was not quite clear whether the consumer was (or was not) allowed to give back the digital content purchased by him online. Now it has been clearly stated in the Directive that the consumer has no right to give such goods back if the performance has begun with the consumer’s prior express consent and his acknowledgment that he thereby loses his right of withdrawal. Although the cases when such express consent and acknowledgment should be deemed given by the consumer have not been explicitly defined, a clearly formulated text of the consent and the consumer’s physical action of for example activating a button or putting a tick should definitely be construed as the consumer’s express consent. To the contrary, the mere fact that the consent has been included in the website terms and conditions will not suffice. Having failed to receive such consent from the consumer, the trader will not be able to apply the exception, and the consumer will be allowed to give back the digital content purchased by him online.
It is noteworthy that traders will be required to provide consumers with information on the right of withdrawal, namely to explain in a clear and comprehensible manner the conditions, time limits and procedures for exercising such right and to make a modal withdrawal form available to them. If these requirements are ignored by the trader, the aforementioned 14-day withdrawal period will be extended by one year. This should encourage traders to take the above requirements very seriously.
Obligation to Issue Contract Confirmation
The new laws impose a requirement to provide the consumer with the distance contract confirmation on a durable medium. Such confirmation ought to be issued within a reasonable time after the conclusion of the contract, and at the latest at the time of the delivery of the goods or before the performance of the services begins. Although the term ‘durable medium’ has been previously used in consumer protection laws, it did not have a clear meaning. According to the new laws, a ‘durable medium’ means any instrument which enables the consumer or the trader to store information addressed personally to him in a way accessible for future reference for a period of time adequate for the purposes of the information and which allows the unchanged reproduction of the information stored. Such media should include in particular paper, USB sticks, CD-ROMs, DVDs, memory cards or the hard disks of computers as well as e-mails. It therefore follows from the above definition that the contract confirmation will have to be sent to the consumer via e-mail (especially when the digital content goods are purchased) or be printed or supplied on another medium and delivered to the consumer along with the tangible goods.
The contract confirmation should contain all information required to be provided by the trader to the consumer before concluding a distance contract unless the trader already has provided such information to the consumer on a durable medium prior to the conclusion of the contract. This means that all information about the contract, ordering and delivery terms, applicable guarantees and the right of withdrawal as well as the trader identification details will have to be sent to the consumer via e-email or be supplied on any medium either before or immediately after concluding the contract.
The new laws contain one more novelty, notably the requirement for the trader to ensure that the consumer, when placing his order, explicitly acknowledges that the order implies an obligation to pay. If placing an order entails activating a button or a similar function, the button or similar function must be labelled in an easily legible manner only with the words ‘order with obligation to pay’ or a corresponding unambiguous formulation indicating that placing the order entails an obligation to pay the trader. It is more than likely that there may also be other ways to implement this requirement; for example, the consumer may be asked to tick off that he understands that by placing an order the consumer agrees to pay.
Additional Requirements for Digital Content Provision
In addition to the general information to be provided to the consumer before concluding the distance contract, in case of supply of software, e-books, music and other digital content the trader must inform the consumer about the functionality, including applicable technical protection measures, and the relevant interoperability of digital content. The notion of functionality should refer to the ways in which digital content can be used. It should also refer to the absence or presence of any technical restrictions, such as protection via Digital Rights Management (DRM), which enable the seller to control the use of digital content after sale. The notion of relevant interoperability is meant to describe the information regarding the standard hardware and software environment with which the digital content is compatible. This technical information should also be included in the contract confirmation issued to the consumer.
There Will Be No Other Choice
The laws prohibit any modification by contract of the consumer rights resulting from the Directive. Therefore, any contractual terms or e-commerce website terms and conditions, which directly or indirectly waive or restrict such rights, will not be binding on the consumers, who nowadays usually have good knowledge of their rights and spare no effort to seek legal remedies for breach of the same or share information about such breaches on the most popular social networking sites. For all these reasons, traders should be diligent in adapting their e-commerce businesses to the new requirements; otherwise they risk losing the confidence and loyalty of their customers.
1 (Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council).
*Giedrė has extensive experience in advising both national and international clients on various Lithuanian law matters. She has been advising in a number of cross-border transactions carried out in Lithuania, including M&A, real estate, project finance. Giedrė regularly advises on legal matters relating to IT, Media and IP law.