The modernization of European Consumer Law: a pig in a poke?

In a forthcoming paper in the European Review of Private Law, I discuss the European Commission's proposal for a directive regarding the modernization and better enforcement of European consumer protection rules (COM (2018) 184 final, the ‘Modernization Directive’), and the relation between this proposal and the Commission’s recent Communication ‘A New Deal for Consumers’ (COM (2018) 183 final). As regards better enforcement, the Modernization Directive introduces higher maximum penalties for infringements of the Unfair Commercial Practices Directive (UCPD), the Unfair Contract Terms Directive (UCTD), the Consumer Rights Directive (CRD) and the Price Indication Directive. The modernization of EU consumer law is reflected, in particular, in the introduction of individual remedies for unfair commercial practices in the UCPD, the introduction of some information obligations directed to online platforms in the CRD, the extension of the scope of the CRD to ‘free’ services, and the loss of the right of withdrawal under the CRD for goods that have been used instead of merely tested by the consumer.

I also discuss to what extent the Modernization Directive proposal does justice to the outcomes of the fitness check carried out in 2017. The fitness check was intended to examine the extent to which EU consumer law is still sufficiently equipped for the protection of consumers and allows traders to take advantage of the internal market. For the purposes of EU consumer law, traders are natural persons or companies acting for purposes related to their trade or business and offering goods and services to consumers.

I conclude that when the Modernization Directive is assessed against the recommendations resulting from the fitness check, it is striking how few recommendations have been adopted. Remarkably, in particular, recommendations to codify the case law of the European Court of Justice recommendations that would extend or strengthen consumer protection were not followed. Recommendations that were not followed  include the introduction of a blacklist or grey list of unfair terms in the UCTD, the revision of the blacklist of unfair commercial practices under the UCPD, the introduction of the obligation for traders to provide a summary of their main standard contract terms to consumers to the UCTD, and the introduction of a fixed format for the information to be provided to consumers under the CRD. The failure to extend the scope of European consumer law directives to consumer-to-business contracts (i.e. contracts whereby goods or services are offered by a consumer to a trader, e.g. in case where a consumer sells his car to a trader in as the consumer urgently needs the money to pay his bills) is regrettable as well. Disappointing for all stakeholders is the absence of measures streamlining the information that is to be provided on the basis of the different consumer directives: harmonization thereof would make it easier for traders to comply with their obligations and reduce the risk of information overload for consumers. The restriction of the right of withdrawal for goods that have been used rather than merely tested is found to create new problems and fails to solve existing problems.

The biggest oversight, however, is the absence of substantive rules for the relationship between consumer and platform: the idea that merely introducing information obligations for online platforms would suffice neglects the fact that online intermediaries such as AirBnB, Amazon, Booking and Uber are important economic operators themselves. In practice, these platforms often deny having any contractual obligations towards the consumer and/or exclude any liability for non-performance. Although various provisions of the CRD will apply to the services offered by these platforms, the applicability of the UCTD and the UCPD remains an open question since these platforms typically do not require payment in money by the consumer and the scope of these directives has not explicitly been extended to ‘free’ services.

This does not suggest that the Modernization Directive is meaningless or redundant: the proposals on the improvement of enforcement may not go far enough, but they are generally a step in the right direction. The introduction of individual remedies for consumers that have fallen victim to an unfair commercial practice may even be considered an important step forward for consumers in EU Member States that so far have not introduced such a remedy. The extension of the scope of the CRD to ‘free’ services is in line with the proposal for a Digital Content Directive and as such to be welcomed. But all in all, the end result is disappointing. Neither the Modernization Directive itself nor the EU Communication ‘A New Deal for Consumers’ deserves the association with Franklin D. Roosevelt’s ‘New Deal’ – it is rather a pig in a poke.

Marco Loos is a Professor in the Faculty of Law, University of Amsterdam.