Regulatory Outlook | Consumer Protection | July 2017
Published on 6th Jul 2017
The Digital Single Market
The European Commission’s Digital Single Market (DSM)strategy is aimed at providing better access for consumers and businesses to digital goods and services across Europe, including through the harmonisation of consumers’ rights across the EU for online purchases of goods and digital content, preventing website geo-blocking and allowing ‘portability’ of digital content services.
The DSM is a wide-ranging and ambitious strategy, and many of its legislative proposals have to be finalised and implemented, but we expect to see some of them take effect in 2017.
In April 2017 the European Parliament voted on a consumer-friendly draft Regulation prohibiting outright geo-blocking or auto-redirection without adequate information, and preventing online sellers from discriminating against consumers within the EU based on their nationality and location. Negotiation will now take place between the Parliament, Council and Commission to agree final law, anticipated for early summer 2017.
In February 2017, the European Parliament, Council and Commission reached agreement on the proposed portability regulation to allow consumers to access their online subscriptions (such as Netflix, Amazon Prime and Spotify) in any Member State while temporarily outside their Member State of residence. The Parliament and Council must now formally approve the new rules. For information on how to prepare for the new law, please see here.
In line with the DSM strategy and to break down regulatory barriers that hinder cross-border eCommerce, in February 2017 the European Commission launched three separate investigations. These investigations are looking into whether online sales practices breach EU antitrust rules by preventing consumers purchasing cross-border electronics, video games and hotel accommodation at competitive prices. The investigations also focus on price restrictions, location discrimination and geo-blocking. The Commission has also now published its final report following its eCommerce sector inquiry.
The vast majority of consumer protection law in the UK derives from EU law, but is long-standing, and has been implemented into national law. As a result, while following Brexit the UK would be free to amend existing consumer law (much of which is consolidated into the Consumer Right Act 2015), this seems unlikely. That said, much of the proposed legislation under the DSM is unlikely to have been implemented by the time of Brexit, so the UK will have to decide whether it implements equivalent legislation post-Brexit. Moreover, the UK is unlikely to have much influence on the DSM legislation going forward as a result of the UK now having triggered Article 50, which may influence the UK’s decision as to whether to adopt equivalent DSM legislation. See here for more on how Brexit might affect consumer protection.
On 10 January 2017, the European Commission published its proposal for a Regulation on Privacy and Electronic Communications, which will be directly applicable across the EU. The ePrivacy Regulation looks to introduce significant reforms, including amending current direct marketing rules. An important change is that these rules will not only apply to automated calls, email and SMS, but also to communications sent via instant messaging services and in-app notifications.
European Commission Fitness Check
The European Commission is currently reviewing a number of consumer protection Directives, including Unfair Commercial Practices Directive, Sales and Guarantees Directive and Unfair Contract Terms Directive, as part of its Regulatory Fitness and Performance Programme (REFIT). The aim of REFIT is to simplify law, reduce regulatory costs and contribute to a clear, stable and predictable regulatory framework. The consultation period has ended and publication of the Commission report is expected in the second quarter of 2017.
The Commission is also evaluating the Product Liability Directive following its public consultation, which closed on 26 April 2017, to review whether the Directive is fit for purpose in light of technological developments such as the Internet of Things.
Digital Economy Act 2017
The Digital Economy Act received Royal Assent on 27 April 2017. The Act intends to (among other things) improve broadband connectivity, so that consumers have better access to fast broadband, no matter where they are based, and to provide better support for consumers. The Act also intends to provide important protections from spam email and nuisance calls, and protection for children from online pornography, through civil penalties and ISP-level blocking.
Consultation on terms and conditions in consumer contracts
Between 1 March and 25 April 2016, the UK Government ran a consultation on making consumer-facing terms and conditions more accessible. The Department of Business, Energy and Industrial Strategy also ran a consultation in relation to its proposal to introduce civil fining powers for breaches of consumer protection legislation, which the CMA responded to with support. We are still awaiting feedback from both consultations.
In focus: Personal liability
There are two public bodies that enforce much of the UK’s consumer law: the Competition and Markets Authority and Trading Standards. Private individuals can also bring claims through the courts to enforce certain consumer protection laws.
Much of consumer protection law focuses liability on the concept of a ‘trader’, where personal liability rarely exists. There are exceptions, though. Under the Consumer Protection from Unfair Trading Regulations 2008, for example, directors, senior managers and any individuals purporting to act in that capacity can be liable for unfair commercial practices, misleading actions, misleading omissions and aggressive selling techniques. A breach of those Regulations can result in criminal prosecutions, unlimited fines, or a fine and up to two years’ imprisonment.
While these sanctions that can be imposed on individuals are rare, they do happen. Recent examples include the following:
- In 2016, a £3,000 fine was imposed on a director of two roofing and windows firms. His companies were also fined £1,000 and £3,000 respectively. The director and the companies were charged with engaging in unfair commercial practices, having stated in their standard consumer contracts that consumers had just seven days to cancel rather than 14, and for misleading customers. The director and companies had ignored previous warnings from Trading Standards, which had included sending the director a template contract to use.
- In 2017, a director of a motor-dealing company was found guilty of providing misleading information to consumers. He was fined £400 for the offences but also ordered to pay £30 as a victim surcharge, £4,750 in damages, split between the two consumers affected, and £3,000 in costs.
Dates for the diary
Q2 2017 – Planned completion of the European Commission’s REFIT programme.
H1 2017 – Finalised European Directive relating to digital content expected.
Q3 2017 – Finalised European Regulation relating to geo-blocking expected.
25 May 2018 – ePrivacy Regulation expected to come into force.
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