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New deal for consumers: What retailers need to know

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12/02/2020

Commercial contracts and international dispute resolution specialists James Crayton and Gwendoline Davies explain that, whatever happens with Brexit, retailers operating domestically, internationally and online need to know about the EU’s ‘new deal’ for consumers.

What’s new?

The Council of the European Union has adopted Directive PE-CONS 83/19 on the better enforcement and modernisation of European Union consumer protection rules (the Directive), which is intended to improve standards of protection for consumers buying goods or services online and to provide more robust measures against unfair or misleading trade practices [1].

Retailers should note that, whatever happens with Brexit, the Directive is likely to impact their business.  Even if the UK has departed the EU and has not decided to implement the Directive or equivalent legislation into UK law by the time the Directive must have been adopted and started to apply in Member States (i.e. mid-2022), any UK-based retailers selling in the EU, including via online cross-border sale contracts, would be subject to the Directive and the EU-wide regime.

What do retailers need to know?

Retailers should familiarise themselves with the Directive and should note, in particular, the following changes:

  • Increased fines of up to 4% of annual global turnover or up to at least €2 million for traders in breach of consumer laws.
  • Changes to the criteria used to determine the level of penalties for breach of consumer laws.
  • A right to individual remedies for consumers when they are harmed by unfair commercial practices.
  • Enhanced transparency in online transactions, in particular regarding reviews [2], personalised pricing based on algorithms, paid placement product ranking, and so on.
  • New obligations for online marketplaces to inform consumers whether the responsible trader in a transaction is the seller or the online marketplace itself.
  • Protection of consumer data in respect of services for which consumers do not pay money but provide personal data (such as cloud storage and e-mail/social media accounts).
  • Provision of clear information regarding pricing before a reduction to avoid misleading consumers about discounts.
  • Updating of methods of communication to be used by traders (including references to e-mail as opposed to fax), and removing other disproportionate burdens on the consumer at various points before, during and after the purchase transaction.

Walker Morris will monitor and report on key developments.  In the meantime, if you would like advice in connection with your contracts, T&Cs, business practices and/or policies in light of changing consumer protection regulation, please do not hesitate to contact James or Gwendoline, who will be very happy to assist.

 

[1] The Directive amends existing EU directives: 93/13/EEC (unfair contract terms), 98/6 EC (price indication), 2005/29 EC (unfair commercial practices) and 2011/83/EU (consumer rights)

[2] See our earlier article on review fraud for background information and advice

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