Consumer protection in the digital single market (Directive 2019/2161)

The recent European Directive 2019/2161, on better enforcement and modernization of consumer protection rules, was published in the Official Journal of the European Union on December 18. It introduces amendments to a variety of other directives to improve consumer protection and adapt legislation on that subject to technological developments.

The following directives are affected by these modifications:

• Directive 93/13/EEC of April 5, 1993, on unfair terms in consumer contracts.
• Directive 98/6/EC of February 16, 1998, on consumer protection in the indication of the prices of products offered to consumers.
• Directive 2005/29/EC of May 11, 2005, concerning unfair business-to-consumer commercial practices.
• Directive 2011/83/EU of October 25, 2011, on consumer rights.

New system of penalties

The purpose of the new Directive 2019/2161 is to ensure that the EU Member States will establish a system of effective, proportional, and dissuasive penalties, and it therefore establishes a series of non-exhaustive criteria as guidelines to facilitate their imposition. This has been done to produce consistent application of penalties throughout the EU, while respecting the principles governing this subject such as protection against double jeopardy.

Member States must ensure that penalties can be imposed via administrative or judicial procedures, and that the maximum amount of fines is at least 4% of the annual revenue of the infringing trader in the Member State in question (if that information is not available, the maximum amount must be equivalent to at least €2 million).

This new penalty system is being introduced into all the directives affected by the new rules.

Amendments on the subject of unfair commercial practices

Under article 7 of Directive 2005/29/EC on unfair practices, any commercial practice that omits material information that the average consumer needs to make an informed transactional decision, or that offers such information in an unclear, unintelligible, ambiguous, or untimely manner is considered to be misleading. With the amendments introduced by Directive 2019/2161, “material information” will now include:

• Information regarding whether or not a trader offering products via an online marketplace.
• Information about consumers who post product reviews, requiring a statement on whether or not the consumer in question has used or acquired the product.
• Information on the parameters used to rank products presented to consumers and the relative importance given to each parameter, so that users can clearly understand the ranking mechanism involved. The requirements on transparency established in Regulation (EU) 2019/1150, on promoting fairness and transparency for business users of online intermediation services, are being amended in a manner similar to those from the directive on unfair practices, to ensure adequate transparency for consumers and encourage trust (recitals from Directive 2019/2161).

The new Directive 2019/2161 also establishes that failure to inform consumers about any advertising where payment or other compensation has been received to improve search result rankings will be considered as an unfair commercial practice. Other practices considered as unfair will include stating that a product’s reviews have been posted by consumers who have acquired or used the product when measures have not been taken to confirm this, or adding fake or manipulated consumer reviews or commissioning another individual or entity to do this (new Annex I to Directive 2005/29/EC).

Failure to comply with any of these obligations will lead to application of the corresponding penalties under the new system.

Amendments on the subject of consumer rights

It is not uncommon for consumers to provide data or information to a provider in exchange for digital contents or services, instead of paying for these. Because of this, and to ensure consistency with the recent Directive 2019/770, on supply of digital content and digital services, the new directive expands the scope of Directive 2011/83/EU on consumer rights, so that it applies to contracts under which the consumer provides or undertakes to provide personal data.

New obligations on informing consumers are imposed upon providers from online marketplaces, and these must be complied with before a consumer can be bound by a distance contract (new article 6 bis of Directive 2011/83/EU). Specifically, information must be provided on (a) the main parameters used to determine the ranking of offers and their relative importance; (b) whether or not a third party offering digital products is acting trader; (c) the fact that consumer protection rights do not apply when that third party is not acting consumer; and (d) how obligations are shared between the third party offering the goods, services, or digital content and the provider of the online marketplace.

The directive also establishes some obligations for traders and consumers on the subject of contract withdrawal:

• Traders are prohibited from using personal data that a consumer has provided or created when using the digital content or service that was provided, except in certain cases.
• Consumers must refrain from using, or making available to any third parties, the digital content or service that was provided.

These provisions allow the regulations established under Directive 2019/770 related to contracts for the supply of digital content and services to be incorporated into the consumer protection laws.

Transposition

The new directive must be transposed before November 28, 2021, and the corresponding measures must become applicable by May 28, 2022.

Authors: Ainhoa Rey and Miquel Peguera