E-commerce laws to be rewritten by European Commission

Out-Law News | 25 Jun 2008 | 1:31 pm | 4 min. read

A new set of consumer contract laws to harmonise the rules that govern online selling across the EU will be proposed this autumn by the European Commission. The EU's consumer chief also promised fresh guidance on viral adverts and profiling technology.

Addressing a roundtable on digital issues in London on Friday, European Consumer Commissioner Meglena Kuneva said that while e-commerce is succeeding at national level, cross-border e-commerce is failing to keep pace. The European Commission believes that simpler and better-harmonised consumer laws will boost the sector.

The results of EU surveys among 26,000 consumers and 7,200 businesses were announced by Kuneva on Friday. They show that while a third of the EU's 490 million consumers have bought something online, only seven percent have bought from foreign suppliers. Of those with web access at home, 56% have bought online; but only 13% have made a cross-border purchase.

"These figures underline how much work we still have to do to boost confidence in the online internal market," said Kuneva.

The surveys, conducted this year, also suggest that fewer retailers are selling online. Fifty-one percent of EU retailers sell via the internet – down from 57% in 2006. Retailers said that only 17% of their e-commerce revenue stems from cross-border sales.

Kuneva said that the Commission is working to remove regulatory barriers to cross-border trade and is planning a new set of consumer contract laws.

"This Autumn, the Commission will bring forward proposals for a single framework consumer contract law for Europe's Internal Market," she said. "Currently, we have a jungle of complex laws which have evolved piecemeal over the last 20 years. The result in practice is a maze of different rights and practices, from cooling off periods to guarantees that are as unclear to consumers as they are confusing for business."

Harmonising consumer laws

The main EU laws on e-commerce in force today are known as the E-commerce Directive and the Distance Selling Directive. However, each Directive gave member states some flexibility in their implementation so national laws are inconsistent. For example, the cancellation period for goods bought online is seven working days in the UK and 14 days in Denmark. In addition, each member state has national consumer laws that apply to all sales but vary widely. A court in France is unlikely to let a UK website deny a French consumer the protection of French consumer law.

"We have a patchwork of complex laws which have evolved piecemeal over the last 20 years," said Kuneva. "The result in practice is a maze of different rights and practices, from cooling off periods to guarantees that are as unclear to consumers as they are confusing for business."

"A single, simple set of core rights and obligations will make it easier for consumers and business to buy and sell across Europe," she said. "It will increase consumer confidence and bring compliance costs down for business."

Kuneva also talked of unnecessary restrictions imposed by suppliers to distribution over the internet. She said that "the revision of the regulation on vertical restrictions under EU competition law in the next couple of years is the right time to reconsider the appropriateness of such internet restrictions."

"[We] cannot buy computers, train tickets or play-stations (sic) freely across the EU," she said. "We are forced to buy domestic. Let me be clear, there is no place in Europe's Single Market for artificial geographical restrictions which hold consumers back within national borders."

Kuneva called for the development of "price comparison sites that compare prices of retailers in different European countries" as a means of promoting online commerce. She also questioned the value of the copyright levies imposed by some member states on goods that can be used for copying digital goods. The Commission is starting a process to "rationalise the system of copyright levies in the EU," she said, so that levies are not an impediment to trade.

Unfair commercial practices

New guidance was promised on the Unfair Commercial Practices Directive, a law that took effect in the UK last month. Kuneva cited "emerging practices against which the legislation still needs to be tested."

"The use of pre-checked boxes for the purchases of costly options is an example," she said. "We are all familiar with the pre-checked insurance boxes while purchasing travel tickets online. Trust me, there is a reason these boxes are pre-checked and it is not customer convenience."

Kuneva continued: "We are also witnessing a worrying trend in the blurring of commercial and non-commercial communication. It is not always clear online when a published item is commercially sponsored. A user might click on a link seemingly indicating user generated beauty advice and land on a page that may or may not be a promotional page and there is no way to tell."

"Viral ads that spread using individuals' social networks and the nature of communications on social websites pose similar new challenges. These developments are bound to challenge legislation and the self-regulatory systems that mostly control advertisement activities."

"I want a further effort to establish common guidelines on how to implement the unfair commercial practices legislation with regard to concrete new practices emerging online," she said.


Kuneva expressed concern about the targeting of adverts in what might be interpreted as a reference to recent controversy over Phorm, an advertising technology firm.

"If you watch tennis over the internet, you will be targeted with ads for tennis items. If you read about home improvement, chances are that you will receive ads for repair services and new furniture," she said. "But there are some concerns that the amounts of personal data collected over the internet without the awareness of users, let alone their consent, is getting too large and a bit out of control."

"The European Data Protection Supervisor has stated that our current legislation requires explicit consent each time personal data is collected. The reality on internet is far removed from these principles," she said.

Kuneva continued: "Currently many websites offer to click for 'enhanced services'. Is this an informed consent? How many people actually know that this amounts to consent to having their behaviour tracked, to have that data stored and then used commercially? What would be fair terms in an agreement to allow tracking? Publishers currently have privacy policies that allow the installation of tracking devices that are not themselves covered by their privacy policy. Is this a fair term? I believe that informed consent is the central issue that consumer policy must next address."

"I want to step up our work to develop core consumer principles that feed into policy across sectors and technologies delivering a more consistent approach the conditions surrounding tracking and profiling," she said.