EU online shoppers double in number but changes to laws needed, new study says

Out-Law News | 01 Sep 2011 | 9:28 am | 3 min. read

The number of EU consumers buying over the internet doubled in a five year period, according to a study published by the European Parliament.

The study said that 40% of EU consumers bought goods or services online during a 12 month period in 2009/10, compared to just 20% of people in 2005. It said that the increase was largely due to "high growth" in the number of people from countries where e-commerce was already "widespread", and not from countries in Southern and Eastern Europe. Less than a quarter of those that made online purchases "did so from a seller based in another EU Member State," the study said.

Consumers use the internet to make purchases because it is convenient, they feel they can make savings and because they think it enhances their shopping experience, but many still harbour concerns about fraud, losing personal information, invasions of privacy and consumer rights, the study said.

"Concerns over privacy risks, fraud, return policies and product and service quality may act as barriers to e-commerce for consumers, particularly for cross-border e-commerce," the study (134-page / 1.19MB PDF) said.

New EU consumer protection laws were approved by the European Parliament in June. The Consumer Rights Directive seeks to harmonise existing European laws for consumer rights in cross-border trading which will benefit both consumers and businesses, the European Parliament said at the time.

Among the changes, which are expected to come into force in 2013, is a requirement for businesses to allow online shoppers a fortnight from receiving goods to claim a refund on their purchases. There is no right to return customer-specified or personalised products under the provisions of the proposed new laws. Current UK law says that distance-sold goods can be returned within seven days.

EU ministers must approve the proposed new Directive before it will become EU law. Purchasers that receive deliveries of multiple orders or parts of goods at different times will have 14 days to claim a refund from the time of the last delivery, a draft of the new consumer laws approved by the Parliament said.

The proposed Directive also states that online traders must give buyers information on the total price of goods including extra fees.

The European Parliament study said that further changes were needed to the laws "in order to support development of e-commerce and in particular cross-border e-commerce".

The study said that "legal fragmentation" on the issues of consumer rights, tax, advertising, product liability, guarantees and warranties and product labelling could be reduced in order to "reduce compliance costs for businesses and increase consumers' and businesses' trust in crossborder transactions".

Making changes to how 'consumer' is defined in EU laws would also help achieve those goals, it said. The study referred to the growth in the number of 'prosumers' - those who act both as a consumer and a producer of content in a market. It said that "current consumer protection rules do not account for ‘prosumers’", because "consumer-to-consumer sales are not currently covered by European law". It said it the protections for prosumers were "not clear".

The study recommended new measures for limiting "potentially abusive pricing practices". It said restrictions on how online traders add to the final cost of goods and services could be achieved "by regulating the number of screens that consumers must click through to determine the final cost or by restricting the size of additional costs (e.g. payment charges) that are not presented to the customer upfront".

Consumer trust in search engine and comparison site results could be enhanced by either drawing new regulations prohibiting suppliers paying the operators to "[influence] the order in which the search results are presented," or by "ensuring that users of such sites are clearly and transparently informed" if the results have been ordered because of such arrangements, the study said.

Harmonising EU copyright laws would help "[eliminate] inefficiencies" that have occurred as a result of the "fragmentation" of the EU market place, whilst improving legal access to digital copyrighted works would help "reduce consumers' incentives to access content illegally," the study recommended.

"Clearly, the lack of an appropriate legal framework for copyright and payment systems blocks development of a digital single market as a true electronic platform that would allow for unlimited access to information and content against a reasonable fee," the study said.

The study also proposed enhacing dispute resolution processes, establishing regulated "trustmarks" for online traders, and developing businesses' skills in using the internet for e-commerce.

The study said consumers should be better educated on consumer protection laws to "strengthen the level of trust in domestic and cross-border online transactions".