European Commission announces crackdown on e-commerce "scams"

Out-Law News | 18 Mar 2013 | 5:12 pm | 3 min. read

The European Commission is to crack down on aggressive commercial practices, which it claims are discouraging consumers from shopping with other member states online.

It has pledged to promote further co-ordinated enforcement action, produce guidance and help EU members share best practices following a review of the existing Unfair Commercial Practices Directive.

The Unfair Commercial Practices Directive introduced a standardised set of rules across the EU, including a general prohibition on unfair business-to-consumer commercial practices. Among its provisions are bans on misleading consumers by making fraudulent claims about products, and on aggressive marketing practices such as 'fake free' offers, hidden advertising, direct marketing to children and 'baiting' consumers with attractive offers that the trader is unable to supply in quantities based on the scale of the advertising.

In its first report on how the Directive was working in practice (31-page / 213KB PDF), five years after the rules were originally implemented by member states, the European Commission said that consumers and traders were still uncertain about how the rules would be applied by national enforcement bodies. In addition, member states had raised concerns over lack of resources and effective sanctions, it said.

"Consumer spending accounts for 56% of EU GDP, but a lack of consumer confidence in shopping across EU borders means we are still not tapping into the full potential of the Single Market," said EU Justice Commissioner Vivienne Reding. "We have good rules in place to protect consumers, but we need to make sure they are better enforced, especially in cross-border cases."

"I want to see zero tolerance for rogue traders so consumers know exactly what they are buying and are not getting ripped off. That also means a coherent approach to enforcing the same set of rules," she said.

Commercial law expert Clare Francis of Pinsent Masons, the law firm behind, said that although the existing rules had been in force for a number of years, the increasing use of the internet as a sales and marketing platform had resulted in some of the practices banned by the Directive actually becoming more common. This was because the internet had increased the pressure to find new ways of marketing, she said.

"We have already seen the Advertising Standards Agency (ASA) increase its remit to cover online content," she said. "This has resulted in a large increase in the number of cases that the ASA is being asked to consider. With the Commission's new clampdown we will see how the UK enforcement agencies are placed to cope with an increase in demand on their resources."

"The laws will remain the same as when the Directive was implemented five years ago. However, the Commission's decision to crack down on aggressive commercial practices is in line with their general approach at the moment which is to seek to put better protections in place for consumers throughout Europe," she said.

According to the Commission's figures, only 40% of European consumers currently shop online across EU borders. Consumers were particularly losing out in the travel and transport, digital, financial services and property markets, it said. However, the Commission said that consumers were now more interested in making cross-border purchases and were willing to spend more money than they were in 2006, before the Directive came into force.

As part of its "more prominent role" in cross-border enforcement, the Commission plans to strengthen the efficiency of the European consumer protection network and ensure that more co-ordinated cross-border enforcement actions, or 'sweeps', are carried out. It will produce guidance aimed at helping member states to effectively apply the existing law, and develop 'enforcement indicators' so that it can detect failings in the system that require further investigative or corrective action.

It has also pledged to introduce regular thematic workshops for national enforcement bodies, and to organise training for enforcers and the judiciary in individual member states. It plans to host further discussions with national representatives at the European Consumer Summit, which is currently taking place in Brussels.

Commercial law expert Clare Francis said that businesses should review their sales and marketing practices regularly to ensure that they remained legally compliant.

"Just because your competitors are engaging in a particular marketing campaign does not mean that it is legally compliant," she said. "Care should be taken to ensure that businesses do not inadvertently fall foul of the rules and end up on the regulator's radar."