New EU E-Commerce Rules for Better Consumer Protection

Following a screening conducted by the EU Commission in 2014, it was discovered that 37% of E-commerce including booking websites for travel, entertainment, clothing, electronic goods and consumer credit services, were in breach of EU consumer laws.

A new draft legislation aims to update the current Consumer Protection Cooperation Regulation (“CPC Regulation”) by increasing the powers of national regulatory authorities, thus enabling them to trace rogue traders, assess if e-commerce sites practice geo-blocking and in certain cases, order the shutting down of websites. Most importantly, the proposed regulation aims to strengthen harmonization in this area and improve cross-border enforcement of EU consumer laws.

Olga Sehnalova, the Internal Market Committee Rapporteur, commented: ‘This regulation has a big potential to significantly strengthen cross-border cooperation between authorities in the area of enforcement of consumer protection laws. As traders increasingly operate across the internal market, we need efficient mechanisms when something goes wrong.’ The crux of the new rules is the focus on new powers for national competent authorities which revolve around investigation and enforcement, including a right of redress for consumers. Consumer organizations will also play a bigger role when handling infringements.

The introductory provisions set out a five-year limitation period within which competent authorities may impose penalties for the infringement of consumer rights. This limitation period will start to run from the termination of the infringement. The draft rules establish procedures for the designation of competent authorities and single liaison offices for the purposes of the Regulation. The proposal also sets out the roles of the single liaison offices. Member States must ensure smooth cooperation between members of the enforcement network within their state. Other authorities within a Member State must also assist competent national authorities in protecting the consumer.

The powers added through the draft legislation include the power to make test purchases and carry out mystery shopping, the power to adopt interim measures and block websites and the power to impose penalties and to facilitate consumer compensation when there is a cross-border element.

For the first time, requested authorities are obligated to reply to mutual assistance requests within the time limits set by the implementing measures. The proposal also provides for new coordinated mechanisms such as common actions against widespread infringements and concerted investigations of consumer markets. In addition, under the proposal, the surveillance mechanism currently in force under the CPC Regulation will be enhanced and will allow for a wider exchange of information which will lead to better detection of widespread infringements.

The proposal also guarantees the protection of professional and commercial secrets. Information which is obtained under the Regulation will only be used so as to ensure compliance with consumer laws and protect consumer interests.

Talks have now commenced with the Council and the Commission with the aim of reaching an agreement on the final legislation. The proposed revision can be accessed here.

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