On 11 July, the IMCO Committee of the European Parliament held a public hearing on “Better enforcement and modernisation of EU consumer protection rules” in the context of the New Deal for Consumers. More specifically, during the hearing, participants discussed about a modification, proposed by the European Commission, to the Consumer Rights Directive for a fairer right of withdrawal. In fact, the European Commission’s proposed to remove burdensome obligations on online merchants when a consumer exercises his right of withdrawal under specific circumstances. As such, Ecommerce Europe does not question the right of withdrawal, which has undoubtedly improved the situation of consumers in distance sales. However, the current provisions allow consumers to withdraw from the contract even after the goods have been used more than what is allowed in an offline store. This is, in practice, a real burden for online shops, which created a high level of uncertainty for both the consumer and the trader. It mostly led to an unsolvable discussion about the diminished value of the goods caused by this “overuse”.
During the hearing, a few guest speakers laid out their perspectives on this topic from an academic, member state, consumer and SME point of view. Ms. Verena Klappstein, from the University of Passau, presented the conclusions of a study according to which there were no sufficient data that would suggest there is a requirement to make changes to the right to withdraw for unduly tested goods and early reimbursement rules. However, there are surveys stating the opposite. For instance, a survey conducted in 2016 by the German member of Ecommerce Europe, Händlerbund, clearly showed that there are problems with the right of withdrawal. For instance, more than ¾ of online merchants interviewed receive returns with damaged original packaging and every 5th return is returned worn, dirty or without a label. 35% is the average discount that online merchants have to grant to resell the returned goods and in 44% of the cases, returned textile products cannot be resold at the original price. This means clear economic losses for the online merchants. To conclude, Ms. Klappstein mentioned that further theoretical survey is necessary concerning the practical impact of the suggested changes before implementing any changes, especially with regard to possible practical and legal consequences.
Ms. Petra Píšová, from Slovak Trade Inspection (STI), stated that the limitation of the right of withdrawal is not the right approach and that it should be deleted from the proposal. A particular concern is who will bear the burden of proof regarding damaged goods. The STI also strongly supports the proposal for more transparency in online marketplaces. However, they feel that the liability of online marketplaces as intermediaries is missing. In their opinion, the right of withdrawal should also apply to digital services and payment with personal data. The STI also supports the proposal for penalties and the redress proposal.
Ms. Ursula Pachl, from the European Consumer Organization BEUC, warned that the current sanctions are not dissuasive and that BEUC generally supports the proposed rules on penalties. BEUC also supports the proposal for remedies and for transparency of online platforms, but suggests several additions to the proposal, such as adding criteria regarding the weighing of ranking parameters, rule on liability for online marketplaces, consequences for non-compliance etc. Lastly, according to BEUC, the proposed changes to the right of withdrawal should also be rejected.
Mr. Luc Hendrickx, from UEAPME, warned that the risk for SMEs is particularly high and that the formalities should be reduced without reducing the level of consumer protection. He also warned that the SMEs pay for misbehaviors of big players and that the proposed text leaves a lot of room for interpretation and can disproportionally affect SMEs. Mr. Hendrickx stated that the focus should be on prevention and not on higher fines which, where appropriate, should remain proportionate. In UEAPME’s opinion the right of withdrawal has proven to constitute disproportionate burden and the proposed limitations should be introduced.
MEP Daniel Dalton, the Parliament’s IMCO Rapporteur for the Proposed Directive on better enforcement and modernisation of EU consumer protection rules, said that he plans to publish the draft report in the coming days, with a deadline for amendments in the IMCO Committee in September and, hopefully, a committee vote in November 2018, so that the trialogues could start already in January 2019. He also said that the limitation to the right of withdrawal has little support in the European Parliament and that fines on turnover were too repressive. He also questioned the part of the legislation on online rankings because requirements to disclose product placement on shelves in offline stores do not exist. MEP Dalton does not see why there should be any difference between online and offline on this matter. On the other hand, the European Commission has said that it fully stands behind the right of withdrawal, but that it believes that the current obligations pose an undue burden for retailers, so the Commission proposes simpler rules which would only impact a minority of consumers.
Ecommerce Europe is actively engaging with EU policymakers to further discuss our position on the New Deal for Consumers. For more information on the position of the European e-commerce association, please download the paper here.