Buyer beware

The European Union’s consumer protection rules are not working. That is the message underlying the green paper that the European Commission published on 8 February.

On the face of it, the Green Paper is a consultation about whether further legislation is needed, but the way in which the questions are couched makes clear that the Commission does not believe that maintaining the status quo is an option.

Taking no further legislative action would mean, says the Commiss-ion’s green paper, that "existing regulatory fragmentation would remain or could increase" and "inconsistencies between different directives would continue to exist".

The green paper stems from a review of existing consumer protection law. The purpose of the review is, according to the green paper, that: "At the end of the exercise it would, ideally, be possible to say to EU consumers ‘wherever you are in the EU or wherever you buy from it makes no difference: your essential rights are the same’."

The review has a two-fold purpose. The immediate aim is to boost consumers’ confidence in the internal market, by giving them a high level of protection wherever in the EU they choose to shop. In turn, greater consumer confidence will improve the level of cross-border economic activity and help businesses to work across national boundaries.

Meglena Kuneva, the European commissioner for consumer protection, claims that "there is an urgent need for action". Her difficulty is that not all national governments will agree with her. Previous attempts at consumer protection have, for the most part, sought minimum harmonisation. National governments have been left free to impose, if they so wish, a higher degree of protection than those demanded by EU law. The results are deemed unsatisfactory.

Although the Commission might applaud the high level of consumer protection, it laments the problems posed for a single market: the consumers cannot be sure that the level of protection that they are accustomed to in their home country also applies elsewhere in the EU. Businesses have extra regulatory hurdles to clear if they wish to trade across the whole EU.

The Commission admits that full harmonisation might be difficult to achieve for all aspects of consumer legislation, so floats the possibility of hybrid solutions. One hybrid model is to seek minimum harmonisation and then, on a case-by-case basis, allow mutual recognition between member states of aspects of legislation that are not fully harmonised. Another hybrid solution would be minimum harmonisation combined with the ‘country of origin’ principle where the trader would be bound to comply with the consumer protection law that applies in the country in which it is established.

Neither option, the Commission points out, would meet the require-ment of the EU treaty for a high common level of consumer protection.

Consumer protection law has developed in certain specific sectors, notably those which posed particular problems of competing jurisdictions - like distance-selling, the sale of timeshares and of package holidays. In its consultation, the Commission poses the question as to whether it should stick with what has been a sector-specific approach or whether it should move to a horizontal approach.

The directive on unfair commercial practices is an example of a horizontal law applying across various sectors of business. That directive falls outside the scope of the review which is limited to eight laws that are deemed to be part of ‘the consumer acquis’ - the body of EU?law specifically concerning consumers. But there are also sector-specific laws in e-commerce and financial services, which have provisions to protect consumers, but which fall outside the consumer acquis.

Laws under spotlight

• Doorstep-selling directive

Gives consumers a cooling-off period and the right to cancel a contract within seven days for goods for sales away from business premises

• Package travel directive

Gives consumers the right to compensation if a package holiday is not what was described in the brochure

• The unfair contract terms directive

Outlaws certain types of contracts and practices

• Timeshare directive

Gives consumers the right to a brochure in their own language and a ten-day cooling-off period

• Distance-selling directive

Protects consumers buying from mail order, internet or telesales companies. Buyers can cancel a contract within seven working days

• Price indication directive

Requires retailers to give the unit price of products

• Injunctions directive

Ensures that an injunction taken out against a trader in one state can protect consumers in another state

• Sale of consumer goods and guarantees directive

Gives the consumer the right to take goods back for repair or replacement, refund or price reduction if they do not comply with the sales agreement

The European Union’s consumer protection rules are not working. That is the message underlying the green paper that the European Commission published on 8 February.