18-19 March 2010 in Brussels there will be European Consumer Summit organized. This year it focuses on services provided to consumers, and especially on access thereto, choice therein and fairness thereof.
Saturday, 27 February 2010
Wednesday, 24 February 2010
Conformity: Ten Timeless Influencers
PsyBlog has an interesting post Conformity: Ten Timeless Influencers. It sums up various consumer behavior research referring to what can make people act in the same way as others do, or what can make them refrain from following the example of others. I strongly believe that such a consumer behavior research can and should be used by legal scholars in order to evaulate the effectiveness of certain consumer laws and regulations.
One example from the post:
Other people affect us even when they're not present. Whether or not we recycle, litter the street or evade tax often comes down to our perception of society's view. Most of us are strongly influenced by thinking about how others would behave in the same situation we are in, especially when we are unsure how to act (Cialdini, 2001).
Tuesday, 23 February 2010
We can make you behave
The Guardian had an interesting commentary - We can make you behave - on one of the panel discussions during the World Economic Forum meeting in Davos. Behavioral thinkers were showing the leaders gathered in Davos how behavioral sciences can influence politics and law.
And because the behavioural sciences show that people often make bad decisions when they're excited by the prospect of immediate gratification, a Conservative government will impose a seven-day cooling off period for store credit cards, so shoppers can't immediately rack up debts on them when they sign up at the till. That's a far less intrusive way to tackle problem debt than banning store cards, for example, or introducing a new tax.
It's not surprising to me that this panel had been organized, taking into account that behavioral sciences are more and more taken into account by discussing new legal solutions, especially within the European consumer law. European Commission have already commissioned certain research to be conducted on various aspects of consumer behavior. I'm keen to see how it is going to influence the future lawmaking.
And because the behavioural sciences show that people often make bad decisions when they're excited by the prospect of immediate gratification, a Conservative government will impose a seven-day cooling off period for store credit cards, so shoppers can't immediately rack up debts on them when they sign up at the till. That's a far less intrusive way to tackle problem debt than banning store cards, for example, or introducing a new tax.
It's not surprising to me that this panel had been organized, taking into account that behavioral sciences are more and more taken into account by discussing new legal solutions, especially within the European consumer law. European Commission have already commissioned certain research to be conducted on various aspects of consumer behavior. I'm keen to see how it is going to influence the future lawmaking.
Saturday, 20 February 2010
European Consumer Centres' Network
A new website has been launched: European Consumer Centres' Network:
Sounds too good to be true, right?
Have you ever had trouble getting a faulty product bought in another European country replaced? Or have you had problems with the reimbursement of your plane ticket when a flight is cancelled? Or had trouble getting your money back when a hotel abroad has withdrawn more than it should from your credit card?
You are not alone! But do not despair: help is available from your European Consumer Centre.
The European Consumer Centres' network handles over sixty thousand such cases every year! The centres are there for you! They can help you find solutions to such cross-border shopping problems. The ECCs can offer legal and practical advice, they can contact a company for you in another European country, they can direct you to a dispute resolution scheme or propose other solutions.
The European Consumer Centres Network (ECC-Net) is an EU-wide network co-sponsored by the European Commission and the Member States. It is made up of 29 centres, one in each of the 27 EU Member States and also in Iceland and Norway.
You are not alone! But do not despair: help is available from your European Consumer Centre.
The European Consumer Centres' network handles over sixty thousand such cases every year! The centres are there for you! They can help you find solutions to such cross-border shopping problems. The ECCs can offer legal and practical advice, they can contact a company for you in another European country, they can direct you to a dispute resolution scheme or propose other solutions.
The European Consumer Centres Network (ECC-Net) is an EU-wide network co-sponsored by the European Commission and the Member States. It is made up of 29 centres, one in each of the 27 EU Member States and also in Iceland and Norway.
Sounds too good to be true, right?
Monday, 15 February 2010
Slow growth of European consumers' confidence
At the website of European Commission you may find Business and Consumer Survey Results for January 2010. This surveys could not only be useful for businesses but also for consumers, if you take into account that they show e.g. confidence of consumers in various sectors of services, retail, etc. That confidence level is still low but (painfully) slowly growing, showing a certain development of the Internal Market.
Sunday, 14 February 2010
Online consumer education
The European Commission (DG Sanco) financed Dolceta - a website for online consumer education. This website is available to consumers in all Member States in their own languages. The website is designed to enhance public access to information about consumer issues on the internal market. It will be updated in order to stay accurate. It is not to be seen as a legal advice but even as information of general nature it should enable the consumers better understanding of the European Consumer Law. Recently (in January 2010) two new modules have been opened at the website.
It contains separate modules on:
It contains separate modules on:
- consumer rights (regarding sales contract, price labelling, distance selling, advertising, safety of products and services, settling disputes, the Single Market, and various other particular issues, e.g. door-to-door sales, privacy laws, etc.), f
- inancial services (giving advice on managing a family budget, running a bank account, means of payment, consumer credit, mortgages, savings&investments),
- product safety (with general chapter on product safety as well as a chapter advising consumers how to keep safe at home, on the road and at work), sustainable consumption (food and drink, personal care products, etc.),
- services of general interest (energy, telecommunications, transport, postal services, water services), and
- so called 'teacher corner'. The teacher corner offers educators a variety of tools to help them find out more about Consumer Education, and assist them in delivering fun and informative lessons for different age groups across a broad range of settings. There is a vast selection of lesson plans and resources to address available in this corner.
Thursday, 11 February 2010
You can break your teeth on it. Literally.
Consumerist blog describes a case in which a woman bought a Godiva's pretzel covered in chocolate and broke her tooth on it while eating it. She contacted a customer care department of Godiva and was offered an apology gift. She wanted more, though...
I wonder whether that case could fall under Product Liability Directive if the consumer could actually prove causal relationship between eating the pretzel and the broken tooth. The damage is there, for sure. How would she prove that the product was defective, though? Would you measure the hardness of the pretzel in comparison to other pretzels to say what could reasonably be expected of a pretzel? How would you know how hard the pretzel was at the day she was trying to eat it? I guess it could help her that there was no expiry date on a package which means the pretzels should be edible at any time she'd like to have them. And finally: is the pretzel still there as an evidence (or has it been eaten)?
Tuesday, 9 February 2010
BPS RESEARCH DIGEST: Morbid warnings on cigarette packs could encourage some people to smoke
BPS RESEARCH DIGEST: Morbid warnings on cigarette packs could encourage some people to smoke
This does not come as a surprise but still it is a nice confirmation of the already existing psychological theories. This research shows that in case smoking is important for identity and self-esteem of people, the warning about the dangers of smoking might have an opposite effect of the one that the regulatory body intended for it to have: instead of decreasing the desire/need to smoke, it would strengthen it. This research should be taken into account by EU and national regulators who enforce warnings about cancer risks to be put on cigarette packs.
This does not come as a surprise but still it is a nice confirmation of the already existing psychological theories. This research shows that in case smoking is important for identity and self-esteem of people, the warning about the dangers of smoking might have an opposite effect of the one that the regulatory body intended for it to have: instead of decreasing the desire/need to smoke, it would strengthen it. This research should be taken into account by EU and national regulators who enforce warnings about cancer risks to be put on cigarette packs.
Sunday, 7 February 2010
ECJ - Heinrich Heine
Heinrich Heine is a German mail-order company. Its general conditions of sale provide that the consumer is to pay a flat-rate charge of EUR 4.95 for delivery, which the supplier will not refund in the event of withdrawal from the contract. A German consumer association brought an action against Heinrich Heine for an injunction to restrain it from charging consumers the cost of delivering the goods in the event of withdrawal as contrary to the aim of the Article 6 of the Distance Selling Directive 97/7/EC.
The German Supreme Court was not sure how to interpret provisions of the BGB (German Civil Code) in accordance with the Directive and issued a question whether these provisions are: 'to be interpreted as precluding national legislation which allows the costs of delivering the goods to be charged to the consumer even where he has withdrawn from the contract?'
The Advocate General argues that Article 6(1) gives consumers rights to withdraw from a distance contract 'without penalty and without giving any reason' which means that in principle the consumer should not suffer any negative consequences as a result of making a decision to withdraw from a contract. The only charge that may be made to the consumer because of the exercise of that right is the direct cost of returning the goods. According to the Advocate General the words 'only charge' require strict interpretation.
At the same time Article 6(2) obligates the supplier to reimburse 'the sums paid' by the consumer 'free of charge' in case of a withdrawal. The principle of 'full refund' means according to the AG that 'sums paid' includes not only the purchase price of the goods or the charge for the service provided, but also amounts paid by the consumer to the supplier in connection with the conclusion or performance of the distance contract, including delivery costs. (par. 34) The AG uses also a systematic argument pointing out the obvious difference between the term 'sums paid' that has been used in this provision and 'price' that has been used in some other provisions of that Directive. (par. 36)
The recommendation of the AG to ECJ is: 'Article 6(1), first subparagraph, second sentence, and Article 6(2) of Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts are to be interpreted as precluding national legislation which, in the context of a distance contract, requires the cost of delivering the goods to be charged to the consumer after he exercises his right of withdrawal.'
The German Supreme Court was not sure how to interpret provisions of the BGB (German Civil Code) in accordance with the Directive and issued a question whether these provisions are: 'to be interpreted as precluding national legislation which allows the costs of delivering the goods to be charged to the consumer even where he has withdrawn from the contract?'
The Advocate General argues that Article 6(1) gives consumers rights to withdraw from a distance contract 'without penalty and without giving any reason' which means that in principle the consumer should not suffer any negative consequences as a result of making a decision to withdraw from a contract. The only charge that may be made to the consumer because of the exercise of that right is the direct cost of returning the goods. According to the Advocate General the words 'only charge' require strict interpretation.
At the same time Article 6(2) obligates the supplier to reimburse 'the sums paid' by the consumer 'free of charge' in case of a withdrawal. The principle of 'full refund' means according to the AG that 'sums paid' includes not only the purchase price of the goods or the charge for the service provided, but also amounts paid by the consumer to the supplier in connection with the conclusion or performance of the distance contract, including delivery costs. (par. 34) The AG uses also a systematic argument pointing out the obvious difference between the term 'sums paid' that has been used in this provision and 'price' that has been used in some other provisions of that Directive. (par. 36)
The recommendation of the AG to ECJ is: 'Article 6(1), first subparagraph, second sentence, and Article 6(2) of Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts are to be interpreted as precluding national legislation which, in the context of a distance contract, requires the cost of delivering the goods to be charged to the consumer after he exercises his right of withdrawal.'
ECJ - Plus Warenhandelsgesellschaft
14 January 2010: ECJ case C-304/08 Plus Warenhandelsgesellschaft
The reference to the ECJ has been made by a German association founded to combat unfair competition against a German retail undertaking Plus Warenhandelsgesellschaft (further called 'Plus').
In 2004 Plus launched the promotional campaign 'Ihre Millionenchance' ('Your chance to win millions') in which the public was invited to purchase goods sold in its shops in order to collect points. By collecting 20 points, customers could take part free of charge in the draws held by the Deutscher Lottoblock (national association of 16 lottery undertakings).
German law (Paragraph 4 of the Law on unfair competition - Gesetz gegen den unlauteren Wettbewerb) prohibits participation of consumers in a lottery being made conditional on the purchase of goods. Therefore, proceedings had been started against Plus to make it put an end to this practice.
The German Supreme Court made a reference to the ECJ to ask whether that national provision is in accordance with the new Directive 2005/29 on unfair commercial practices:
‘Is Article 5(2) of Directive 2005/29 … to be interpreted as meaning that that provision precludes a national provision which states that a commercial practice whereby the participation of consumers in a prize competition or lottery is made conditional on the purchase of goods or the use of services is in principle unlawful, irrespective of whether, in any particular case, the advertising in question affects consumers’ interests?’ (par. 19)
The ECJ adjudicated as to the substance that 'promotional campagins which enable consumers to take part free of charge in a lottery subject to their purchasing a certain quantity of goods or services, clearly form part of an operator's commercial strategy and relate directly to the promotion thereof and its sales development'. (par. 37) This means that these practices fall under the definition of commercial practices within the meaning of Article 2(d) of the Directive. It does not matter that the practices used by Plus harmed not only interests of the consumers but also those of other competitors. 'Only national legislation relating to unfair commercial practices which harm ‘only’ competitors’ economic interests or which relate to a transaction between traders is thus excluded from that scope'. (par. 39)
Taking into account the fact that the Directive provides for maximum harmonization, which means that the Member States may not introduce stricter measures to protect the consumers, the ECJ made a point that a commercial practice is unfair only if it fulfills the requirements of Article 5(2): 'if it is contrary to the requirements of professional diligence and materially distorts, or is likely materially to distort, the economic behaviour of the average consumer with regard to the product'. (par. 43) Only commercial practices (black)listed in the Annex I are seen as unfair in any circumstances (exhaustive list). Other commercial practices need to fulfill the test of Article 5 of the Directive in order to be seen as unfair.
The German law: 'prohibits any commercial transaction which couples the purchase of goods or use of services to the participation of consumers in a prize competition or lottery, with the sole exception of those relating to a lottery or prize competition which is inherently linked to the goods or services in question. In other words, that type of practice is prohibited generally, without it being necessary to determine, having regard to the facts of each particular case, whether the commercial transaction at issue is ‘unfair’ in the light of the criteria set out in Articles 5 to 9 of Directive 2005/29'. (par. 48) Such a practice is not listed in the Annex I which means that according to the Directive it could be seen as fair in case the test of Article 5 was not fulfilled. '(...) such an exception cannot take the place of the analysis, which must of necessity be undertaken having regard to the facts of each particular case, of the ‘unfairness’ of a commercial practice in the light of the criteria set out in Articles 5 to 9 of the directive, where, as here in the main proceedings, that practice is not listed in Annex I thereto (see VTB-VAB and Galatea , paragraphs 64 and 65)'. (par. 53)
This case follows closely the reasoning the ECJ presented in VTB-VAB case.
The Advocate General in its opinion considered an interesting question that has been left out of deliberation of ECJ completely: whether the fact that these type of practices had been seen as immoral in Germany and therefore were prohibited could influence the decision of the ECJ. 'The Court’s decisions in the so-called games-of-chance cases also demonstrate that games of chance may harbour a potential risk to the societies of the Member States, which must therefore be in a position to take appropriate measures to control the risks arising from addiction to gambling. The central issue in those cases was to strike a balance between the freedom to provide services and the freedom of establishment, on the one hand, and, on the other, the safeguarding of imperative requirements in the general interest such as consumer protection, the prevention of fraud, preventing citizens from being tempted to spend excessively on gaming, as well as defending the social order in general. The Court acknowledged that the Member States ‘are free to set the objectives of their policy on betting and gaming and, where appropriate, to define in detail the level of protection sought’. In the Court’s opinion, ‘moral, religious and cultural factors, and the morally and financially harmful consequences for the individual and society associated with gaming and betting, could serve to justify the existence on the part of the national authorities of a margin of appreciation sufficient to enable them to determine what consumer protection and the preservation of public order require’, on condition that the measures adopted are proportionate. In my view it is necessary, for the sake of consistent case-law, to apply the abovementioned principles to the interpretation of Article 5(2)(a) of the Directive, in particular to the element of ‘honest market practice’, and to allow the Member States a sufficient margin of discretion – within the limits laid down by Community law – when adopting measures for controlling the risks arising from addiction to gambling. The German Government’s general doubts concerning a commercial practice that uses the enticement effect of games of chance can be categorised as moral reservations. As the German Government correctly observes, the use of games of chance in advertising is very likely to arouse the human pleasure in gambling. Not least because of the prospect of (sometimes) very large winnings, such games exercise a certain attraction. They can arouse the attention of prospective customers and direct them to certain ends by means of the chosen advertising strategy. For that reason, the argument that a commercial practice of this kind has manipulatory elements and may consequently, in certain circumstances, amount to a breach of professional diligence cannot, in general, be rejected out of hand.' (par. 91-93 of the Advocate General's opinion) It seems, however, that the ECJ rightly did not even consider this matter since the Directive clearly aims only at protecting economic interests of the consumers. This means that if the Member States plan on protecting other interests of the consumers, e.g. moral ones, they should do it outside the scope of the Directive.
The reference to the ECJ has been made by a German association founded to combat unfair competition against a German retail undertaking Plus Warenhandelsgesellschaft (further called 'Plus').
In 2004 Plus launched the promotional campaign 'Ihre Millionenchance' ('Your chance to win millions') in which the public was invited to purchase goods sold in its shops in order to collect points. By collecting 20 points, customers could take part free of charge in the draws held by the Deutscher Lottoblock (national association of 16 lottery undertakings).
German law (Paragraph 4 of the Law on unfair competition - Gesetz gegen den unlauteren Wettbewerb) prohibits participation of consumers in a lottery being made conditional on the purchase of goods. Therefore, proceedings had been started against Plus to make it put an end to this practice.
The German Supreme Court made a reference to the ECJ to ask whether that national provision is in accordance with the new Directive 2005/29 on unfair commercial practices:
‘Is Article 5(2) of Directive 2005/29 … to be interpreted as meaning that that provision precludes a national provision which states that a commercial practice whereby the participation of consumers in a prize competition or lottery is made conditional on the purchase of goods or the use of services is in principle unlawful, irrespective of whether, in any particular case, the advertising in question affects consumers’ interests?’ (par. 19)
The ECJ adjudicated as to the substance that 'promotional campagins which enable consumers to take part free of charge in a lottery subject to their purchasing a certain quantity of goods or services, clearly form part of an operator's commercial strategy and relate directly to the promotion thereof and its sales development'. (par. 37) This means that these practices fall under the definition of commercial practices within the meaning of Article 2(d) of the Directive. It does not matter that the practices used by Plus harmed not only interests of the consumers but also those of other competitors. 'Only national legislation relating to unfair commercial practices which harm ‘only’ competitors’ economic interests or which relate to a transaction between traders is thus excluded from that scope'. (par. 39)
Taking into account the fact that the Directive provides for maximum harmonization, which means that the Member States may not introduce stricter measures to protect the consumers, the ECJ made a point that a commercial practice is unfair only if it fulfills the requirements of Article 5(2): 'if it is contrary to the requirements of professional diligence and materially distorts, or is likely materially to distort, the economic behaviour of the average consumer with regard to the product'. (par. 43) Only commercial practices (black)listed in the Annex I are seen as unfair in any circumstances (exhaustive list). Other commercial practices need to fulfill the test of Article 5 of the Directive in order to be seen as unfair.
The German law: 'prohibits any commercial transaction which couples the purchase of goods or use of services to the participation of consumers in a prize competition or lottery, with the sole exception of those relating to a lottery or prize competition which is inherently linked to the goods or services in question. In other words, that type of practice is prohibited generally, without it being necessary to determine, having regard to the facts of each particular case, whether the commercial transaction at issue is ‘unfair’ in the light of the criteria set out in Articles 5 to 9 of Directive 2005/29'. (par. 48) Such a practice is not listed in the Annex I which means that according to the Directive it could be seen as fair in case the test of Article 5 was not fulfilled. '(...) such an exception cannot take the place of the analysis, which must of necessity be undertaken having regard to the facts of each particular case, of the ‘unfairness’ of a commercial practice in the light of the criteria set out in Articles 5 to 9 of the directive, where, as here in the main proceedings, that practice is not listed in Annex I thereto (see VTB-VAB and Galatea , paragraphs 64 and 65)'. (par. 53)
This case follows closely the reasoning the ECJ presented in VTB-VAB case.
The Advocate General in its opinion considered an interesting question that has been left out of deliberation of ECJ completely: whether the fact that these type of practices had been seen as immoral in Germany and therefore were prohibited could influence the decision of the ECJ. 'The Court’s decisions in the so-called games-of-chance cases also demonstrate that games of chance may harbour a potential risk to the societies of the Member States, which must therefore be in a position to take appropriate measures to control the risks arising from addiction to gambling. The central issue in those cases was to strike a balance between the freedom to provide services and the freedom of establishment, on the one hand, and, on the other, the safeguarding of imperative requirements in the general interest such as consumer protection, the prevention of fraud, preventing citizens from being tempted to spend excessively on gaming, as well as defending the social order in general. The Court acknowledged that the Member States ‘are free to set the objectives of their policy on betting and gaming and, where appropriate, to define in detail the level of protection sought’. In the Court’s opinion, ‘moral, religious and cultural factors, and the morally and financially harmful consequences for the individual and society associated with gaming and betting, could serve to justify the existence on the part of the national authorities of a margin of appreciation sufficient to enable them to determine what consumer protection and the preservation of public order require’, on condition that the measures adopted are proportionate. In my view it is necessary, for the sake of consistent case-law, to apply the abovementioned principles to the interpretation of Article 5(2)(a) of the Directive, in particular to the element of ‘honest market practice’, and to allow the Member States a sufficient margin of discretion – within the limits laid down by Community law – when adopting measures for controlling the risks arising from addiction to gambling. The German Government’s general doubts concerning a commercial practice that uses the enticement effect of games of chance can be categorised as moral reservations. As the German Government correctly observes, the use of games of chance in advertising is very likely to arouse the human pleasure in gambling. Not least because of the prospect of (sometimes) very large winnings, such games exercise a certain attraction. They can arouse the attention of prospective customers and direct them to certain ends by means of the chosen advertising strategy. For that reason, the argument that a commercial practice of this kind has manipulatory elements and may consequently, in certain circumstances, amount to a breach of professional diligence cannot, in general, be rejected out of hand.' (par. 91-93 of the Advocate General's opinion) It seems, however, that the ECJ rightly did not even consider this matter since the Directive clearly aims only at protecting economic interests of the consumers. This means that if the Member States plan on protecting other interests of the consumers, e.g. moral ones, they should do it outside the scope of the Directive.
Friday, 5 February 2010
'Free' when it's really NOT
Unfair Commercial Practices Directive 2005/29/EC blacklists certain commercial practices in its Annex I. This means that these practices are considered unfair in all circumstances. On that list a practice of advertising a product/service as free when the consumer would in reality have to pay more than just the costs of delivery and responding to the advert is mentioned:
20. Describing a product as "gratis", "free", "without charge" or similar if the consumer has to pay anything other than the unavoidable cost of responding to the commercial practice and collecting or paying for delivery of the item.
20. Describing a product as "gratis", "free", "without charge" or similar if the consumer has to pay anything other than the unavoidable cost of responding to the commercial practice and collecting or paying for delivery of the item.
The Consumerist blog mentions today a US case in which the company Experian is being sued for deceptive advertisements. These adds made consumers believe that if they go to Freecreditreport.com website they would get a free credit report when in reality they needed to sign up for paying a $14.95 monthly credit monitoring service. This practice, in Europe, would clearly fall under the Section 20 of the Annex I of the Unfair Commercial Practices Directive.
Wednesday, 3 February 2010
Customer Think | Stop Being Stupid! The Customer Isn’t Always Right
Customer Think Stop Being Stupid! The Customer Isn’t Always Right
Dave Brock posted an interesting article 'Stop Being stupid! The Customer Isn't Always Right' on Customer Think blog. I completely agree with him that customers are not always right. However, I would go further than he does in his conclusions. He claims that if professionals could only realize that, then they would see a great opportunity that is there in front of them: to educate the consumer, to inform him, to make a difference. I believe that in many cases professionals not only have such an opportunity but they even have a duty to do so. Duties to inform, to advise, to warn and all other duties of care are becoming more and more prominent within European Consumer Law. To make professionals aware of the fact that it could be in their benefit to take care of interests of the consumers is a good beginning, but it is just a beginning.
Dave Brock posted an interesting article 'Stop Being stupid! The Customer Isn't Always Right' on Customer Think blog. I completely agree with him that customers are not always right. However, I would go further than he does in his conclusions. He claims that if professionals could only realize that, then they would see a great opportunity that is there in front of them: to educate the consumer, to inform him, to make a difference. I believe that in many cases professionals not only have such an opportunity but they even have a duty to do so. Duties to inform, to advise, to warn and all other duties of care are becoming more and more prominent within European Consumer Law. To make professionals aware of the fact that it could be in their benefit to take care of interests of the consumers is a good beginning, but it is just a beginning.
Tuesday, 2 February 2010
Goals
I've been thinking about writing this blog for a while now, but the concept has not yet crystallized itself fully. Instead, I prefer to just start doing it and see how it develops in practice. In the near future I intend to start adding more and more data that were of interest to me as far as development of European Consumer Law is concerned. I will start with posting short summaries of ECJ judgments that concerned EC Law and have been issued as of 1 January 2010. With time I hope to start adding interesting news on European consumers and their laws, maybe describe certain articles/books that are published on this subject. The goal is: at least a weekly update.
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