Friday, 25 February 2011

OFT publishes research on consumer contracts and small print

Yesterday the Office of Fair Trading (UK) published a report on how consumer deal with contracts and in particular with small print. The main aim of the investigation was to develop a systematic approach for determining the effects of consumer contracts, in order to be able to better identify the priorities for enforcement.

As could be expected, one of the findings was that consumers rarely read small print in contracts. The reasons consumers give is that they do not expect the terms to be negotiable, that they rely on the reputation of the company they are dealing with, or that they simply do not have enough time. But the report also goes into questions regarding e.g. the understanding of contract terms by consumers and to what extent consumers learn from bad experiences in the past.

For more background information and the report, click here.

Monday, 21 February 2011

Denied boarding? Don't let them deny you compensation as well!

Recently many students approached me to ask to write their master thesis about rights that consumers have while they book a flight, which then gets delayed or cancelled. They claim that they and their friends (aka: consumers) are not familiar with the protection they might receive in such situations and that it would be fascinating to study the remedies that as a consumer one might use against airlines.

On one hand, this was surprising to me since EU Regulation 261/2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights aimed at giving all European air passengers the same level of protection if something went wrong with their flight. It would seem then that in the past few years the situation should have been clarified. What happened, however, is far from any clear and comprehensible state of matters. Why? Mostly because the airlines prefer to pretend either that this EU Regulation 261/2004 does not exist or that it does not apply to the given situation. How is that possible? Let us first remind briefly the level of protection that consumers might expect:

The EU Regulation 261/2004 provided consumers with a possibility to claim compensation in case their flight was cancelled (pursuant to Article 7 of the Regulation) or delayed (confirmed in ECJ case: Sturgeon C-402/07. However, in order to protect the interests of the airline industry, an exception had been made for situations when the flight was cancelled or delayed due to extraordinary circumstances (i.e. they could not have been avoided even if all reasonable measures had been taken), Rec. 14 and Article 5 Sec. 3 of the Regulation. In recent ECJ case law (e.g. Sturgeon) it has been confirmed that these extraordinary circumstances should be understood narrowly and that the burden of proof that such an extraordinary circumstance had happened laid on the airline.This means that, in general, if your flight is cancelled you have a RIGHT to claim compensation. If your airline refuses to pay it - they have to justify that refusal. If their justification is not on the grounds of extraordinary circumstances: it is not valid and you should proceed with your claim.

What happens in practice, however? When a consumer approaches the airlines to claim compensation after his flight was cancelled or delayed he hears that no compensation is due to him since the reason for the given cancellation or delay was 'extraordinary circumstances' (an example may be found in a recent Guardian post). Usually, no explanation follows, which means that consumers may not question the true 'extraordinary' nature of these circumstances. Unfortunately, this tactic works since many consumers take it at a face value that there were indeed extraordinary circumstances and that as the result they had lost their right to claim compensation. Hereby, I would like to make an appeal for more consumers to actually question the airlines. Ask what the nature of the 'extraordinary circumstances' was. Ask for a written statement/explanation/denial of your compensation claim. If it does not sound convincing or if it does not give you any sufficient justification: demand more and demand your compensation. If that does not work - go to court to protect your rights and rights of other consumers!

Sunday, 20 February 2011


No doubt that we value our privacy as well as we want to feel secure. At home, at work, when traveling. Intuitively we trust documents which are signed. What about the Internet? Much is said about security on-line. However, in my opinion, it is still to little or maybe a current discussion is not deep enough.

As Joasia mentioned in some earlier posts, the EU is permanently struggling to increase consumers confidence in concluding online transactions and deal with a problem of data privacy on-line. And “struggling” is a right word, I think.

As a recent development the Commission launches public consultation on eSignatures and eIdentification. The Commission plans to ask citizens and other interested parties how electronic signatures and electronic identification (eID) and authentication can help the development of the European Digital Single Market.

The results of this consultation will feed into the Commission's review of the existing eSignature Directive and the preparation of a planned initiative on the mutual recognition of electronic identification and authentication. The online consultation runs until 15 April 2011.

Thursday, 17 February 2011

Fat or thin?

When I saw news about "Renewed Commitment of Stakeholders to Combat Overweight and Obesity-Related Health Issues" I immediately thought about my 1,5 years old son who is extremely active and - I hope therefore - extremely thin. As a loving mummy I am permanently worried: is he "fat" enough? But is it a real problem? Looking at the data below, I am not longer worried about the weight of my son.

According to the EC/OECD Report "Health at a Glance" published last December, the rate of obesity has more than doubled in the past 20 years in most EU Member States. On average, an estimated 15% of the EU adult population is obese.

Currently, 1 in 7 children in the EU are overweight or obese - and it is likely that the figures will rise even further. This is worrying, as children who are obese or overweight are more likely to suffer from poor health later in life, with greater risk of developing heart disease, diabetes, some forms of cancer, arthritis, asthma, a reduced quality of life and even premature death.

This week, European-level umbrella organisations, ranging from the food industry, health organisations and other civil society NGOs, who are members of the European Commission's Platform for Action on Diet, Physical Activity and Health agreed to step up action to tackle the growing problem of overweight and obesity related health problems. Priorities focus on children and how to make healthy choices available whilst also encouraging physical activity and sports.

No doubt that as consumers we all should take better care and double check what we buy to eat and how we live.

Wednesday, 16 February 2011

"The secret of my influence has always been that it remained secret." [S. Dali]

It's not a recently published book that I would like to mention here, but I have only recently finished reading it. "Influence: Science and Practice" by Robert B. Cialdini, professor of psychology and marketing at Arizona State University.

This book is a must-read for anyone who is interested in how the minds of consumers work. It shows clearly what factors influence consumers and their decision-making processes on a daily basis, most often subconsciously. It presents also mechanisms of defence that consumers might try using to protect themselves from this influence (as Dali mentioned, the power of influence is usually greatly diminished if it becomes known). From a legal perspective, if we find out what factors influence consumers we might figure out why certain legal mechanisms established to protect consumers are not effective in practice - when they ignore these powerful effects of 'click-whirr' mechanisms that often dominate consumers' way of thinking (certain stimuli causes automatic responses with consumers: "Click and the appropriate tape is activated; whirr and out rolls the standard sequence of behaviors"). On the other hand, it clearly shows that there are many ways of influencing the consumers and maybe the EU regulators should start using them in their own decision-making processes in order to deliver better protection mechanisms to EU consumers.

Friday, 11 February 2011

Are consumer protection rules a means to an end?

…in a form of the Single Market, mainly – as stated in the Lisbon Strategy – to make the EU the best economic and competitive player in the word.

In my opinion, a speech delivered by Commissioner John Dalli on 8 February 2011 on “European Citizens at the Heart of the Single Market” confirms that the Commission is going to tie consumer policy into its economic policy objectives even tighter than in the last decades.

What makes me think that?

No doubt that the Single Market has been fundamental to the EU integration. With time it has been regarded as the basis on which to unlock growth in the EU. “The whole is more then the sum of its parts” – said the Commissioner. The success of the Single Market depends on enhancing and strengthening consumers’ confidence. From this perspective – in the Commissioner opinion – there is still an unacceptable degree of market fragmentation.

What about concrete actions? They should be focused on: safety, information and education, redress and enforcement. New legislatives are planned.

To sum up, I think that consumer law may be regarded as a set of rules which has to serve the EU competitiveness – be economically efficient. It shall help the EU to protect its market from distortions, fragmentation and problems.

Tuesday, 8 February 2011

Happy Safer Internet Day 2011!

"It's more than a game. It's your life." - Happy Safer Internet Day is organized each year in February by Insafe to promote safer and more conscious use of online services and mobile phones, especially by children.

What to do to get someone's phone number... as a starter.

Ironically, while the European institutions are worried about consequences of the breach of the privacy of data and try to ensure that the appropriate authorities and consumers would be notified about such situations (see earlier post: Your personal data had been stolen online...), the consumers themselves seem to have more trust in institutions to which they give their personal information.

Nokia Siemens Networks presented a data privacy survey which shows that awareness about the use and misuse of personal data by third parties has increased among the consumers in the past years. It seems that regardless of whether the requirement of notification of data breach is binding the online parties, the consumers are aware that their personal data is highly sensitive and might be misused. Still, 40% of respondents confirmed that they would agree to submit their personal data in exchange for targeted services. It seems that while the consumers know that they take certain risks by sharing their personal data, they are willing to do so in order to obtain certain benefits. What is surprising is that surveyed consumers considered the telecom operators as highly trusted partners (right after banks), whom they could rely on in protection of their personal information.

On one hand, we seem to be aware that there is a risk. On the other hand, we have all the trust. I, for once, am glad that the European institutions are a bit more cautious in this respect.

Data taken from an article at Total Telecom: Consumers willing to share information with trusted telecom operators.

Cartoon: from a blog (Other Personal Data).

Saturday, 5 February 2011

Added value for improving the enforcement of EU legislation – initial stage

The European Commission has just launched a public consultation aimed at achieving a coherent approach towards collective redress in the European Union.

Although collective redress is not a new concept in the EU, the Commission decided to launch a consultation “Towards a more coherent European approach to collective redress”.

What is the purpose? Mainly to identify common legal principles, is there a need for a future legal instrument and – last but not least - how these principles could fit into the EU as well as into the Member States legal systems. In other words, the Commission seeks opinions on the future for collective actions in Europe.

Sometimes the violation of EU law may trigger multiple individual lawsuits. Current EU law already provides for the possibility of pursuing collective actions for injunctions in the field of consumer law, but the national legal systems vary considerably concerning financial markets, competition, environmental protection, and other areas of law (what is more, some Member States have them, while others do not).

Generally speaking, there are two types of a “broad concept of collective redress”. That is: (i) injunctive relief (lawsuits seeking to stop illegal behavior) and (ii) compensatory relief (lawsuits seeking damages for the harm caused). Such procedures can take a variety of forms. To name a few: court actions, out-of-court settlements, ADR.

It is still a very initial stage and the outcome of the public consultation is open. Contributions can be sent until the end of April 2011.

Your personal data had been stolen online. Wouldn't you like to be notified about that?

There is more and more talk recently about European Commission needing to take more actions to make consumers more secure in the digital world that we are living in. (e.g. read an earlier post on cloud computing: here) We can see the European Commission expresses more interest in regulation of the digital content services or in review of Package Travel Directive which would accommodate consumers buying their holidays online (e.g. read earlier post: here). Moreover, recently it seems that the European Commission would consider harmonisation of European consumer law in Consumer Rights Directive a success if it only improved the confidence of consumers in online transactions (read earlier post: here).

One of the issues that the EU is still struggling against while trying to increase consumers confidence in concluding online transactions, is a problem of data privacy. Many consumers are wary as to the leaks and abuses that might (and do) happen online or the impossibility of deletion of data that had been once entered into the world wide web. In the review of ePrivacy Directive (2002/58/EC) it has been decided that a European data breach notification requirement should be introduced for the electronic communication sector in order to appease the consumers' worries.

The ENISA (European Network and Information Security Agency - the role of that agency is to improve network and information security in EU) had recently released a report in which it reviewed the current situation in order to develop a consistent set of guidelines addressing the technical implementation measures of the data breach notification requirement. It seems that nowadays most Member States have no system that would require the data breach notification to the consumers or to any agency that might protect consumers or the privacy of their data. One can hope that this will change soon due to the new European policy established in the EU Telecoms Reform in November 2009 which is to be implemented by May 2011 (more information on these new rules may be found here). The data breach notification requirement is set for notifying mainly the data protection authorities. However, in case the data breach affects personal data, then the affected consumers should be notified, as well. The ENISA report sets out, inter alia, under what circumstances the consumers should be notified. You may find that report here.

This compliments nicely the public consultation on the privacy of personal data that had just been concluded by the European Commission - which also had been previously mentioned on this blog, see: here.

Wednesday, 2 February 2011

Will Consumer Rights Directive harmonise 2 or 4 EU consumer directives? Come on, take a guess.

A few days ago I wrote (And then there were two...) about the Council's agreement on the new proposal for the Consumer Rights Directive. They reached consensus on harmonization of two currently binding European Directives on: Distance and Doorstep Selling.

Today, the Committee on the Internal Market and Consumer Protection of the European Parliament adopted in a vote it's own version of the future Consumer Rights Directive and they seemed to have included in it all four Directives that were originally reviewed (that is, together with the Consumer Sales Directive and Unfair Contract Terms Directive). Most members of the Committee of the European Parliament were convinced that the consumers should not only be protected in the same way across EU when they conclude online (or other distance or off-premises) contracts, which seemed to have dominated the debate in the past few months. The European Parliament might still want to aim at the same level of protection for consumers regardless whether they purchase a good in stores or online. Moreover, they intend for the Consumer Rights Directive to include a list of unfair contractual terms.

The European Parliament does not follow fully the recommendation of the European Commission by not choosing to adopt full harmonization. After so much criticism the idea of full harmonization had received it did not really come as a surprise that EP choosed for a mix of minimum (e.g. as to remedies for lack of conformity) and maximum harmonization (the last one as to: information requirements, delivery deadlines, right of withdrawal).

While the Parliament is expected to vote on the proposal of its own Committee in March in a plenary session, the action plot is getting thicker. What kind of substance is the Consumer Rights Directive going to end up with? Is anyone going to be happy with it?

More in the European Parliament's press release of yesterday.