Saturday, 18 March 2017

Commission provides a bigger stick: social media companies to comply with EU consumer protection

This week the European Commission and EU consumer authorities met with representatives of social media companies (Facebook, Twitter, Google+) to discuss how they could adjust their practices in order to comply with EU consumer law. The main areas of concern, many times previously flagged by concerned consumers, authorities and scholars (see e.g. my article written together with M. Loos, "Wanted: a Bigger Stick. On Unfair Terms in Consumer Contracts with Online Service Providers") pertain to unfair terms and conditions used by these companies, as well as fraud and scams used to mislead consumers while they use social networks (The European Commission and Member States consumer authorities ask social media companies to comply with EU consumer rules).

The Commission identifies, among others, the following as unfair/illegal terms :
  • Social media networks cannot deprive consumers of their right to go to court in their Member State of residence;
  • Social media networks cannot require consumers to waive mandatory rights, such as their right to withdraw from an on-line purchase;
  • Terms of services cannot limit or totally exclude the liability of Social media networks in connection with the performance of the service;
  • Sponsored content cannot be hidden, but should be identifiable as such;
  • Social media networks cannot unilaterally change terms and conditions without clearly informing consumers about the justification and without given them the possibility to cancel the contract, with adequate notice;
  • Terms of services cannot confer unlimited and discretionary power to social media operators on the removal of content.
  • Termination of a contract by the social media operator should be governed by clear rules and not decided unilaterally without a reason.

Furthermore, consumer authorities require 'a direct and standardised communication channel' so that they can signal to social media companies whenever they notice fraud (e.g. fake promotions) and scam practices (e.g. involving payment taken from consumers) misleading consumers. Content resulting from such practices should then be taken down and consumer authorities should be informed about the identity of traders who introduced such practices.

This request made of social media companies is a result of the action taken by the Consumer Protection Cooperation (CPC) Network of national consumer authorities, under the lead of French consumer authority (see common position of CPC Network here), which identifies as unfair contract terms many of the terms that M. Loos and me have analysed in our article.

Saturday, 4 March 2017

CJEU rules on the costs of after-sales helplines

Speaking of the recent cases on (comparatively) recent directives, last Thursday the Court of Justice also delivered its judgment in case C‑568/15 Zentrale zur Bekämpfung unlauteren Wettbewerbs Frankfurt am Main v comtech. Since the Court largely followed the opinion of Advocate-General Szpunar, on which we reported last year, it suffices to briefly summarise the judgment here and refer the interested readers to our earlier post

What was the issue?

The CJEU was asked to interpret the concept of "basic rate" contained in Article 21 of Directive 2011/83/EU on consumer rights. Pursuant to this provision:

Member States shall ensure that where the trader operates a telephone line for the purpose of contacting him by telephone in relation to the contract concluded, the consumer, when contacting the trader is not bound to pay more than the basic rate.

The German legislator did not implement this provision word by word, though. Paragraph 312a of the German Civil Code (Bürgerliches Gesetzbuch) rather stated that the charges paid by consumers for the use of after-sales helplines should not exceed "the charges for the mere use of the telecommunications service".

Thus, the national legislation did not seem to attach particular importance to the amount of costs borne by consumers, but only required that they do not exceed the cost of providing the relevant helpline, i.e. that traders do not derive profit thereof. The question arose whether this interpretation is consistent with the concept of "basic rate" laid down in the CRD.

What did the CJEU say?

The CJEU did not share this interpretation and opted for a more consumer-friendly approach linking the concept of basic rate with the cost of a standard call. The Court's reasoning was based on the following elements:

  1. the usual meaning of the word in everyday language (para. 20)
  2. the context in which the article occurs (paras. 21-27)
  3. the purposes of the rules of which it is part (paras. 28-31).

One can notice that, unlike the AG, the Court did not refer to the legislative history of the provision. The aforementioned considerations were, nevertheless, sufficient to arrive at the very same conclusion, expressed in the operative part of the judgment.

The Court thus ruled that:

"The concept of ‘basic rate’ referred to in Article 21 of Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council, must be interpreted as meaning that call charges relating to a contract concluded with a trader to a telephone helpline operated by the trader may not exceed the cost of a call to a standard geographic landline or mobile telephone line. Provided that that limit is respected, the fact that the relevant trader makes or does not make a profit through that telephone helpline is irrelevant."