Only natural persons can be consumers – CJEU in Condominio di Milano, via Meda (C-329/19)

On the 2^nd of April 2020, the CJEU decided on the Condominio di Milano case (here). The case concerned the concept of consumer under the Unfair Terms Directive, regarding a contract between Condominio Meda (a commonhold association) and Eurothermo SpA (an energy supplier). The dispute originated in the duty to pay interest for late payment in a contract for the supply of thermal energy. Article 6.3 of the terms and conditions of Eurothermo stated that, in the event of late payment, the debtor must pay ‘default interest at the rate of 9.25% from the expiry of the period for payment of the balance’. Condominio Meda claimed that it is a consumer in the sense of the Unfair Terms Directive and that Article 6.3 of the terms and conditions is unfair.

The national court highlighted the existence of pre-existing national case law from the Italian Supreme Court that determines that a commonhold association – as a form of co-ownership – is not a legal person but it is considered a ‘distinct subject of the law’. This means that, under Italian law, Condominio Meda is neither a natural person nor a legal person. The Italian Supreme Court has nonetheless previously applied consumer protection rules to contracts concluded by a commonhold association and a trader or supplier. Furthermore, the national court mentioned the CJEU’s previous decisions on the concept of consumer, which were exclusively based on the criterion of being (or not) a natural person. Therefore, the referring court asked whether the Unfair Terms Directive is applicable to this contract.

The CJEU started by analyzing whether a ‘distinct subject of the law’ that is not a consumer is covered by the Unfair Terms Directive. In fact, Article (2)(b) explicitly identifies a consumer with ‘a natural person’. According to past case law, the CJEU reiterated that ‘a person other than a natural person who concludes a contract with a seller or supplier’ cannot be considered a consumer (Cape and Idealservice MN RE, C‑541/99). Therefore, the contract concluded between the commonhold and the energy supplier is excluded from the scope of the Unfair Terms Directive (paragraph 29). This is a literal interpretation of Article 2(b), allowing for a well-defined and consistent notion of consumer.

Additionally, the CJEU extracted a second question from the national court’s request: is it contrary ‘to the spirit of the framework of consumer protection in the European Union’ for a national court to interpret the transposing legislation of the Unfair Terms Directive as covering contracts concluded between a commonhold (not a natural person) and a supplier? Given that the Unfair Terms Directive is a minimum harmonization Directive and that the Italian Supreme Court has developed a line of case law ‘which seeks to afford greater protection to consumers’, the answer is negative. Therefore, even though the contract in question is excluded by the scope of the Unfair Terms Directive, the Unfair Terms Directive does not preclude national case law from applying its transposing legislation to the contract in question. 

Airbnb hosts can (and should) be regulated locally, AG says

Earlier this month Advocate General Bobek delivered his opinion in joined cases C-724/18 and C-727/18 Cali Apartments. The cases involve two Parisian hosts who were sanctioned for letting their apartments via Airbnb without an authorisation required under national and municipal law. Unlike in the previous cases on the so-called platform economy (see, in particular:  Airbnb scores a victory before the Court of Justice), the questions referred did not revolve around the role of the platform operator. Rather, the Court was asked to define the limits of the freedom to provide services by the peer providers.

Background of the case

Under applicable French law letting apartments for short periods to a transient clientele is only allowed if a number of conditions are fulfilled. Firstly, it is necessary to declare this fact to the mayor of the relevant municipality. Secondly, and most importantly to the dispute, in municipalities with more than 200 000 inhabitants, change of use of residential premises is additionally subject to a prior authorisation. Detailed conditions for obtaining the authorisation are set out at the local level and may include offset requirements in the form of the concurrent conversion of non-residential premises into housing. The appellants, who were sanctioned for letting their Parisian properties to tourists without necessary authorisations, argued that requirements imposed under French law were contrary to Directive 2006/123/EC on services.

Opinion of AG Bobek

The Advocate General considered the answer to the first two questions asked by the referring court to be fairly straightforward. In his view, Services Directive does apply to the activities and rules in question and the national/municipal framework at issue should be qualified as an 'authorisation scheme' under Articles 9 to 13 of Services Directive. While the reasoning in this respect is rather convincing (note especially reference to Visser), it is hard to overlook a similarilty with another recent case, in which AG Bobek gave an opinion: C-393/17 Kirschstein. There as well, the AG argued for a broad reading of the act's scope - in that case Directive 2005/29/EC on unfair commercial practices - and centered his analysis on the substance of the act. As we reported on this blog, however, the Court did not share this opinion and considered the applicability question to be decisive (see: CJEU in Kirschstein...).

Having established the applicability of Service Directive to the Cali case, the AG moved to assessing the compatibility of the relevant authorisation scheme with Services Directive. Here, a distinction was made between the benchmark for evaluating the need for establishing such a scheme in the first place and more specific conditions of such a scheme. Following the opinion, the former should comply with Article 9 of Services Directive, while the more extensive list of Article 10 is relevant for the latter. Crucially, both provisions contain a common core, requiring the applicable measures to be non-discriminatory, justified by an overriding reason relating to the public interest and proportionate to the objective pursued.

As regards the public interest objective, para. 97 of the opinion lists the different reasons put forward by participants to the proceedings: combating a housing shortage; offering affordable and sufficient housing; social housing policy; the protection of the urban environment; resisting pressures on land; the protection of consumers; the efficiency of tax inspections; fair trading; and the protection of the recipients of housing services. The relevant French authorities focused, in particular, on considerations of housing shortage and protection of urban environment, both of which the AG  accepted without hesitation. Other reasons, including the more consumer-oriented ones, thus remained on the sidelines of the analysis, even if their role in other context has not been discounted.

As regards the remaining questions, the AG took the view that establishment of the authorisation scheme at issue can be seen proportionate under Article 9(1) of the Services Directive, but questioned the proportionality and the non-discriminatory nature of its specific requirements under Article 10(2). According to the AG,  offsetting required by the City of Paris can in many instances actually defeat the purpose of asking for an authorisation in the first place (para. 127). This is especially the case for 'non-professional owners' of an extra flat in which they personally do not reside. Hence, the analysed offsetting requirement eventually reserves the access to market for short-term accommodation rental only for the big players, who would typically be legal persons or property developers. Having said that, the AG made clear that offsetting requirements need not always be contrary to EU law. Proportionality of such requirements could potentially be achieved by limiting them to premises above a certain size or to owners with more residential properties. A system of temporary authorisations not subject to offset, which would be periodically reviewed and potentially redistributed, could be another option to consider (para. 134).

Concluding thought

Two elements transpiring from the AG's proportinality analysis are additionally worth highlighting: the role of evidence-based assessment and of local diversity. According to the AG, the conclusion on both Article 9 and 10 requires that account is taken of "specific data" concerning the housing market in the cities where an authorisation scheme is envisaged. Such evidence, collected at the local level, is needed to assess whether the scheme does not go beyond what is necessary to achieve the objectives pursued (paras. 112, 121). The opinion concludes with a thought, towards which - as the AG notes - the Commission showed some "intellectual unease" during the hearing: that local diversity as to the specific authorisation conditions is not only permissible; it is even desirable (para. 136). While this finding might be true for limitations justified by the reasons related to housing shortage and urban environment, this is not necessarily the case for ones related to consumer protection.

* The author carries out a research project on consumer protection in the collaborative economy, financed by the National Science Centre in Poland on the basis of decision no. DEC-2015/19/N/HS5/01557.

Consumer Credit Directive allows for ‘subconcepts’ of ‘total cost of the credit’ in national law – CJEU in Mikrokasa (C-779/18)

On the 26^th of March 2020 the CJEU decided on the Mikrokasa case (in French, here). The case concerns a contractual clause on the calculation of the total costs of a credit agreement under the regimes of the Consumer Credit Directive and of the Unfair Terms Directive.

The facts of the case:

In November 2016, the consumer concluded a credit agreement with IPF Polska (who later passed the credit onto Revenue). The credit amount was 3 000 Polish zlótis (around 703 euros), payable until May 2018. According to this credit agreement, the consumer had to pay a commission of 2 084 PLN (around 488 euros). Besides, the consumer must pay 10% annual interest on the total amount of 248 PLN (around 57 euros). In December 2016, the same consumer concluded another credit agreement with Mikrokasa for the amount of 4000 PLN (around 940 euros), payable until June 2019. Additionally, the consumer was obliged to pay 600 PLN (around 139 euros) in preparatory fees and 3 400 PLN (around 790 euros) in administrative fees. Besides, the consumer had to pay 7% annual interest on the total amount of 371,87 PLN (around 86 euros). The consumer did not pay the total amount owed in either contract.

The first question:

In Polish national law, the consumer is made aware of the ‘total cost of the credit excluding interest’. The contractual clause in question, although trying to limit the costs imposed on the consumer, indicates that the total cost of the credit excluding interest should not exceed 55% of the total annual amount of the credit, 85% if for 2 years, and 100% regardless of the duration of the credit. The concept of ‘total cost of credit excluding interest’ does not exist in the Consumer Credit Directive, which refers multiple times to an idea of totality of costs (including taxes and other fees). The national court questions the conformity of applicable national law with the Consumer Credit Directive (considering its maximum harmonization), since national legislation introduces the concept of ‘total cost of the credit excluding interest’. Furthermore, according to Polish national law, the ‘total cost of the credit excluding interest’ is determined according to a formula that does not take into account the installments actually performed, which means that the consumer does not know the real costs of the credit and is not duly informed at the time of the conclusion of the contract (paragraph 29). The national court therefore asked the CJEU whether the Consumer Credit Directive (and its goals) should be interpreted as being incompatible with separating the Polish national law notion of ‘total cost of the credit excluding interest’ from the Directive notion of ‘total cost of the credit for the consumer’.

The CJEU’s argumentation:

The CJEU correctly highlights that the legislator provides a broad definition of the concept of ‘total cost of the credit for the consumer’ in Article 3(g), which encompasses all costs that the creditor knows of (excluding notarial fees). According to the Court of Justice, the ‘cost of the credit excluding interest’ is a subcategory of ‘total cost of the credit’ as defined by Article 3(g) of the Consumer Credit Directive. Furthermore, the CJEU highlighted that Article 5(1) and Article 10(2)(g) regarding pre-contractual information in a credit agreement state that the consumer must be informed of the ‘total amount payable by the consumer’ as meaning the ‘the sum of the total amount of the credit and the total cost of the credit to the consumer’ (as defined in Article 3(h)). The CJEU also states that these provisions do not prescribe a duty to inform on the cost of the credit excluding interest or its calculation method and that, therefore, this issue is not harmonized (paragraph 41-42). The CJEU concludes that Polish national law merely establishes a maximum limit for the total credit cost and its calculation method, as well as the consequences of non-performance. As long as national law does not impose supplementary duties to inform (which is up to the national court to verify), there is no contradiction between national law and the Consumer Credit Directive.

The second question:

Regarding the contractual clause in question, the national court states that in practice professional parties choose the maximum amount allowed, without taking into account the costs actually incurred in by the consumer (paragraph 32), which could mean that the clause is unfair. However, the national court had doubts as to whether this contract term is imposed by Polish national law, in which scenario it would be excluded from the scope of the Unfair Terms Directive (Article 1(2)). Therefore, the national court asked whether the Unfair Terms Directive excludes from its scope contractual clauses that determine the total cost of the credit excluding interest while respecting the maximum limit prescribed by national law, without considering the costs that were actually incurred in by the consumer.

The CJEU’s argumentation:

Regarding the second question, the Court of Justice reminds that the Unfair Terms Directive is not applicable to contractual terms that are imposed by national legislation (or regulation), as long as such a provision is mandatory, that is, that it applies regardless of the contractual parties’ choice or as a default rule (paragraph 50). This exclusion from the scope of the Unfair Terms Directive is to be interpreted in a strict way, so as to provide consumers with a high level of protection (paragraph 51). As the CJEU repeatedly says, the evaluation of whether the contractual clause results from national law and whether it is a mandatory provision is to be made by the national courts. However, the CJEU conducts that evaluation itself, and states it does not appear that a contract term that applies a calculation method to the maximum limit of the cost of the credit excluding interest results from the relevant national provision in this case, given that that provision does not establish the rights and duties of the parties but simply restricts the freedom to determine the cost of the credit excluding interest above a certain level, which does not seem to prevent the national judge to assess the unfairness of the clause. The CJEU concludes that the Unfair Terms Directive does not exclude from its scope a contract term that determines the cost of the credit excluding interest which respects the maximum limit imposed by national legislation, without necessarily taking int account the costs actually incurred in by the consumer.

Remarks:

While I understand the argumentation of the CJEU regarding the first question, not only does it not offer a high level of consumer protection but also it does not represent the spirit of the Consumer Credit Directive. The CJEU should have further emphasized the goals of the information duties in the Consumer Credit Directive, especially considering that the referring court highlighted that ‘the consumer does not know the real costs of the credit and is not duly informed’. The Consumer Credit Directive – and other consumer instruments at EU level – are very clear on the fact that the information on the total price of the product or service to be acquired must be complete, all-encompassing and final (whenever possible). One of the main goals of the Consumer Credit Directive is to increase transparency regarding contract terms and to guarantee that the consumer is aware of the economic consequences the credit agreement entails, both before the conclusion of the contract and throughout the performance of the contract. See, for example, Recital 19 (‘In order to enable consumers to make their decisions in full knowledge of the facts, they should receive adequate information, (…) on the cost of the credit and on their obligations’). This is particularly true when it comes to the justification behind imposing specific duties to disclose the total cost of the credit. See, for example, Recital 43 (‘In individual Member States different cost factors are taken into account in the calculation thereof. This Directive should therefore clearly and comprehensively define the total cost of a credit to the consumer’). What the CJEU is saying is that it is acceptable to insert a term on the calculation of the total price of the credit excluding interest (and not considering actual performances, therefore preventing the consumer from knowing the actual cost of the credit excluding interest…), as long as there is no explicit obligation to inform the consumers on the matter and as long as the consumers are also informed on all the aspects covered by the Directive. However, the ratio of the obligation to inform consumers on the total amount of the credit seems to directly conflict with this (and not only with an explicit obligation to inform on the total cost of the credit except interest). A contractual clause establishing a certain monetary amount excluding interest will ‘inform’ the consumers anyway (from a practical perspective). If we take the CJEU's reasoning to the extreme, it means that it is acceptable to have in the same contract several concepts (or clauses) that fall under the concept of ‘total cost of the credit’ along with ‘total cost of the credit excluding interest’, such as ‘total cost of the credit excluding taxes’, ‘total cost of the credit excluding commissions’ and ‘total cost of the credit excluding fees’. The fact that the consumer is aware of the total cost of the credit does not guarantee that the consumer understands the information/ economic consequences if he is also informed of all the other ‘total costs’. As we know, consumer biases and information overload stand in the way of a clear, concise and understandable credit agreement. Considering all the research that has been conducted on behavioral economics and on how consumers perceive and contextualize (pre-contractual) information and contract terms, it seems strange to allow this, especially when it seems to contradict the spirit of the Directive. 

Coronavirus and digital finance: public consultations and other initiatives

The current coronavirus pandemic made our financial lives exclusively digital. This raised new challenges but also opened new opportunities for the financial sector. It is of no surprise therefore that within the EU Commission's overall focal point on fighting the coronavirus health emergency and its social and economic consequences, digital finance gained a pivotal role. There are currently a couple of initiatives that we wished to share with you.

Public consultations 

A couple of days ago the Commission opened two important public consultations.

The first focuses more generally on setting out the new Digital Finance Strategy/FinTech Action Plan later in 2020 that would identify policy areas and policy measures for the next 5 years (on the current FinTech Action Plan we reported here). The consultation is organized around three priority areas:

1. ensuring that the EU financial services regulatory framework is fit for the digital age;
2. enabling consumers and firms to reap the opportunities offered by the EU-wide Single Market for digital financial services;
3. promoting a data-driven financial sector for the benefit of EU consumers and firms.

At the same time, the EU Commission opened a separate consultation on retail payments as a key step towards the adoption of a retail Payments Strategy for Europe.

Both consultations can be contributed to by the 26th of June 2020.

Online roundtables

Within its initiative of Digital Finance Outreach 2020 DG FISMA moved its planned roundtable events online. They are organized around current topical issues and are run weekly until the end of May. The events aim to raise awareness of the work of DG FISMA and to connect relevant stakeholders. They are free to attend and encourage contribution, so if you have anything to add, feel free to raise your hand.

Pan-European Hackaton

Finally, in collaboration with Member States the Commission opened a very interesting call for participation in a pan-European Hackaton, within the #EUvsVirus challenge, to develop innovative solutions for the new challenges raised by the current coronavirus crisis. One of the domains of the hackaton is digital finance with a range of challenges. One important challenge for us is how to develop innovative solutions to support the the most vulnerable, the digitally excluded such as the elderly, who currently struggle to access financial services and products. There is also a challenge to solve other problems in the current climate such as to development of coronavirus related health insurance (see the list of challenges here). The hackaton will be held 24-26 April. Registration is still open (access link here), so if you have ideas for workable solutions, please register. The full agenda is also available here and much of the event is livestreamed on Facebook. 

Free online seminars on consumer law

In response to the current outbreak of COVID-19 The Academy of European Law (ERA) is one of the companies that provides some of their services now for free (for an abusive approach of companies we reported here). They made available some of their past seminars for free on specific areas of law, including consumer law. We highly recommend these seminars as being delivered on topical matters by high level experts.

Spelling out the law - CJEU in Kreissparkasse (C-66/19)

On 26 March the CJEU published a judgment in a case Kreissparkasse (C-66/19), which was not accompanied by an opinion. The consumer in this case concluded a credit agreement secured by a mortgage. Four years after the conclusion of the contract, the consumer attempted to withdraw from the credit agreement, claiming that he has never received all the mandatory information from the credit provider and, therefore, the period to make use of his right of withdrawal has never started running. The contested matter was whether the mandatory information has indeed been provided and in a transparent enough manner, as the contract specified: "The borrower may withdraw from the contractual obligation, without having to provide any reasons, within 14 days and in writing (for example, by letter, fax or email). The period begins after conclusion of the agreement, but not before the borrower has received all mandatory information referred to in Paragraph 492(2) of the [BGB] (for example, information concerning the type of loan, information relating to the net loan amount, information concerning the contractual term). …". Should the consumer know from the above contractual provision when the right of withdrawal starts running (and runs out)? Would he need to check the legal provisions of the German Civil Code to determine what information the credit provider should give him and ensure that he has received them all (and when)?

The CJEU is not a fan of placing such obligations on consumers. Article 10(2) of the Consumer Credit Directive obliges credit providers to give consumers transparent information on the right of withdrawal, incl. the period during which the right might be exercised and the conditions under which it may be used. The CJEU emphasises that this means that the consumer should be given transparent information on how the period of withdrawal is to be calculated (para. 38). It is insufficient for fulfilling this objective for the credit provider only to refer to the national provisions implementing the Credit Consumer Directive, stating that the right of withdrawal starts from the moment of the conclusion of the contract or when the consumer receives all the mandatory information, if the latter occurs later. "Where an agreement concluded by a consumer refers to certain provisions of national law as regards information which must be provided pursuant to Article 10 of Directive 2008/48, the consumer is not in a position, on the basis of the agreement, to determine the scope of his or her contractual obligations, check whether all the required information, in accordance with that provision, is included in the contract that he or she has concluded, or a fortiori verify whether the period of withdrawal open to him or her has begun." (para. 44) 

In case law under the Unfair Contract Terms Directive the CJEU has already specified that the traders are required to inform consumers about the content of the legal provisions they are referring to in the contract (Invitel and RWE Vertrieb) (paras. 46-47). This judgment applies the same reasoning to information that needs to be provided under the CCD.

Replacing unfair terms with supplementary rules - not a mission impossible? AG Kokott elaborates on Dziubak in C-81/19 Banca Transilvania

Amid the current crisis it is worth taking a step back in order to catch up on some of the ongoing cases before the Court of Justice. Case C-81/19 Banca Transilvania is one of such noteworthy disputes. On March 19th the Advocate-General Kokott issued the opinion in the case, addressing a number of important points concerning consumer protection against unfair terms in foreign currency loan agreements. The opinion engages with the scope of fairness assessment, focusing on the exclusions of the terms reflecting mandatory statutory provisions and conditional exclusion of core terms. It further elaborates on the legal consequences to be drawn by national courts if a term governing the exchange rate risk is found to be unfair. In the latter regard, the dispute follows up on the widely commented Dziubak ruling, decided by the Court at the end of last year.

Facts of the case

The case was brought by a number of Romanian consumers, who, despite receiving their income in Romanian leu, entered into a credit agreement for a sum denonminated in Swiss francs. As a result of the fall in value of the leu, the amount to be paid increased very significantly. The consumers argued that the bank failed to provide them with adequate information on the exchange rate risk, which they found unreasonably disadvantagous. The bank responded that the contested term reflected the principle of monetary nominalism expressed in the Romanian Civil Code and, therefore, fell outside the scope of the unfairness test in line with Article 1(2) of Directive 93/13.

Opinion of AG

Against this background, the referring court firstly asked whether a contractual term that reflects a general principle established by law (such as the principle of monetary nominalism) is subject to the provisions of Directive 93/13. According to the AG,  the exemption in Article 1(2) extends to the statutory provisions - including both mandatory and default rules - which were adopted "specifically for the type of contract concerned" or which are applicable to the contract according to a legislative reference. This conclusion was justified by a teleological argument, according to which it is only possible for the national legislature to "strike a balance" between the parties inasmuch as the specific arrangement between the parties was indeed envisaged by it (para. 42). If the provision is not intended to create a balance between consumers and sellers or suppliers, the trader should not be able to rely on Article 1(2), which is for the national court to verify. Although the interpretation does not actually lie too far off from the previous case law of the Court of Justice, such as RWE Vertrieb or Aqua Med, it could potentially further reduce the improtance of Article 1(2) exemption.

Assuming the referring court should go forward with a substantive fairness assessment, a further question was raised as regards the analysis of core terms under Article 4(2) of Directive 93/13. In this regard the AG recalled, following the Andriciuc case, that a term under which a loan denominated in a foreign currency is to be repaid in that currency may concern the 'main subject matter of the contract' within the meaning of Article 4(2) of Directive 93/13. Terms of this kind escape fairness assessment under UCTD (provided Member States have not increased the level of consumer protection, see Ahorros) in so far they are in plain intelligible language. According to the AG, the relevant criteria have already been explained by the Court. The trader is thus required to comprehensively inform the consumer about the potential risks of variations in the exchange rate and the fact that they must be borne entirely by the borrower (para. 59).

Finally and perhaps most importantly, the referring court sought to find out whether freezing the exchange rate at the rate applicable on the date of signature of the agreement offers a solution which ensures the full effectiveness of the consumer’s rights under UCTD. According to that court, the agreement could not continue to exist without the contested term, yet its annulment would not be favourable to the consumer either, as it would put the latter at the risk of having to repay the entire loan at once. To recall, full annulment was an outcome welcomed by the consumers in the Dziubak case. This, however, has not been case in Banca Transilvania. According to AG Kokott, previous case law of the Court of Justice significantly limits the scope of actions that the national court can take in situations of this kind: among others, the court may not assume that the consumer is bound by the unfair term and may not modify the contract by revising the content of the unfair term. However, in view of the AG, a national court cannot be prohibited from plugging a gap in a contract left by the removal of the unfair term with a supplementary rule that restores the balance between the reciprocal rights and obligations of the parties, simply because one of the parties is a consumer (para. 73). Such a conclusion is not to be mistaken with a judicial interpretation of the term and with reduction of its content to a permissible extent, as this would indeed reduce the directive's dissuasive effect. However, where disuassive effect is also not achieved by the anullment, national courts should be able to substitute the unfair term with a supplementary rule that replaces the formal balance between the rights and obligations of the parties with an effective balance which re-establishes equality between them (paras. 79, 87). While the possibility of, exceptionally, replacing an unfair contract term with a supplementary provision of national law if the nullity of the contract would have particularly negative consequences for the consumer has already been recognized in prior case law (Kásler, Abanca), the interpretation of the concept of 'supplementary provisions of national law' has remained underdeveloped (see Guidance Notice to the UCTD, p. 42). Reference of the AG to the rules that "replace the formal balance between the rights and obligations of the parties with an effective balance which re-establishes equality between them" could be of help in this regard. The AG herself, however, did not give her opinion whether freezing the exchange rate at the rate applicable on the date of signature could provide such a solution. The mission given to national courts, therefore, remains quite challenging.

Concluding thought

Overall, the opinion brings the discussion on the legal consequences to be drawn by national courts if a contract term is found to be unfair back on its previous track, following the more fact-specific Dziubak judgment delivered last year. It does not go against the prior case law of the Court, since one of the proposed conditions for allowing the court to replace the unfair term with a supplementary rule is the finding that annulement would have particularly unfavourable consequences for the consumer. With this condition in mind, it does not seem unlikely the interpretation laid down in the opinion will eventually be followed by the Court.

On a more general note, the commented case reminds us of the crucial role of the UCTD as a vehicle of consumer protection following the financial crisis of 2008. While the potential economic downturn caused by the COVID-19 pandemic would likely have a different nature, it is worth remembering the lessons learnt from previous times of hardship. In her opinion, AG Kokott seeks to provide for a high level of consumer protection while highlighting the importance of an "effective balance" between the rights and obligations of both parties, in line with their reasonable expectations. Lifting the economy following current crisis will be a challenging endevour and will likely require a similar balance to be struck. Yet the consumers' weaker position should not be forgotten along the way.

Coronavirus and unfairness: scams and unfair practices

Dear readers,

The news is full of warnings of scams and other unfair practices that consumers are exposed to these days. Using the words of The Guardian, what is for some the 'greatest heath and economic emergency for a century', for others, is a chance to 'scam a fortune from a captive market under effective house arrest.'

The spread of COVID-19 and subsequent government interventions has led to unprecedented situations, completely rearranging our lives, from working from home to social distancing. Fear for the health of our loved ones and our own and social solidarity with those in need of e.g. food is all part of our daily lives now. This is a new situation for everyone, and as such we are all vulnerable and easy prey for those that wish to take advantage of us, as consumers, to obtain financial gain.

This advantage taking can take harsh forms of fraud, that seem very common in these difficult times. BBC News ran a special feature on scams recently, giving the example of a young woman who was misled by a scammer posing as a rental agent into transferring part of her rent in advance to the scammers account, believing that she was helping other vulnerable tenants who could not afford to pay rent (see more examples here). A couple of days ago Finextra reported on a new pop up malware activated by a cyber-attacker to open a webpage titled 'Coronavirus Finder'  which clams there are people nearby infected with the virus. In order to find the infected individuals the victim is asked to pay only 0.75 euros on a payment page set up by the hacker. The attempted payment of this money would then transfer the bank details of the consumer to the fraudster. Fraudsters even pose as the EU Commission sending fake debt collect letters for unpaid taxes. There are also teams of people showing up at consumers' homes dressed in protective gear, to supposedly check whether the consumer's environment is not contaminated with the virus. When some of them are talking to consumers, others are robbing the house. New COVID-19 themed scams appear virtually every day, and they cost, for instance, UK customers 800 000 pound sterling in the past month.

Apart from clear cases of fraud, there are other, perhaps less financially harmful but still unfair practices. While many traders have shown their goodwill by providing free (digital) services and digital content, such as fitness training and free entertainment for kids, and free delivery of goods, there are also those that have taken unfair advantage of the current situation, by raising the price of goods in high demand such as toilet paper and by selling fake goods such as face masks and sanitizers that allegedly cure the illness.

The current situation placed the key actors in consumer protection enforcement on high alert across Europe. Authorities are already taking steps to prevent the illegal content to reach consumers, for instance, the Italian Consumer Protection Authority blocked the website of a trader who claimed that he sells the only drug that cures the illness.  On March 20 the national consumer protection authorities within the CPC network issued their Common Position on COVID-19, and subsequently the EU Commissioner for Justice and Consumers wrote to online platforms and marketplaces to combat these practices.

The new situation will be yet another grand challenge for EU consumer law. It is our job as academics and policy makers to question whether the current legal framework and enforcement tools are fit for purpose. In particular, enforcement of consumer rights at the EU level and the functionality of the CPC network and the role of the EU Commission might be questioned once again (see for instance our reports here  and here). It is also less clear what will the EU Commission and national authorities do about stopping specific scams such as the illegal transfer of money and the theft of personal data. These may even be outside the competence of national consumer protection authorities and will require further cooperation and coordination with the relevant authorities. Finally, we should consider whether the concept of consumer vulnerability needs to be further worked on in the new circumstances, and generally whether these new circumstances require new or redefined measures of protection.

If you are interested in these issues, please listen to the recording of the public webinar of our colleague Dr Christine Riefa (with contributions of Professor Christian Twigg-Flesner) on Consumer Rights, Scams and Coronavirus (accessible here). You can also share your views and information on COVID-19 related scams or unfair practices in comments.

And finally, please stay safe and stay alert at all times 🌈