The European Commission has published a study on "
Consumers' attitudes to Terms and Conditions" conducted by a consortium consisting of Ecorys, Tilburg University, University of Amsterdam and GfK. The legal expertise was provided for this study by Marco Loos (CSECL, University of Amsterdam) and Joasia Luzak (CESL, University of Exeter; CSECL, University of Amsterdam). Within the study experiments were conducted to, among other things, examine how quality cues impact consumer attitudes to standard terms and conditions, whether the length and complexity of text of disclosure matters etc. The Commission announces that the results of this study will inform the ongoing review of EU consumer and marketing law, as they are relevant both for the revision of Unfair Contract Terms Directive and the Digital Single Market proposals. No specific plans have yet been announced though.
The final report is available
here.
Abstract:
Previous
research has shown that when buying products and services online, the
vast majority of consumers accept terms and conditions (T&Cs)
without even reading them.
Although by not reading the T&Cs consumers are disempowering
themselves, this behaviour can be viewed as rational from a cost-benefit
perspective. As such, it would be unrealistic but arguably also
unnecessary to expect all consumers to read and comprehend
all T&Cs that they encounter: In most cases these T&Cs will not
have an impact on the performances of the parties. On the other hand,
even in such cases consumers may want to have a short look at the
T&Cs in order to assess the reliability of the trader with
whom they are about to conclude a contract. Therefore, this research
took on a dual approach as to how to help consumers assess the
substantive quality of the T&Cs.
The
first approach was to increase readability. We investigated whether
readership and understanding would be increased by shortening and
simplifying the T&Cs. The
assumption was that some consumers are motivated to be informed about
(specific parts of) the T&Cs before making a purchase. If consumers
are motivated to read the T&Cs, they should be able to understand
this information. This approach is in line with the case-law
of the Court of Justice pertaining to the requirement in Article 5 of
the Unfair Contract Terms Directive (UCTD) that terms and conditions
must be drafted in plain and intelligible language. According to the
Court, this requirement implies that terms must be
drafted in such language that the average consumer can foresee, on the
basis of clear, intelligible criteria, the economic consequences which
derive from these terms for the consumer. Shorter and simpler T&Cs
could contribute to the readability of the T&Cs
and therefore to better consumer decisions regarding whether or not to
conclude the contract with a particular trader.
The
second approach was to create effortless awareness. This approach was
not focused on increasing the share of consumers who read the T&Cs
per se. Rather, it investigated
how consumers can be made more aware of the content of the T&Cs, or
at least of the quality thereof, without them spending much more effort.
To that extent, we investigated whether trust in the T&Cs and
purchase intentions would be increased by adding a quality
cue to the online store, such as the presence of a logo of a national
consumer organisation accompanied by the statement “these terms and
conditions are fair”. The assumption was that when the T&Cs were
accompanied by such a statement, consumers would trust
the content of the T&Cs more and would therefore be more willing to
conclude a contract with that trader compared to traders that did not
accompany their T&Cs with such a statement. Again, this may then
contribute to better decision-making by consumers regarding
whether or not to contract.
On the basis of our findings, we have made the following policy recommendations:
1. To improve readership, T&Cs could be presented in a default exposure format.
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The study shows that where consumers can access the T&Cs by
clicking on a link, only a small percentage of consumers (9.4%) opened
the T&Cs in the absence of a quality
or reading cost cue. When the T&Cs were directly provided on the
screen and consumers had to scroll through them, only 22.1% indicated
that they did not read the T&Cs at all, compared to the 90.6% in the
voluntary exposure experiment. How much readership can
be improved by this measure needs to be investigated in further
experiments that directly compare free and default exposure conditions
on the same outcome measure.
2.
To improve readership and understanding, T&Cs could be standardised
and presented in a simple and short format, containing no more than the
most relevant information.
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From the perspective of general consumer law and product-specific
regulations, certain information must be disclosed to consumers by
traders. Standardised forms
for providing this information may facilitate reductions in length. This
study suggests that T&Cs do not need to be long and complex, and
traders actually have a commercial and legal interest in keeping
T&Cs short and simple.
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When the T&Cs were simplified and shortened, more consumers
indicated that they had read the T&Cs. For example, when the
T&Cs were extremely short and simple, 26.5%
reported to have read the whole T&Cs compared to only 10.5% in the
standard long and complex T&Cs condition. Consumers also understood
the T&Cs better when they were short and simple. This was found on
an objective comprehension test about the content of the
T&Cs as well as on consumers’ self-report on how easy or difficult
it was to comprehend the T&Cs.
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Moreover, consumers’ attitudes towards the T&Cs were influenced by
the length and complexity of the T&Cs. Simple and short T&Cs
were trusted more than long and complex
ones. Consumers were also more satisfied with the content of the
T&Cs, felt less frustrated while reading them, and felt that reading
them was more worth their time when the T&Cs were simplified and
shortened. It should be emphasised that in this part of the
experiment the length and complexity of the T&Cs differed but their
substance did not. This suggests that it is indeed the length and
complexity of the texts as such that influence the trust that consumers
have in the fairness of the T&Cs, irrespective of the
content.
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Importantly, consumers indicated that they did not miss relevant
information in the short and simple T&Cs. Thus, despite shortening
them, the T&Cs appeared to contain
all relevant information of the longer version, at least from consumers’
viewpoint. This suggests that the shorter T&Cs were at least
equally effective in providing the necessary information as the longer
and more complex T&Cs.
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The effects did not depend on whether the online store was domestic or
foreign (meaning that the effects were present on both types of online
stores), and hardly
differed between countries.
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Shortening the T&Cs is in line with other European legislative
instruments. In this respect it is important to note that under the
Consumer Rights Directive (CRD)
traders need to present a list of information items in a clear and
comprehensible manner before the consumer is bound by the contract. This
information needs to be actively presented to consumers and cannot be
buried in the T&Cs. Similarly, relevant practical
information could possibly be included in the FAQ section at a website
instead of in T&Cs, thus further enabling traders to shorten the
T&Cs.
3.
To improve readership of T&Cs, a statement with an estimation of
the time it takes to read the T&Cs could be added (a reading cost
cue). If providing such a reading
cost cue is made mandatory it may also work as an incentive for traders
to reduce the length of their T&Cs.
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Experiment 2 showed that readership of the T&Cs was influenced by
the presence of a reading cost cue. In one condition, we added the
message that “reading the terms
and conditions takes less than five minutes” next to the link by which
the T&Cs could be accessed. This reading cost cue increased the
number of consumers opening the T&Cs from 9.4% to 19.8%. Moreover,
the time spent on the T&Cs indicated that when a reading
cost cue was present, respondents who opened the T&Cs also spent, on
average, more time on that page than respondents who opened the
T&Cs when no such reading cost cue was present.
4.
To increase effortless awareness of the T&Cs, quality cues may be
helpful. Customer feedback, national consumer organisation endorsement,
and European consumer
organisation endorsement cues can be used, as they positively influence
trust and purchase intentions. The most positive effects are achieved
with a national consumer organisation endorsement cue on domestic online
stores, and with a European consumer organisation
endorsement cue on foreign online stores.
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Adding a quality cue indicating that the terms and conditions are fair
had an effect on consumers’ trust in the T&Cs and their purchase
intentions. Adding a customer
feedback quality cue, an endorsement by a national consumer
organisation, and an endorsement by a European consumer organisation
increased trust and purchase intentions. These positive effects were
found on domestic as well as foreign online stores (though
more pronounced on domestic stores) and on existing as well as
non-existing online stores.
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The quality cues were not all trusted to an equal extent. Although all
cues had positive effects, a positive customer feedback cue was trusted
the least, indicating
that (supposed) endorsement by customers is trusted less than (supposed)
endorsement by a consumer organisation. Which of the consumer
organisation endorsement cues was trusted the most depended on the type
of online store. On domestic online stores, a national
consumer organisation endorsement cue was trusted the most. On foreign
online stores, a European consumer organisation endorsement cue was
trusted the most.
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A promise-to-be-fair by the seller and expert endorsement sometimes
decreased trust and purchase intentions. This study therefore does not
find evidence to support
the promotion of such quality cues.
–
Adding a quality cue seems to be effective on both familiar and
unfamiliar online stores, although the effects appear to be larger on
familiar online stores. Preliminary
study 2 highlighted that the positive effects of adding a quality cue
are more pronounced on existing (familiar) than on non-existing
(unfamiliar) online stores. A similar result was found with subjective
familiarity. The main study did, however, also find
positive effects on non-existing (unfamiliar) online stores (experiment
3). Taken together, these findings suggest that the effects of adding a
quality cue are present on existing (familiar) and non-existing
(unfamiliar) online stores, although the effects
are sometimes more pronounced on existing (familiar) online stores.
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When deciding on whether to add a quality cue to an online store,
differences across Member States do not appear to be so large as to
warrant that they be given
much weight.
5. Policy may also focus on raising general and specific awareness, thus making consumers more aware of their basic rights.
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Both preliminary studies demonstrated that consumers’ knowledge of
consumer rights (general awareness) is limited. Interestingly,
consumers' self-reported knowledge
is not equally low, indicating that consumers are generally unaware of
their lack of knowledge.
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In order to raise general awareness, one can think of information
campaigns initiated by governments, consumer authorities, or consumer
organisations through media
channels or at the point-of-purchase (e.g. when entering a mall).
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Finally, policy may focus on raising specific awareness. An example is
that information about the delivery period and length of the right of
withdrawal and commercial
guarantee must be mentioned on the first page/screen of the order form,
as this is typically the type of information consumers need before they
can make their decisions.
