"Initial commitment period" of two years in phone subscriptions - aka when is long enough long enough? CJEU in C‑612/23

 Many readers will have had the experience - signing up for a new mobile (phone) contract and opting for the 2-year commitment in order to obtain the best terms, and then again starting a new contract with the same provider when a new and more attractive offer comes about. What happens then with the remaining months on the new contract?

Vodafone Germany thought, we learn through xxx, that these months should just be added to the next contracts. In the case of the two consumers on behalf of whom the German Verbraucherzentrale brought a case, the new contracts they signed after upgrading to a new device and service level were drafted as including a minimum commitment of 26 months, in one case, and "24 months after the expiry of the original commitment period" in the other case. 

German courts disagreed on whether this extension, which meant that even though the parties had agreed mutually to a new contract the old contract would "live on" in terms of commitment, was in line with the Universal Services Directive, according to which (article 30 para 5)

Member States shall ensure that contracts concluded between consumers and undertakings providing electronic communications services do not mandate an initial commitment period that exceeds 24 months. Member States shall also ensure that undertakings offer users the possibility to subscribe to a contract with a maximum duration of 12 months.

Was this maximum "initial commitment" period, the ECJ was hence asked, limited to the first contract between a consumer and a service provider, or did the same capping also apply to subsequent contracts, so that they should not (directly or indirectly) bind the consumer for more than 24 months?

The Court begins its analysis by acknowledging (para 30) that the different language versions may point in more or less ambiguous directions: whereas in some versions it is clear that the rule was meant to regulate *commitment periods* irrespective of contractual form, in some other languages "initial" could refer to both the period and the contract, so that only the first contract would be covered by the restriction. The task is then to solve this ambiguity in a way that secures uniform application throughout the Union. 

In the following paragraphs, the Court takes a deep dive in the competitive reasons behind the rule, under the Universal Services Directive in the original formulation as well as under the more recent amendments and finally the new Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December 2018 establishing the European Electronic Communications Code (OJ 2018 L 321, p. 36).

The gist of the reasoning is that the rule is meant to make sure that consumers should be able to "change providers when it is in their interests... without being hindered by legal, technical or practical obstacles, including contractual conditions, procedures, charges and so on."(recital 47 Dir 2009/136) While reasonable minimum contractual periods are allowed, they should not be used to make it more difficult "potentially for long periods, for consumers to change provider"and thus to deprive them "of the possibility to take full advantage competition in the field concern" (para 33).

While it can be considered that after the first contract the consumer has sufficient information about the provider, this doesn't mean that they should be prevented from changing provider "if a more attractive offer were to present itself" (para 34). 

This leads the court to conclude that, considering that the level of protection afforded to consumers should not be lowered by their choice to enter a second contract with the same provider (para 35), the provision should be interpreted to mean that "initial commitment period" applies not only to the first contract between a provider and a consumer, but also to any successive contract between the same parties, "including when it was signed and put into effect before the expiry of the initial contract". 

As a rather habit-driven and not so savvy consumer who tries to use their device for at least four to five years (and encourages all readers to do the same!), this blogger has never experienced similar issues. However, it would be interesting to see whether the problem was typically German or also present in other jurisdictions: one can see how it can be tempting for companies to have their cake (the new contract) and eat the last slice of the previous cake too. According to the Court's overview, at least the Italian and Portuguese language version would seem to have left abundant space for an ambiguous interpretation. Wonder whether there will now be hundreds of consumers potentially claiming two or a few months worth of subscription as undue payments? Please let us know if you have stories on this!

Are contract summary templates transparent? - feedback opportunity

The European Commission asks for feedback on the draft contract summary template, which all consumers must receive from e-communication service providers. Commission aims to make this template 'clear and understandable' and to facilitate comparison of services of different providers, thus transparency is definitely one of the key points that should be considered during the evaluation. Feedback may be submitted until 9 September on this website.

ECJ in Orange Polska: Signing a contract in the presence of a courier is not an aggressive practice

On 12th June the CJEU issued its judgement on the Orange Polska case (C‑628/17) on the meaning of the aggressive practices provisions in the Unfair Commercial Practices Directive. This blog previously reported on the AG opinion on the case. The facts of the case will be summarised here, but they are analysed in greater detail in that post. 

The referring court asked whether the practice in question, where in order to conclude a telecommunication contract the consumer has to make the final decision in the presence of the courier employee who is handing him the contract terms, should be considered an aggressive practice with the use of undue influence, according to art. 8 and 9 UCPD.

The Court draws attention to the fact that the context of each individual case needs to be taken into account for determining the existence of a practice that uses harassment, coercion or undue influence (paras 30-31). This case-by-case factual analysis seems to be necessary only for aggressive practices, rather than all kinds of unfair practices.

The Court goes on to clarify that only undue influence is relevant in this particular case (para 32). However, the wording of articles 8 and 9 UCPD doe snot appear to demand identifying whether a practice is aggressive due to the use of harassment, coercion or undue influence.Making reference to point 45 of the AG Opinion the Court pointed out that undue influence is not necessarily impermissible influence but influence which, without prejudice to its lawfulness, actively entails, through the application of a certain degree of pressure, the forced conditioning of the consumer’s will.

Tne Court stated that the fact that the consumer was asked to sign a contract in the presence of a courier without having been sent the contract beforehand, but having had the chance to access it online, cannot be considered an aggressive practice (para 40) on its own.In assessing whether the consumer actually had a chance to receive information prior to the courier's visit, the quality of information plays an important role. The mode of communication is key as the information provided on a trader's website may be superior to that included in a phone conversation (para 42). Still, while more detailed information may be available on line, one could argue that over the phone, consumers may be able to focus on the the questions more relevant for them.

The Court is taking a restrictive view on what can amount to an aggressive practice, as it is pointed out that even if a consumer did not have the chance to access the information beforehand, that is not enough to classify it as an aggressive practice (para 43). Instead, the key criterion is the conduct of the trader. It is stated that conduct, such as the one in the case in question where the courier asks the consumer to take his final transactional decision without having time to study, at his convenience, the documents delivered to him by that courier, cannot constitute an aggressive commercial practice (para 45).

What is needed is something additional to the conduct above that would make the consumer feel uncomfortable and confuse his thinking in relation to the transactional decision at hand. Some examples of what might be considered aggressive includes:'the announcement that any delay in signing the contract or amendment would mean that the subsequent conclusion thereof would be possible only under less favourable conditions, or the fact that the consumer would risk having to pay contractual penalties or, in the event of the contract being amended, would risk the trader suspending the service'(para 48).

Another example was that of the courier informing the consumer that, if he refuses to sign or delays in signing the contract or amendment that has been delivered to him, he could receive an unfavourable assessment from his employer could also fall within that same category; an example similar to point 30 of Annex I of the UCPD, where a trader informs the consumer that if he does not buy the product, his job or livelihood will be in jeopardy.

Unfortunately, the opinion of the AG was not followed in this case and the Court was not daring enough in its interpretation of the aggressive practices provisions, as it was in Wind Tre, even though it was often cited in the judgement. Contrary to the AG opinion, the judgement does not engage at all with the average consumer standard. The judgement fails to provide a comprehensive mechanism for interpreting the provisions or indeed promote our understanding of what kind of pressure is the consumer expected to withstand. Instead, it repeats the phrasing of art.8 on making the consumer take a transactional decision he would not have taken otherwise. 

With this judgement the concept of aggressive practices is interpreted in a restrictive manner, in an effort to balance consumer protection with commercial realities, thus failing to make use of the potential of the provisions.

Un

AG Campos Sánchez-Bordona's opinion on Orange Polska (C-628/17): Signing a contract with the courier present can be undue influence under UCPD

On 30 January 2019, the AG Campos Sánchez-Bordona's opinion on case C-628/17 Orange Polska has been published. This is a case of great significance as it is the first one clarifying the meaning of aggressive practices and especially undue influence under the Unfair Commercial Practices Directive (UCPD). In the last year there has been a growing interest in aggressive practices with this being the second case on aggressive practices, following the judgment on Wind Tre, after the Directive being in force for more than 10 years. It is not clear why this is happening now, yet it is a welcome development. Perhaps it is telling that both these cases concern telecommunications companies.

Facts of the case

Orange Polska is a Polish telecommunications company which concludes service contracts with consumers through their website, using the following stages (the opinion also mentions sales via phone, yet the stages listed are relevant only for online sales):

1. Consumer’s visit to the website of the company where he can get informed on the offers of the company as well as access the standard forms.
2. Choice of product.
3. Send an order. What is highlighted about this is that the consumer does not consent to any statement that he has read the terms and conditions at this stage.
4. The order is executed with the courier service employee bringing the standard form contract to the consumers, along with any other appendices to sign.
5.  Contract is concluded when the consumer signs the contract and the declaration that he has reviewed all the documents is handed to him and he accepts their content. The signing needs to take place while the courier employee is there, otherwise the consumer needs to go to a physical shop or place a new order online.
6. The contract is activated.

Stage 5 of the ones listed above is the problematic one, especially the aspect that consumers have to sign the documents in the presence of the courier employee, meaning they might be pressured into signing without having the opportunity to review the documents in detail. That was the view of the Polish regulator who found the practice to be harmful to the collective interests of consumers. This administrative decision was disputed in the Warsaw courts with the decision being cancelled in the first instance only to be reinstated by the Court of Appeal. 

Referred questions

Finally the case reached the Supreme Court of Poland, which referred the following questions:

The Court asked whether the practice in question, where in order to conclude a telecommunication contract the consumer has to make the final decision in the presence of the courier employee who is handing him the contract terms, should be considered an aggressive practice with the use of undue influence, according to art. 8 and 9 UCPD.

The referring Court goes on to discern different scenarios the practice can be characterised as aggressive:

1. Always when the consumer has not been able to be informed of the content of the terms during the visit of the courier employee without hindrance.
2. Only when the consumer has not received the full terms in advance individually before the visit of the courier employee, even though he had the chance to access them online.
3. Only when from it can be deduced that the business is engaging in unfair practices aiming at impairing the freedom of choice of the consumer thereby causing him to take a transactional decision he otherwise would not have taken.

AG opinion

The decision on whether a practice is aggressive needs to be made taking into account all of its features and circumstances, as stated in art. 8 UCPD.

The phrasing used in the referred questions is contentious, such as the use of the word ‘always’. As the AG clarifies, only the practices included in ANNEX I of the Directive are meant to be always unfair. Given that the practice in question is not one of the blacklisted practices, then it cannot be said to always be unfair. (para. 42)

Sometimes classified as aggressive

One of the arguments put forward by the Orange Polska is that the practice cannot be characterised as using undue influence as it did not make use of illegal influence. The AG Campos Sánchez-Bordona in his opinion rejects this restrictive interpretation of the term ‘undue influence’ and states that undue influence is the influence which, regardless of its legality, leads in an active way, through the use of pressure, to the manipulation of the will of the consumer (para 45).

In order to decide whether the particular practice was aggressive, three relevant factors are listed. The AG correctly states that the weight placed on each of these factors will depend on the facts. Each one of these factors may be able to establish the aggressive character if it is intense enough, or there may be a need to combine the presence of all three to find the practice aggressive (para 53).

These factors are listed in para 52 of the opinion:

1. If the behaviour or the actions of the employee of the company are especially pressuring or aggressive.
2. If the consumer received in advance limited, fragmented or partial information or information that does not correspond to the one provided later by the courier employee. This element is enough to establish a misleading action or omission (as per art. 6-7 UCPD) and possible undue influence.
3. Finally, other unfair actions of a different nature would suffice, according to their potential for influencing the will of the consumer to amount to undue influence.

Relevant factors

While the facts are to be determined by the national court AG Campos Sánchez-Bordona is offering a helping hand by providing a list of relevant factors for deciding when a practice is aggressive.

The AG distinguishes between sales via phone and sales via the internet, as the circumstances call for a different approach.

In online sales, usually the consumer chooses to visit the website of the trader and nothing stops him from taking time to consider the different offers and terms. Conversely, on the phone, there is often an element of surprise and the consumer is passive (para 57).

Furthermore, there is a different average consumer in the two instances (para 58). The average consumer shopping online is considered to have a minimum level of familiarity with online processes and the ability to handle them at least until placing an order. On the other hand, the average consumer of phone sales may be less circumspect and well-informed and therefore in need of greater protection. The rationale for that is that it is easier to reach that consumer on the phone, as all that is needed is to take a call.

Also, the quality of the provided information is important, as one of the important features of aggressive practices are that they limit the freedom of choice of the consumer, as stated also in Wind Tre case (para 59). Since this is only the second case on aggressive practices ever, and AG Campos Sánchez-Bordona was involved in both, there is a frequent mention of the remarks made in Wind Tre (see the previous post on that case here).

It is essential that consumers are informed of the terms prior to the conclusion of the contract, as that is how they decide whether to commit to the contract. The AG Campos Sánchez-Bordona states that ultimately, there is a disparity between the information provided in online and phone sales with the information in the latter one being of a lower quality (para 62).

The important question is here whether the timing of the provision of information, in this case in the presence of the courier employee is enough to make the consumer take a transactional decision he would not have taken otherwise. This may be the case particularly if the consumer has doubts on whether the information provided by the courier employee is the same as the one they read online or were given by phone (para 66). This issue is exacerbated by the fact that the courier employee is not in the position to answer any questions on that matter and dissolve their doubts.

The behaviour of the courier is key in determining whether the practice would be aggressive. Every measure needs to be taken to alleviate any psychological pressure to the consumer to sign. This can be achieved by the employee not insisting that the consumer signs on the spot. Should the courier employee be linked to the trader (which was not the case here), there is a higher standard to adhere to as they should be able to answer questions. Furthermore, they should not imply that if the consumer does not sign they might face a penalty or less favourable terms in the future and should offer to visit on another day to allow consumers to read the terms in their own time (para 72).

These suggestions do not so much list what would classify as aggressive behaviour but rather what wouldn’t.

Conclusion

This is the most detailed interpretation of what constitutes an aggressive practice in the case law of the ECJ. It is a sorely needed guidance, going beyond the phrasing of art. 8-9 UCPD, which would assist regulators and traders. It reflects the difficulties in defining aggressive practices to the extent that they are tied to human behaviour. It remains to be seen whether the ECJ in its judgement will follow the AG’s opinion and how they will interpret the meaning of undue influence.

The 2018 Consumer Scoreboard

On 12th October the European Commission published the 2018 Consumer Markets Scoreboard. The Consumer Scoreboard provides an overview of how the EU single market works for consumers. There are two kinds of Consumer Scoreboards, the Markets scoreboard and the Conditions Scoreboard which get published in alternate years. This year it is the turn for the Markets Scoreboard which monitors the performance of over 40 markets as experienced by consumers.

Here is a summary of some of the most interesting findings of the scoreboard:

• The overall positive trend of consumers' assessment of markets continues; however there is divergence between different part of the EU. Markets in Western Europe perform better, while markets in South Europe are lacking in performance. The Eastern Europe markets are the ones that show the greatest improvements.
•  Services continue to underperform in the Scoreboard with the lowest performing being banking services and real estate.
• The financial situation of consumers plays an important role in their assessment of markets as poorer consumers are, unsurprisingly more negative in their assessment.
• Choice and comparability in utility markets, and especially in electricity, is leaving consumers dissatisfied.
• The highest incident of problems reported (16.9%) was noted for telecommunications, with that percentage being even higher (20.3%) for internet services. While the performance of the markets ranges across countries, with southern countries being less satisfied, the sector continues to be a cause for concern.

Justice Commissioner Vera Jourova responded to the findings of the Scoreboard by pointing out that the 'New Deal for Consumers'and the announced measures, such as a new representative action for consumers should serve to increase consumer trust in the single market.