Financial benefits from a loyalty programme cannot deprive one of consumer status - case C-455/21, Lyoness Europe

Yesterday we reported on a case discussing the consumer notion under the Unfair Contract Terms Directive in the context of dual purpose contracts. Interestingly enough, this was not the only ruling on Article 2(b) UCTD issued by the Court on that day. Another one is C-455/21, Lyoness Europe, in which the Court similarly engaged with the consumer notion, although in somewhat different circumstances.

Facts of the case

  Image by storyset on Freepik

The dispute related to a membership programme offered by Lyoness Europe (currently myWorld), making it possible for the customers to purchase goods and services from collaborating traders on favourable conditions. One of the customers - a natural person working as a mechanical engineer - believed that the contract contained unfair terms and decided to sue the provider. Among others, the claimant questioned the lawfulness of a term designating Swiss law as the applicable law.

Easy case: membership programme

The Court focused on the easier problem arising in the dispute, namely whether a natural person who becomes a member of a scheme allowing certain financial benefits in connection with the purchase of goods and services is a 'consumer' within the meaning of Article 2(b) UCTD. Not surprisingly, the Court concluded that such a person does qualify as a consumer where he or she is acting for purposes which are outside his or her trade, business or profession. Like in case  C‑570/21, YYY, on which we reported yesterday, the Court emphasised the nature of the service covered by the contract, which may show the purpose for which that service is being acquired (para. 49). In this context, the Court concluded that a natural person who seeks to benefit from advantageous conditions in the context of the purchase of goods and services for non-commercial purposes cannot lose the status of 'consumer' by the mere fact that he or she derives financial benefits (refunds on purchases, commissions or other promotional advantages) from the participation in the scheme. Joining a club to get deals for your purchases does not make you a trader.

Unanswered questions: dual purpose contracts

The referring court also explicitly asked about the application of Article 2(b) UCTD to dual purpose contracts. The Court considered those questions inadmissible, stating that there was nothing in the preliminary reference to suggest that the case indeed involved such a contract. The conclusion seems justified. But the question also sheds light on the additional dimension of the differentiated interpretation of the consumer notion in contract law and private international law. As we know from case C-191/15, VKI vs. Amazon, a choice of law clause included in standard terms can be considered unfair if it leads the consumer into error by giving him the impression that only the law of that Member State applies to the contract, without informing the consumer that under Article 6(2) of the Rome I Regulation he or she also enjoys the protection of the mandatory provisions of the law that would be applicable in the absence of that term (para. 71). In case of dual purpose contracts, however, the very same person may qualify as a consumer under the UCTD and not qualify as such under Rome I Regulation. How then should a perfectly transparent term be formulated?

CJEU confirms: consumer notions in contract law and private international law are not equivalent

Earlier today the Court of Justice issued the judgment in case C‑570/21, YYY. (Notion de consommateur). The case concerned, once again, the notion of the consumer under Directive 93/13/EEC on unfair terms in consumer contracts (UCTD). The Court has already dealt with similar problems in its earlier case law, recently e.g. in case C-485/21, S.V. (Immeuble en copropriété). The judgment confirmed that the notion of the consumer in mixed-purpose contracts under UCTD should be understood broadly. The ruling does not come as a surprise; what is nevertheless noteworthy is an explicit confirmation that the notion of the consumer in contract law is different from that in private international law. The Court, moreover, provided additional guidance on the interpretation of consumer notion in joint credit agreements.

Facts of the case

The case involved a credit contract concluded between a bank and two married debtors, one of whom self-employed. The loan amount was devoted partly to the professional purposes and partly to the private purposes. Specifically, 35% of the loan was used to make outstanding payments for the company of one of the debtors, while the remaining 65% was used to used to finance renovation works in the debtors' house. Against this background, a question was raised whether the contract qualified as a business-to-consumer contract and fell within the scope of the UCTD.

"Not predominant" vs. "negligible" purpose

The referring court requested the interpretation of Article 2(b) UCTD, which defines the notion of the consumer, explicitly enquiring about the relevance of the Gruber case law in that context. To recall, the Court established in Gruber that a person who concludes a contract for goods intended for purposes which are in part within and in part outside his or her trade or profession may not rely on the special rules of jurisdiction, unless the trade or professional purpose is "so limited as to be negligible" in the overall context of the supply. This seemed to be at odds with the wording on mixed-purpose contacts found, among others, in Directive 2011/83/EU on consumer rights (CRD). Specifically, pursuant to recital 17 of the CRD where the contract is concluded for purposes partly within and partly outside the person’s trade and the trade purpose is "so limited as not to be predominant" in the overall context of the contract, that person should also be considered as a consumer.

As mentioned, already the previous judgments of the Court suggested that the Gruber test cannot be applied more broadly to consumer law, but is limited to the specific context of applicable law and jurisdiction. The Court has now made this distinction explicit. It drew attention to a close connection between the UCTD and the CRD, recently strengthened via the Omnibus Directive (para. 43). The Court emphasised that both directives follow the same main objective, namely to provide for a high level of consumer protection (para. 42). It also observed that a wording similar to that in recital 17 CRD can also be found in the ADR Directive and the ODR Regulation, suggesting that the legislator intended such a broader reading to have a horizontal nature (para. 45). Accordingly, the notion of the consumer under UCTD must be understood as also covering a person who concludes a dual purpose contract if the trade purpose is so limited as not to be predominant in the overall context of the contract.

The more restrictive reading of the consumer notion in mixed-purpose contracts continues to be relevant in the domain of private international law. Here, as the Court noted, additional objectives must be considered, namely the legal certainty and predictability of the jurisdiction. The more recent Schrems judgment does not undermine this reading (para. 47). 

Joint credit agreements

Having clarified the outer boundaries of the consumer concept, the Court went on to provide more specific guidelines on its interpretation in the case at hand. Firstly, it stressed that the referring court should take all circumstances of the case into account, including the nature of the product or the service. In case of mixed-purpose credit contracts, the Court indicated that the scope of professional and personal components of the contract and the dominant purpose of the contract should be considered. The Court then went on to formulate more specific criteria, noting that they are neither exhaustive nor exclusive (para. 58). In particular, the quantitative breakdown of the borrowed sum between the two respective purposes may be an important criterion. However, also qualitative criteria may turn out to be relevant, e.g. the fact that only one of a larger number of debtors pursues a professional activity or that the granting of a loan, initially intended solely for private purposes, was made conditional upon the partial allocation of the borrowed amount to the repayment of trade-related debts.

Overall, the judgment in case C‑570/21, YYY, is a welcome ruling, dispelling some persisting doubts about the reading of consumer notion in different legal acts. Nonetheless, the differentiated interpretation may, in itself, pose practical challenges, as the second judgment issued on the same day illustrates.

Services performed, no right to payment - CJEU in DC (C-97/22)

On May 17th, the CJEU issued a judgment in the German case DC (Rétractation après l’exécution du contrat) (C-97/22) interpreting Article 14 of the Consumer Rights Directive. Article 14 CRD determines consumers' obligations when they withdraw from a contract. This includes releasing consumers from their obligation to pay for the performance of services provided during the withdrawal period, if consumers were not pre-contractually, transparently informed about their obligation to pay in such circumstances, as well as about conditions for using their right of withdrawal (pursuant to Article 6(1)(h) and (j) CRD). 

By Jimmy Nilsson Masth on Unsplash

The consumer in the given case concluded an oral, off-premises contract for the renovation of the electrical installations in their house. There was no information provided on the right to withdrawal at that time. This became an issue when the contract was fully performed and the consumer did not pay the invoice for the provided services. The consumer claimed they did not have to pay, as they subsequently withdrew from the contract and Article 14(4)(a)(i) and (5) CRD released them from their obligation to pay due to the consumer not having received relevant pre-contractual information on their right of withdrawal. German courts posed a question whether CRD's rule that consumers should no bear any costs in such circumstances extends as far as to prevent traders and service providers from asking for any compensation for enhancing consumers' assets, 'in breach of the prohibition of unjust enrichment' (para 19).

The CJEU very summarily confirms that indeed, in order to provide high level of consumer protection aimed at by the CRD, and considering the full harmonisation character of its provisions, the consumer may not be obliged to 'incur costs that are not expressly provided for by that directive.' (para 31). This conclusion also supports the 'fundamental importance which Directive 2011/83 ascribes to the pre-contractual information' (para 32).

The consequence of this judgment is that if service providers breach their pre-contractual information obligations, consumers benefit from this breach regardless whether consumers themselves act in good or bad faith. The CJEU is clear that service providers may not rely in such a case on the principle that any penalties should be proportionate (para 32). This judgment assigns then quite a far-reaching sanction to the breach of pre-contractual information duties. Of course, traders and service providers may easily protect themselves against these sanctions by fulfilling their information obligations. Still, it is curious to have the 'fundamental importance' of pre-contractual information obligations recognised at a time when the critique of their effectiveness as consumer protection measures is at its highest. Is it the Court's intention to try to revive them somewhat?

Workload problems in the air, nothing out of ordinary - CJEU in TAP Portugal (C-156/22 to C-158/22)

In a judgment issued today the CJEU had another chance to restrictively interpret the concept of 'extraordinary circumstances' from Regulation 261/2004. If extraordinary circumstances occur, this limits the airlines' obligation to compensate passengers of cancelled or delayed flights. 

By Andrés Dallimonti on Unsplash

In TAP Portugal judgment (joined cases C-156/22 to C-158/22) an early morning flight from Stuttgart (Germany) to Lisbon (Portugal) was cancelled due to the death of a co-pilot, which occurred earlier on the same day. Unsurprisingly, the whole crew was unfit to fly and since TAP does not have a base in Stuttgart, the replacement flight with a new crew was only managed to be arranged for late afternoon that day. The referring court found disparities between the application of the concept of 'extraordinary circumstances' to situations of unexpected illness of crew members by national courts and asked CJEU for guidance. 

Previous case law interpreted the notion of 'extraordinary circumstances' restrictively as: 1) not inherent in the normal exercise of air carrier's activity AND, 2) beyond that carrier's actual control (paras 18-19, see e.g. our comment on Airhelp case). Unsurprisingly, the CJEU declares workload planning for crew members as falling within the normal exercise of the air carriers' activity (para 21). And anyone who has ever managed staff knows that this includes anticipating and resolving unexpected absences, although luckily usually resulting from less extreme circumstances (para 22). Legally speaking, as CJEU emphasises, the reason for the unexpected absence makes no difference to the fact that the air carrier should anticipate dealing with unexpected absences (para 23). It is also irrelevant whether the absent crew member recently had been cleared medically, as unexpected illness or death may happen at any time (as morbid of a remark as it is true, para 24; this reasoning is also analogous to the one on technical defects of airplanes not constituting extraordinary circumstances even if the defect occurred in plane parts that were regularly maintained and recently checked, see e.g. van der Lans case). This means that the first condition to perceive this situation as qualifying as an extraordinary circumstances is not fulfilled. 

The CJEU consistently limits then the scope of application of the 'extraordinary circumstances', ensuring wide scope of protection offered to passengers of cancelled or delayed flights. It seems unlikely that airlines could afford to keep spare crew members at different airports to anticipate unexpected illness/death. They could though, of course, consider working with a pool of freelancing crew members, rotating between different airlines, when and as needed. The alternative is to accept the need to pay compensation to passengers, which means adding this to the flight tickets prices and/or re-negotiating insurance policies.

Enforcement of consumer law in digital age: the EnfTech Project

In order to provide much-needed help to the enforcement of consumer law, our readers may be interested in the recently launched EnfTech Project.

EnfTech is a broad term for the use of technological innovations by enforcement agencies to help deliver enforcement activities. This could include market surveillance, such as scanning for misleading pricing or fake advertising; an investigative activity that uses machine learning to interrogate company documentation; preventative measures such as reviewing consumer contracts for unfair clauses before they reach the market. In the future, it may have the potential to directly execute or enable an enforcement action such as a warning, takedown, or sanction.

EnfTech was launched on the 20th of April via an online event. The recordings of the event, the associated blog, and contact details are available here.

The (un)fairness of fees - the CJEU in C-565/21 CaixaBank S.A.

On the 16th of March 2023, the CJEU delivered another judgment on the interpretation of Directive 1993/13/EC on Unfair Contract Terms (UCTD), C-565/21 Caixabank S.A v X. As many before, this judgment also concerned mortgage credit.

 

This case is about the validity of a so-called 'arrangement fee' that was charged to the consumer in the amount of EUR 845. According to the applicable Spanish law, an arrangement fee meant all expenses related to the examination of the loan application, the granting, and processing of the mortgage loan, or other similar expenses that are necessarily associated with the loan application. The law required the fee to be a single sum for all associated expenses.

 

It appears that this lex specialis providing for arrangement fees caused uncertainty in terms of how it affects the horizontal, lex generalis rules of the UCTD, and whether the practice of Spanish courts of giving priority to lex specialis in ruling on the validity of arrangement fees is compliant with EU law.7

 

The CJEU took this opportunity to clarify the question and reinforce its earlier by now established case law and to provide novel addition to these by ruling on the interpretation of Articles 4(2), 5 and 3(1) of the UCTD.

 

Is the assessment of the fairness of the arrangement fee excluded based on Article 4(2) of the UCTD?

 

With its first question the referring Spanish Supreme Court essentially asked the CJEU to clarify the scope of the ‘main subject matter’ exception from the test of fairness. As we know, if the term amounts to the ‘main subject matter of the contract’ and is transparent it cannot be assessed for its fairness based on Article 4(2) of the UCTD.

 

The starting premise of the referring court was that the arrangement fee constitutes, along with the compensatory interest, the price of the mortgage loan and is therefore within the concept of ‘the main subject matter of the contract’ and exempted from the scrutiny of the test of fairness. Disregarding the somewhat odd approach to consider the arrangement fee a possible main subject matter of the contract when it is more likely to be the price and therefore fall under the second limb of Article 4(2), the ‘adequacy of the price’ exception, the CJEU gave a useful interpretation of the exception.

 

The CJEU referred to its established case-law, and noted that only those terms are exempted from the test of fairness as the main subject matter of the contract that define the essential obligations of the contract, which in the case of a loan contract would be the amount lent and repaid and the interest. Following this approach, the CJEU noted that in Caixabank and Banco Bilbao Vizcaya Argentaria (C‑224/19 and C‑259/19), the CJEU already ruled that the (Spanish) arrangement fee cannot be considered to be an essential obligation of a mortgage loan agreement only because it is included in the total cost of the loan.

 

The CJEU then highlighted the need to interpret the scope of the Article 4(2) exception restrictively and concluded that the obligation to pay for such services cannot be regarded as forming part of the main obligations arising from a credit agreement. It would be contrary to strict interpretation to include in the concept of ‘the main subject matter of the contract’ all services which are merely associated with the main subject matter itself and are therefore ancillary. The CJEU, therefore, emphasised once again, the main subject matter of the contract must be the main obligation of the contract, which in this case, would be the amount of the loan, as the main obligation of the lender, and the payment of the interest, as the main obligation of the borrower.

What is the meaning and scope of transparency under Articles 4(2) and 5 of the UCTD?

 

The CJEU ruled that whether the term is in plain and intelligible language under Article 5, the national court, taking into account all the relevant facts of the case, should ascertain whether the borrower had been placed in a position to assess the economic consequences for him or her, to understand the nature of the services provided in return for the costs provided for by that term and to ascertain that there is no overlap between the various costs provided for in the contract or between the services for which those costs are paid.

 

The emphasis above is the assessment based on the concrete facts of the case. An arrangement fee should not be regarded as automatically satisfying the transparency requirement arising from both Article 4(2) and Article 5 if the term satisfies the requirements imposed by national legislation. The CJEU emphasized, transparency should be assessed in the light of all the relevant facts, whether the borrower was indeed in a position to assess the economic consequences for him or her which derive from that term, to understand the nature of the services supplied in return for the costs provided for by that term, and to ascertain that there is no overlap between the various costs for which the agreement provides or between the services for which those costs are paid.

 

Very helpfully, the CJEU provided a list of circumstances that the national courts should, may, or should not consider in ruling on transparency which we summarise and categorise below:

 

Information/circumstances that should be considered:  

 

• the  wording of the term,
•  the information that the financial institution provided to the borrower, including mandatory information required by national law,
• advertising in relation to the type of agreement entered into, by taking into account the level of attention which can be expected of an average consumer who is reasonably well informed and reasonably observant and circumspect.
•  promotional material provided by a financial institution on the type of agreement entered into.

Information/circumstances that may be taken into account:

 

•     Information that the financial institution is required to provide to the potential borrower in accordance with national legislation; in general, the information that the financial institution has given to that borrower in the negotiation of an agreement on the contractual terms and the consequences of entering into that agreement
•    Attention which the average consumer pays to a term relating to an arrangement fee, In accordance with the case-law, account must be taken, in the context of that assessment, of the level of attention which can be expected of an average consumer who is reasonably well informed and reasonably observant and circumspect.

 Information/circumstances that should not be considered: 

•         The onsumers’ general knowledge of a term unconnected to the way in which such a term is drafted in the context of a particular agreement. The fact that such a term is well known is not a factor that may be taken into consideration in assessing whether that term is plain and intelligible,
•         The wording, location, and structure of a term justify the finding that it is an essential element of the agreement (at least in this case because it leads to an incorrect assumption that it is an essential term). 

Does the arrangement fee cause a ‘significant imbalance’ under Article 3(1) UCTD?

 

The final question to the CJEU was whether the arrangement fee could be considered under Article 3(1) as directly affecting the contractual balance in the parties’ rights and duties to the detriment of the consumer.

 

Referring to Kiss and CIB Bank (C‑621/17), the CJEU clarified that unless the services provided in return (the arrangement fee in this case) do not reasonably relate to services provided in connection with the management or disbursement of the loan, or the amounts charged to the consumer in respect of those costs and that fees are disproportionate to the amount of the loan, in principle, it would not cause significant imbalance. However, this would have to be verified by the competent court in each individual case based on the facts of the case.

 

On the same grounds, a contractual term governed by national law that establishes an arrangement fee to remunerate services relating to the examination, constitution, and personalised processing of an application for a mortgage loan, does not appear, subject to verification by the court having jurisdiction, capable of adversely affecting the legal position of the consumer, unless the services provided in return do not reasonably fall within the scope of the services described above or the amount charged to the consumer in respect of that fee is disproportionate to the amount of the loan.

Finally, the CJEU emphasised that national court practice that would simply declare that a term is not unfair because it is based on the applicable national law would be contrary to EU law and the UCTD, as it would prevent national courts to carry out, including of their own motion, an examination of the potential unfairness of the terms concerned in accordance with that provision and, consequently, would fail to ensure the full effectiveness of the UCTD. This final point, the point that caused uncertainty in Spanish judicial practice, is somewhat surprising. First of all,  it seems to go against one of the founding principles of law according to which special rules prevail over general rules (lex specialis derogat legi generali). Secondly, it would have been useful to consider the ‘mandatory terms’ exception here under Article 1(2) UCTD. 

No colouring outside the lines for national courts (exchange rate risk in consumer loan contracts) - CJEU in AxFina Hungary (C-705/21)

On April 27th the CJEU issued another judgment in the saga of consumer loan contracts denominated in a foreign currency, AxFina Hungary (C-705/21). It discussed further consequences, pursuant to Articles 6 and 7 UCTD, of finding unfair such terms that place the exchange risk on the consumer, when the loan is denominated in a foreign currency, but consumers repay it in the national currency.

This case concerned a smaller consumer law (ca 7k Euro) taken out to purchase a vehicle and repayable over 10 years. The loan was denominated in Swiss francs and repayable in Hungarian forint. Hungarian court declared invalidity of this loan contract on the basis of the unfairness of the term imposing the exchange rate risk on consumers. On appeal the referral was made to assess the compliance with EU consumer law of current Hungarian practices regarding unfair terms in consumer loan contracts. Namely, as paras 17-19 explains, following Hungarian Supreme Court's non-binding position, Hungarian case law tended to declare consumer loan contracts with unfair terms on exchange rate risk 'temporarily applicable' - until the date the judgment was issued. This means that the contract is terminated for the future, but not seen as having been invalid in the past. When removing 'the cause of the invalidity' courts would either convert the loan into Hungarian forints (removing entire exchange risk) or set a ceiling on the exchange rate risk (removing part of exchange risk). 

Declaring loan contracts valid and amending their terms: Not a default

The CJEU is clear in condemning Hungarian case law practices: If a term places exchange rate risk on consumers and as a result is declared unfair, which leads to invalidity of a loan contract, this contract cannot then be declared valid and have its terms amended by courts. It does not matter whether the amendment would change the currency of the loan or of the interest rate or set the ceiling on the exchange rate (para 50). The court recalls the previously raised arguments on the need to assure the dissuasive effect of the UCTD by not allowing national courts to modify unfair contract terms (paras 38-41). The previously adopted exception, for when invalidating a contract due to unfairness would expose consumers to particularly detrimental consequences, and where there is a possibility to replace the unfair term with a supplementary provision of national law, still stands (para 42). If such supplementary provisions do not exist, national courts could still help consumers facing detrimental consequences of contract's invalidity, e.g. by inviting parties to negotiate new terms, within the framework set by national courts (para 46) or by ordering repayment of sums wrongly received by the lender on the basis of the unfair term as unjust enrichment (para 48). But national courts, in their efforts to protect consumers from detrimental consequences, cannot go beyond what is 'strictly necessary' to restore contractual balance.

This is perhaps just a reiteration of the previously declared rules (mainly in Lombard Lizing and Banca B, see here on the latter), but it is a needed repetition. This in light of the tendency of national courts to still try to colour outside the lines set by the CJEU in cases related to consumer loan contracts denominated in foreign currencies.

Substituting unfair exchange rate terms with supplementary provisions

Further, the CJEU reiterated Dziubak (see here) and stressed the narrow scope for what constitutes supplementary provisions, with which national courts may replace unfair exchange rate terms in consumer loan contracts. This substitution may only happen in exceptional cases, i.e. when consumers face 'particularly unfavourable consequences' (para 52). Further, such provisions cannot be of a general nature (para 55), as they had to be adopted to specifically address the need to restore the balance between the parties (para 54). This also means that  such supplementary provisions need to 'usefully replace the same term by a mere substitution by the national court which does not require action on the part of that court that would amount to revising the content of an unfair term in that contract' (para 56).

Going in blind - Consequences of no opportunity to read insurance terms: CJEU in Occidental (C-263/22)

Last week, on 20 April, the CJEU issued a judgment in the case Occidental - Companhia Portuguesa de Seguros de Vida (C-263/22) interpreting further provisions of Articles 3-6 of the Unfair Contract Terms Directive.

By Ryoji Iwata on Unsplash 

The case concerned a bank loan taken by a Portuguese couple, who joined a group insurance contract between the bank and Occidental, an insurance company. Occidental was to guarantee repayment in the event of the consumer's permanent incapacity. When consumer became permanently incapacitated, the insurer refused re-payment, invoking invalidity of the insurance contract due to incorrect and incomplete health declaration by consumer. The insurance contract also excluded from the cover any permanent incapacity resulting from illness that consumers suffered from prior to the contract's conclusion. Consumers claimed, however, that they were never informed about this exclusion clause and that they also did not provide their own health questionnaire to the insurer, as a bank employee completed it for them. 

Portuguese court struggled with two strands approach to the above situation in Portuguese case law, either recognising the insurers' duty to notify policy terms to policyholders or not, and the compliance of the second approach with the UCTD.

Opportunity to read

The first and second questions are interpreted as inquiring about the scope of obligation to create an opportunity to read terms and conditions for consumers. The CJEU reiterates the compliance rules with the principle of transparency, including the need to provide relevant information to consumers before the conclusion of the contract (para 27). Importantly, the CJEU draws attention the fact that with linked contracts (consumers concluding loan and insurance contracts simultaneously) consumers 'vigilance regarding the extent of the risks covered by that insurance contract' will not be the same as when they are concluding loan and insurance contracts separately (para 28). Consumers will need also to have access to all terms of a contract before its conclusion (para 29), regardless whether these are core contract terms (paras 30 and 31), incl. receiving information on 'the specific features of the arrangements for covering the loan repayments' in the event of permanent incapacity to work (para 28). After all, transparency means being able to evaluate economic consequences flowing from the concluded agreement.

To sum up, if consumers did not have access to full terms and conditions prior to concluding the contract, they could invoke UCTD protection against the trader/service provider. Further, the attention drawn by the CJEU to the increased need for transparency when linked contracts are concluded could result in service providers needing to re-evaluate their disclosures in such circumstances.

Consequences of lack of opportunity to read insurance terms on insurance cover

Since consumers had no chance to read the terms of the insurance cover on possible exclusions from the cover's scope, this lack of transparency would weigh in on the evaluation of unfairness (paras 40-41). The CJEU proceeds to outline in details how national court should conduct the unfairness test, i.e. assessing good faith and checking for a significant imbalance in parties rights and obligations to the contract. Importantly, the CJEU draws a conclusion that '(...) by not allowing the consumer concerned to become acquainted, prior to the conclusion of that contract, with the information relating to those contractual terms and all the consequences of the conclusion of that contract, the seller or supplier places that risk, arising from any permanent incapacity, in whole or at least in part, on that consumer' (para 50). If, consequently, the national court would find that consumers would not accept these terms in individual negotiations, then the seller/supplier should be seen as acting not in good faith and the term as unfair (para 51). The term would then be void and not enforceable against consumers (paras 52-53). This legal status  of unfair terms could not be changed by national legislation regulating civil liability of insurers for failure to notify policyholders (para 53). Such a civil liability could be pursued separately by consumers (para 55).

To sum up, the fact that consumers had no opportunity to read the term does not lead to a consequence of that term being automatically void under EU consumer law. This circumstance weighs in though, rather heavily, on the unfairness test. Only when the term is declared unfair, it needs to be considered as void, with all the consequences attributable to this.

Consumer law webinars in May

On May 9 ELI Austrian Hub and the University of Innsbruck hold an online evening lecture by prof. Christiane Wendehorst on the topic of a potential direct claim against the producer ("Do we need a direct claim against producers?"). To register your attendance visit this website.

On May 18-19 in Olomouc (Czech Republic) the 16th Year of the International Scientific Conference Juridical Days take place with one session dedicated to challenges of consumer protection, delivered in English and in a hybrid manner, too. To register for the session "Consumer Protection in Times of Global Challenges" visit this website. Zoom link will be sent after registration.

EDPB updated guidelines on right of access to personal data

The European Data Protection Board (EDPB) a few days ago published updated (second version) guidelines on the rights of data subjects, specifically the right of access to personal data. Any person whose personal data is processed is entitled to the right of access under Art. 15 of the GDPR. The right of access to data is considered one of the key rights under the GDPR, as it allows you to maintain control over what personal data is being processed, by whom, on what legal basis, to whom it has been made available, etc. Although the guidelines are primarily addressed to data controllers, they contain valuable tips for data subjects, providing insight into the actual scope of our rights. It's good to familiarize yourself with them, because as consumers, we leave digital footprints almost everywhere, and as a result, it's good to know what rights we have.

Just not to sound groundless, here are some noteworthy points from the guidelines: 

1. If you ask for access to your data the controller should give you access to all your personal data that are processed, unless you expressly limit your request (e.g. to identification data or data concerning a contract concluded on a particular day). The controller is not entitled to narrow the scope of your request arbitrarily, but may ask you to specify the request if he processes a large quantity of data.

2. Before granting access to personal data, the controller should confirm your identity in order to ensure the security of processing and minimise the risk of unauthorised disclosure of personal data. In this regard the EDPB emphasized that "as a rule, the controller cannot request more personal data than is necessary to enable this authentication, and that the use of such information should be strictly limited to fulfilling the data subjects’ request" (p. 25). The GDPR does not precise how to identify the data subject, so it is up to the controller to decide which authentication method is the most appropriate. However, the method must be proportionate to the circumstances of the processing, including the type of personal data being processed (e.g. special categories of data), the context within which the request is being made, potential damage that could result from improper disclosure of data). It happens that controllers fail to meet this requirement and choose methods that are convenient for them, but disproportionate. The EDPB states: "In practice, authentication procedures often exist and controllers do not need to introduce additional safeguards to prevent unauthorised access to services. In order to enable individuals to access the data contained in their accounts (such as an e-mail account, an account on social networks or online shops), controllers are most likely to request the logging through the login and password of the user, which in such cases should be sufficient to authenticate a data subject. [...] Consequently, it is disproportionate to require a copy of an identity document in the event where the data subject making a request is already authenticated by the controller. [...] Taking into account the fact, that many organisations (e.g. hotels, banks, car rentals) request copies of their clients’ ID card, it should generally not be considered an appropriate way of authentication" (p. 27).

3. Information requested as part of data access right should be provided to the data subject without undue delay and in any event within one month of receipt of the request. This deadline can be extended by a maximum of two months taking into account the complexity and the number of the requests that the controller receives. In such a situation the data subject must be informed about the reasons for delay. But the rule is that the controller should act "without undue delay", which means that the information should be given as soon as possible - "if it is possible to provide the requested information in a shorter amount of time than one month, the controller should do so" (p. 50).

4. Sometimes the controller may limit or refuse to give access to personal data. According to Art. 15(4) GDPR, the right to obtain a copy of data shall not adversely affect the rights and freedoms of others. Another restriction results from Art. 12(5) GDPR which enables controllers to override requests that are manifestly unfounded or excessive, in particular because of their repetitive character. These concepts must be interpreted narrowly. Data access right may be exercised more the once, but as it was indicated in recital 63 of the GDPR - "at reasonable intervals". It is not possible to determine in advance how often it is permissible to make requests for access to data, because it depends on processing circumstances. The EDPB remarks that "the more often changes occur in the database of the controller, the more often data subjects may be permitted to request access to their personal data without it being excessive". For example, "in the case of social networks, a change in the data set will be expected at shorter intervals than in the case of land registers or central company registers" (p. 56).

These are just a few examples worth keeping in mind. For more, I recommend checking out the guidelines.