Online tracking infringing e-privacy? Duh!

Following my earlier post on digital piracy, let's stay within the digital environment and talk some more about digital privacy. The European Data Protection Supervisor (EDPS) revealed today in a press release that the Data Retention Directive does not meet privacy and data protection standards. This Directive requires all providers of e-communication to store traffic and location data of the communications of all citizens, for possible use by the law enforcement agencies of the Member States (if you haven't known you were being tracked online, let me burst that bubble you live in right away). In April 2011 the European Commission published its report evaluating the implementation and application of this Directive, also from the fundamental rights to privacy and data protection point of view. Now, the EDPS reports that the Directive does not meet the requirements imposed by the fundamental rights to privacy and data protection, since the large scale on which the data needs to be retained according to this Directive is not sufficiently justified by legitimate interests. According to the EDPS data retention could have been regulated in a less privacy-intrusive way. Finally, the Directive leaves too much scope for the Member States to decide for which purpose the retained data might be used, as well as for establishing who can access the data and under which conditions. The further fate of the Directive will now have to be decided but even abolishment seems to be an option, if it cannot be adjusted in a comprehensive and proportionate way.

'Ahoy!' and 'Aye aye captain!'... on digital piracy

I've recently read an article "E-books drive older women to digital piracy" on The Telegraph. It presents interesting findings about how with e-readers becoming more and more popular and their sale growing, more and more e-books are being downloaded illegally. The interesting part being that digital piracy is often associated with young people downloading music, films, games, etc. from the net since they can either not afford the price of a DVD or CD, or they don't want to wait for official publication. E-readers are more seen as a plaything of a bit more mature generation, who definitely can afford investing in a book, whether it's a printed or an electronic version thereof. Still, survey (conducted by the law firm Wiggin within Digital Entertainment Survey 2011, annual assessment of consumer behaviour online) shows that 1 in 8 women over 35 who bought an e-reader admits to having downloaded an unlicensed e-book (compared to 1 in 20 women in this age category who admit to having downloaded music illegally). One might wonder whether this new trend will 'encourage' more people to digital piracy of all sorts (after all, if you downloaded a book without a license, you might as well get a movie the next time you are online, too...). On the other hand, this new data might just signify to people caring less about whether a book has a license or not being aware that a book should have a license online, and will not influence behaviour as far as other online transactions are concerned (ca 29% of e-reader owners and ca 36% of tablet owners admits to piracy). This remains yet to be seen. However, the news for the publishing industry are definitely worrying since we are talking here about a significant trend (and at least 25% of those who admitted to e-piracy stated they'd continue).

Is this new trend REALLY worrying though? Interestingly, last week I've also stumbled upon a fascinating read that concerns the other side of the coin of the same issue. In an article "Naughty bedtime book shifts focus on privacy" at The Age website a fate of a best-selling book is described. A book that will not be published until June 14, but which has already been leaked online in its PDF-file version and was emailed to most computer users in Australia. We are talking here about a fascinating book: "Go the F... to Sleep" - profane children's book written for suffering moms and dads who struggle with putting their children to bed night by night. The interesting thing is that the digital piracy in this case might have contributed to the success of the book. It is easy to spread a word about this book online and to tell all your friends (and Facebook friends) about it. Since the book is apparently hilarious, it's rather doubtful that its availability online will stop people from purchasing it (also as an ironic gift for young parents - 'look what you'll have to go through'). Leaking of this book online in this case was simply a brilliant PR move.

Consumer-friendly mobile phone contracts

As of 25th of May 2011 the new EU telecom rules had to be implemented by the Member States which means that consumers in Europe should have been by that date notified by their telephone service providers of changes in their services. What can you expect (and demand) as of this week?

1. If you decide to switch your mobile phone operator while keeping the same number, the switch has to happen within one working day! No more delays and inconveniences of your service being interrupted for up to a week, due to 'administrative' problems of mobile phone operators who claimed that they weren't able to facilitate a switch faster.

2. When you sign a contract with a mobile phone operator it cannot be for longer than 24 months, initially. If the consumer asks for it, the operator has to present an option for a 12 month contract. This allows consumers to use attractive offers given by mobile phone operators frequently.

3. Before you conclude a contract you need to receive a bunch of information on e.g. minimum service quality level that you may expect, as well as on compensation that you will receive if this level is not met. Other information concerns e.g. whether you want to (and will be) listed in telephone directories, promotional offers and their conditions that might apply to you, restrictions that might apply to your use of internet via your phone (e.g. bandwidth throttling), connection speeds, etc. This information has to be provided in a non-misleading way.

If there are any problems for consumers exercising their rights under the new telecom rules, they may contact the telecommunications regulatory authorities in their Member States. A list of such authorities has been given here.

Short selling regulation?

While the European Parliament works on funny videos that declare its resolution to fight against the financial crisis (see earlier post), the Economic and Financial Affairs Council agreed on a general approach on a draft Regulation on short selling and certain aspects of credit default swaps (on the 17th of May). This means that serious negotiations on this Regulation may now start with the European Parliament (and it will get its chance to make good on his resolution).

Short selling is one of the financial instruments that tend to be misleading and misunderstood by consumers. It basically allows consumers to sell a security that they do not own, but that is promised to be delivered, with the intention of buying it back later. What's the point of this practice? If the security price drops between the time the consumers short sell it and buy it back, the consumers make a profit from that price difference. Short selling is common for share trading but it can also be used for other financial instruments, e.g. government bonds. There are also two types of short selling: covered and uncovered (or naked - where at the time of the short sale the consumer has not borrowed the securities).

The European Regulation on short selling is something that is definitely missing in order to harmonize financial markets within Europe. It would guarantee common transparency rules (e.g. need to disclose net short positions either to regulator or, at a higher threshold, to the market) and would harmonize powers that regulators may use in exceptional situations, e.g. where there is a serious threat to financial stability (e.g. temporary powers to require more transparency or to restrict short selling transactions). Moreover, naked short selling (the more risky type) would be forbidden (with exception for short selling of sovereign debt).

Press release may be found here.

One for all, all for one! A new chapter in collective redress?

Collective redress continues to be a hot topic on the European agenda. We posted earlier about the consultation of the European Commission on “Towards a more coherent European approach to collective redress”, the consultation paper for which can be found here.

The responses to the consultation have now been published online. A wide range of stakeholders has taken the opportunity to respond, which should give the Commission a good basis for further decision making in this area. Academically, one of the most comprehensive responses comes from the team of Chris Hodges based at the University of Oxford. From the Netherlands, a response has been submitted from Tilburg University, written by Thijs Bosters, Ianika Tzankova, and myself.

Should there be an initiative for a European collective redress regime? It seems timely to open a new chapter in this area. An individual consumer stands small against the ‘big fish’ in the EU retail market (see also an earlier post on this blog). New legislation can help. The ball is now in the Commission’s court…

European Parliament to be known as a know-it-all?

I'm completely taken aback by the new video released by the European Parliament on the financial crisis. It's so insensitive, patronizing and just skims the surface of a really serious problem that influenced many people. I'm not convinced I should publish it here, since I don't want to be seen as spreading this clear propaganda around. But at the same time, I think we should be aware of this 'new' action plan and be ready to criticize it for the empty talk that it is.

Weakness of many languages in EU

Another interesting Eurobarometer study was published last week that shows that 82% of European consumers are less likely to buy goods online if they are not sold in their own language. This, of course, is understandable since why would you buy a product the description of which (nor the rules on paying the price or delivery) you cannot understand online. Only those of us who are speak more than one language are prone to buying something online from a provider from another country (the language of which they do speak). While understandable this finding shines light on another uneven situation in the internal market - businesses set up in languages of certain Member States are more likely to attract online customers due to the sheer popularity of the language (think: English vs Polish website). Time to invest in language courses for EU citizens or online translation tools? Well, the European Commission is already involved in 30 different research projects working at the interface of language and digital content, supported by 67 million Euro of EU funding (additionally, new projects submitted this year will get an additional 50 million Euro).

Musings on an invitation to purchase in ECJ case C-122/10 Ving Sverige

12 May 2011: ECJ case C-122/10 Ving Sverige

This Swedish (for a change) case concerns new issues that arose in the process of interpretation of the Directive 2005/29/EC on unfair commercial practices that concern the definition of an invitation to purchase (art. 2(i)) as well as information duties of the trader that need to be fulfilled while issuing an invitation to purchase (ar. 7(4)). 

Ving Sverige is a travel agency which not only arranges charter and package holidays but also sells individual tickets and hotel accommodation. They sell holidays via internet, by telephone, in their agencies and in selected travel agencies throughout Sweden. What made the Swedish consumer organization start a case against them was an advertisement that they had published in a daily Swedish newspaper. In the ad they had offered trips to New York, in the period Sep-Dec 2008, "from SEK 7820". The advertisement also added: "in smaller letters below that wording, ‘Flight from Arlanda with British Airways and 2 nights in the Bedford Hotel – Price per person in double room including airport taxes. Extra nights from SEK 1 320. Applies to selected trips from September to December. Limited number of places’ and, at the very bottom left side of the advertisement, ‘Vingflex.se Tel. 0771-995995’." (Par. 16)

The consumer organisation thought that this sort of advertisement constituted an unfair commercial practice, taking into account that there was no sufficient information on the main characteristics of the trip, inter alia the price (misleading omission, thus). The consumer organisation claimed that instead of entry-level prices, fixed prices should be given in such adverts, and that more main characteristics of the trip should be named that might influence the entry-level price given, e.g. departure time. Ving claimed, firstly that their advertisement was not an invitation to purchase, which means that the provisions of the Unfair Commercial Practices Directive should not apply to it. As alternative they claimed that the main characteristics of the product and the price were stated appropriately to the medium of communication used and the product concerned. (Par. 18)

ECJ was asked a few important questions by the Swedish court. Firstly, interpretation of the definition of 'invitation to purchase' was needed. Article 2(i) of the Directive states:

" "invitation to purchase" means a commercial communication which indicates characteristics of the product and the price in a way appropriate to the means of the commercial communication used and thereby enables the consumer to make a purchase"

The Swedish court asked whether the part 'thereby enables the consumer to make a purchase' had to mean that there is no invitation to purchase unless there exists an actual opportunity to purchase the product advertised. The AG and the ECJ categorised the invitation to purchase as:

" a specific form of advertising to which is attached a stricter obligation to provide information under Article 7(4) of Directive 2005/2" (Par. 28)

Since there are strict requirements to be observed to protect consumers from unfair invitation to purchase, according to the ECJ this concept needs to be understood broadly. (Par. 29) Using as a tool the literal and teleological interpretation, the ECJ stated that:

"it is not necessary for it to include an actual opportunity to purchase or for it to appear in proximity to and at the same time as such an opportunity" (Par. 32)

 in order to constitute an invitation to purchase.

This means that on the facts of the given case Ving issued an invitation to purchase to its consumers by placing that advertisement and had to thus comply with other rules of the Unfair Commercial Practices Directive.

The ECJ needed to define 'invitation to purchase' even more precisely by giving an answer to the next question: whether indication of price in the invitation to purchase could be only by means of an entry-level price, that is the lowest price for which the advertised product or category of products can be bought while they are available in various versions. (Par. 35)

Article 2(i) of the Directive, as we could see, refers just to a 'price', which means it does not per se demand identification of final price. Moreover, this provision predicts that the identification of the price might differ, taking into account various methods of communication used. This seems to suggest that it might be difficult to state the price of the product corresponding to each of the versions in which this product might be available. (Par. 37) Additionally, even Art. 7(4)(c) of the Directive states that sometimes, due to the nature of the product, the trader may not reasonably be able to communicate, in advance, the final price. Finally, ECJ reminded that if entry-level price was not sufficient to be considered as 'price' for the purpose of the advertisement to be defined as an invitation to purchase, then traders could escape having to comply with stricter requirements provided for invitations to purchase by always giving only entry-level prices instead of final prices. (Par. 39) All in all, entry-level price could be seen as meeting the requirement relating to the reference to the price of the product within the meaning of Article 2(i) of the Directive, if, on the basis of the nature and characteristics of the product and the commercial medium of communication used, that reference enabled consumers to take transactional decisions. (Par. 40)

Finally, as far as the definition of the invitation to purchase is concerned, the ECJ was asked whether Article 2(i) of the Directive covers situations in which product's characteristics are indicated by verbal or visual reference to the product, including when a product is offered in various forms. (Par. 42)

The ECJ notices that:

"The information relating to the characteristics of the product may, however, vary considerably according to the nature of that product." (Par. 44)

Additionally, various medium of communication used might allow for various degree of detail as to the product. (Par. 45)

"A verbal or visual reference may enable the consumer to form an opinion on the nature and characteristics of the product for the purpose of taking a transactional decision, and that includes a situation where such a reference designates a product which is offered in many versions." (Par. 46)

Even the entry-level price mentioned in the advertisement might indicate to consumers that the product exists in many versions, that he will be able to customize. (Par. 47)

This means that it's left to the national courts to ascertain, taking into account the nature and characteristics of the product and the medium of communication used, whether the consumer has sufficient information to identify and distinguish he product for the purpose of taking a transactional decision.

After having indicated that Ving's advertisement might be seen as an invitation to purchase, the ECJ considered questions as to the interpretation of Article 7(4)(a) and 7(4)(c) of the Directive:

"In the case of an invitation to purchase, the following information shall be regarded as material, if not already apparent from the context:

(a) the main characteristics of the product, to an extent appropriate to the medium and the product;(...)

(c) the price inclusive of taxes, or where the nature of the product means that the price cannot reasonably be calculated in advance, the manner in which the price is calculated, as well as, where appropriate, all additional freight, delivery or postal charges or, where these charges cannot reasonably be calculated in advance, the fact that such additional charges may be payable;"

Firstly, the ECJ had to decide whether it is sufficient for only certain of a product's main characteristics to be given and for the trader to refer in addition to its website, on condition that on that site there is essential information on the product's main characteristics, price and other terms. The ECJ stresses that there is no definition of what constitutes main characteristics, nor an exhaustive list thereof given in the Directive.

"...it is however stated that account must be taken, first, of the medium of communication used and, secondly, of the product." (Par. 52)

Other sections of Article 7 of this Directive also specifically refer to the possibility that limited space of the medium of communication used would not allow for provision of all information that might be seen as desirable. This means that:

"the extent of the information relating to the main characteristics of a product which has to be communicated, by a trader, in an invitation to purchase, must be assessed on the basis of the context of that invitation, the nature and characteristics of the product and the medium of communication used.

It follows from the foregoing that Article 7(4)(a) of Directive 2005/29 does not preclude a reference to only certain of a product’s main characteristics if the trader refers in addition to its website, on condition that on that site there is essential information on the product’s main characteristics, price and other terms in accordance with the requirements in Article 7 of that directive." (Par. 55 and 56)

However, after having stated that the ECJ decided to remind the national court about Article 7(5) of the Directive, which requires that also information requirements set by other EU regulations and directives should be considered as material, i.e. to be included among the information that needs to be given in an invitation to purchase. Among these provisions there is Article 3 par 2 of the Directive 90/314 on package travel, which sets out a certain number of information which a brochure relating to that kind of travel must contain. (Par. 57) It seems that although the ECJ has to concede that the trader will not always be able to give all information that the consumer might want/need to receive about a product in an invitation to purchase, does not accept it when the traders significantly limit the information given to consumers, and therefore it reminds the national court to look beyond just the provisions of the Unfair Commercial Practices Directive and pay attention to all other information duties that have been established in EU consumer law that the traders need to comply with.

Finally the question was asked whether enough information is given to consumers if only an entry-level price is identified, pursuant to Article 7(4)(c) of the Directive. The ECJ had to consider here whether entry-level price might be considered as material information.

"A reference only to an entry-level price may, therefore, be justified in situations where the price cannot reasonably be calculated in advance, having regard, inter alia, to the nature and characteristics of the product. It is apparent from the information in the documents before the court that, in order to establish the final price of a trip, a certain number of variable factors may be taken into consideration, inter alia the point at which a booking is made; the interest in the destination on account of the existence of religious, artistic or sports events; the particular characteristics of seasonal conditions; and the dates and times of travel." (Par. 64)

Still, the ECJ considered that providing the consumer just with an entry-level price might constitute a misleading omission, when e.g. the medium of communication used allows the trader to give more details on how the total price will be calculated or the trader did not make an effort to provide this information by other means, e.g. on his website that he refers to in original commercial communication. (Par. 65-66)

"The extent of the information relating to the price will be established on the basis of the nature and characteristics of the product, but also on the basis of the medium of communication used for the invitation to purchase and having regard to additional information possibly provided by the trader.

A reference only to an entry-level price in an invitation to purchase cannot therefore be regarded, in itself, as constituting a misleading omission.

It is for the national court to ascertain whether a reference to an entry-level price is sufficient for the requirements concerning the reference to a price, such as those set out in Article 7(4)(c) of Directive 2005/29, to be considered to be met.

The national court will have, inter alia, to ascertain whether the omission of the detailed rules for calculating the final price prevents the consumer from taking an informed transactional decision and, consequently, leads him to take a transactional decision which he would not otherwise have taken. It is also for the national court to take into consideration the limitations forming an integral part of the medium of communication used; the nature and the characteristics of the product and the other measures that the trader has actually taken to make the information available to consumers." (Par. 68-71)

Quoting online equals plagiarism? - Google v Copiepresse

Are you familiar with Google News? It's a search engine of many of the news sources which means it refers consumers who go online in search for news to related websites that might deliver what they are looking for. If a publisher does not want to be listed on Google News, he has a choice to opt out or limit its listing, so you should not immediately assume on one hand that you will find all the information you are looking for on Google News, and on the other hand that Google News took over content of other publishers for its own use without acknowledging their rights to it. Or did it?

In 2007 Google News lost a suit filed against them by Copiepresse - representative of French and German language newspapers in Belgium. The claim was that Google News infringed copyrights of certain newspapers by placing headlines and quotes from their articles on its index. In the past week, Google News lost an appeal against this ruling.

The BEUC, the European consumers' organisation, said that this ruling creates a dangerous precedent, since it restricts Internet users by enforcing strict exclusive copyrights. After all, what harm may come from Google referring consumers to websites of relevant publishers by using quotes from their publications and giving direct links to the source? Isn't it what most of us does online anyhow? Imagine me referring to you this development. I found an interesting article about it online (on Computerworld website) and now I'm giving you my opinion thereof (enriching it with more data that I found on Computerworld website). Does it mean I'm infringing Computerworld's copyright? Well, if that were true, how are we supposed to benefit from using internet? Plagiarism is wrong, we know that, but if credit is given to the original creator, isn't spreading its/his name (and glory), a desirable thing? You might say that Google News doesn't fill in the missing gaps, like I just did and it just repeats the original content. But isn't that what quotes are for? Again, if you refer it back to the author and don't claim it as your own piece of news, it shouldn't be legally relevant...

It is interesting how this matter will be approached (if it will be approached at all) in the upcoming review of the Directive 2004/48/EC on the enforcement of intellectual property rights. On the 7th of June in Brussels there will be a public hearing on this Directive and the challenges posed by the digital environment. You may find details on this hearing on the EC website.

Inside Job

I've seen yesterday the documentary "Inside Job" that has won an Oscar for the best documentary of 2010. It is a documentary about the financial crisis directed by Charles H. Ferguson explaining how changes in the policy environment and banking practices contributed to the financial crisis of the past few years. It shows clearly that if certain changes had been made, warnings listened and followed, corruption restricted - the financial crisis could have been avoided. The movie introduces certain financial instruments and explains clearly the risks involved with them, it follows year by year developments on the financial market, shows when the first warnings were given by economists as well as presents lack of political response to them. What caught most of my attention were the interviews with various reknowned economists who 'happened' to also be consultants either of the US government or/and major financial companies and banks. Presented in this movie their ignorance as far as morality of certain choices they had made is astounding. And it ends on a scary note: nothing seems to be changing in the US financial policy despite election promises of Obama...

I recommend this movie to anyone. I think it's interesting both for people who have in-depth knowledge as to financial markets, as well as regular consumers who are thinking about investing on the financial market or taking mortgages. Of course, you need to be a bit wary since this movie is definitely leaving you with a certain view that they intended to inflict upon you: bankers are corrupt and care only about their own money, and not about their clients' interests. Still, one cannot help but wonder how much of what is presented in it is more of a rule than an exception.

Are you an empowered consumer?

On the website of the European Commission anyone can take a test whether they are an 'empowered' consumer - Survey on Consumer Empowerment Index. What characterizes an empowered consumer? Certain level of knowledge of his rights and obligations as a consumer. The survey available online is part of a bigger survey that was conducted by the EC within the Eurobarometer research, which allowed for the EC to estimate what to expect from an average consumer. The questionnaire should not take longer than 5-10 minutes and if you feel like it, you may test yourself on this website. I have to admit that I didn't get all the answers right. Oops. Time to get myself more savvy... ;)

Expert advice on the future of European contract law

Just a quick note to announce the publication of the results of the Expert Group on European Contract Law. Commissioner Reding stated the following:

"After more than 10 years of intense work on contract law by the European Union, I am grateful to the members of the expert group for having consolidated, simplified, modernised and narrowed down the preparatory work done so far into a feasibility study. It is also good to see that contract law experts from very different legal traditions and professional backgrounds arrived at a consensus on the document. The result of the expert group is without doubt a major step in the work towards a future European contract law instrument, which the European Parliament's Legal Affairs Committee favoured in a vote last month. This study provides the EU institutions with a toolbox for any future EU initiative in the field of contract law. I plan to discuss this further with the European Parliament, the incoming Polish Presidency and stakeholders to see whether and how this toolbox can serve as the basis of a political follow-up initiative on contract law this autumn. My goal is that SMEs and consumers should benefit from a user-friendly contract law instrument, especially when it comes to cross-border transactions in the Single Market."
More information can be found in today's press release and on the Commission's website. Interested parties are invited to send their feedback to the Commission by 1 July 2011.

Howard - the shopping assistant

As it has been many times mentioned on this blog the European Commission pays more and more attention to protection of consumers in their online transactions. More and more articles, interviews, newsletters and websites help consumers find out what their rights online are and how to deal with online transactions. No doubt, the goal of the EC is to create a better environment for the cross-border online transactions and to contribute to their increase which is supposed to improve the inner market of the EU. That doesn't change the fact that individual consumers might benefit from this increased attention.

One of the websites is the so-called Howard - the shopping assistant. You can access this website to check if a certain web trader can be trusted. How does it work? You enter the url (website address) of the European website that you wish to buy something from (any website that end in .com, .net, .eu, .nu) and then Howard (little cute owl, by the way) tells you what he knows about this website (e.g. date of registration of the webshop, gives results for a search in various search engines which might show you positive or negative comments on the webshop, says whether the webshop belongs to any trade organization). This might be a good way to avoid fraudulent web traders as well to get good advice on reliable traders. The website also gives links to price comparison sites, explains warranty cancellation rights etc. Howard is not new, it has been created in 2007, but with every year it becomes accessible to more and more EU consumers (more countries create their national Howards, in their own languages), so hopefully soon it will be of use to all EU consumers. Of course, every information that Howard provides you with can be easily found if you do some research online yourself, but to have it all in one place may be helpful for less internet savvy consumers.