Tuesday, 27 August 2019

Towards clearer Terms and Conditions... again

Be it pre-contractual information in terms and conditions or information on the processing of personal data in privacy policies, the truth is that the way businesses provide information to consumers generally leaves a great deal to be desired. In order to prevent this, and to better inform the informers, the Behavioural Insights Team (BIT) published a ‘Best Practices Guide’ on improving consumer understanding of contractual terms and privacy policies. These evidence-based guidelines are aimed at businesses and focus on ‘how’ to present information, rather than on the ‘what’. 

This study had a dual-focus: consumer comprehension of online contractual terms/ privacy policies and consumer engagement (i.e. the opening of full contractual terms or privacy policies). The study produced interesting, although not surprising, findings. In fact, the shortcomings of the information paradigm have been repeatedly studied and analysed, both at a practical and at a normative level. See, for example, what we previously reported here, here and here.

From the 18 measures tested, 6 proved to be effective, meaning that they showed evidence of increased consumer understanding or increased consumer engagement. The most effective measures are the display of important or unusual terms as Frequently Asked Questions (which increased comprehension in 36%), the use of icons combined with summaries to explain key terms (which increased comprehension in 34%) and telling customers how long it will take to read the policy (which increased opening rates of full terms and policies in 105%). Other effective measures include the use of illustrations and comics to explain step-by-step actions and processes, telling customers when it is their last chance to read information before they make a decision and showing customers the terms in a scrollable text box instead of requiring a click to view them. Also noteworthy is the fact that while BIT’s research showed that reducing a policy’s reading age level did not change comprehension levels for general customers, it showed evidence that such a measure helped people with lower levels of qualifications (increased comprehension by 16.9%).

Funnily enough, considering social media trends, adding emojis to contractual terms is amongst the measures that have no supportive evidence of increased understanding or engagement. Besides, well-known techniques like shortening the terms and conditions, using simpler language or resorting to summaries showed mixed evidence, which means that although they worked in some cases, they did not work in others. For example, presenting key points in a summary table increased comprehension of terms included in the summary, but it also decreased comprehension of terms not included in the summary. These findings show that a mere language simplification-based solution is not enough to fix consumer disinformation: measures such as simple language and summaries must be combined with visualization.

The study – which was commissioned by the UK Government – also demonstrates how regulators are well-aware of the consumer disinformation problem. However, it is rare to see a legislative instrument (both at national and EU level) incorporating explicit measures dealing with these (or with similar) findings. The only recent exception at EU level is the General Data Protection Regulation, which explicitly calls for ‘standardized icons’ and visualization as a means to increase transparency in the pre-contractual stage. This study is another reminder of the need for lawyers to work with information designers in order to increase and improve visualization of their terms and conditions.

Finally, it is important to stress that even though the effective measures led to an increase in consumer understanding and consumer engagement, the final numbers did not go above 58% and 34%, respectively. In other words, according to this study, around 40% of consumers still do not understand terms and conditions, while 66% of consumers do not open the full policies, even after the tested measures are implemented. This means that in order to reach an almost complete comprehension of pre-contractual information – or to guarantee that everyone understands what they are binding themselves to - we need additional solutions and new approaches.

Thursday, 15 August 2019

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.

Tuesday, 6 August 2019

Public call for information on online choice architecture for consumers

The Dutch Authority for Consumers and Markets (ACM) has published a call for information on online choice architectures for consumers. The questionnaire may be found on this website, with the deadline for submitting information being set at August 16. The gathered information is to be used in preparation of the 'Guidelines regarding online choice architectures'. Through these guidelines ACM intends to advice traders, which online behavioural persuasive practices could e.g. be assessed as unfair (deceptive or coercive) commercial practices, and which examples of online persuasion could be seen as exemplary.

Friday, 2 August 2019

When the going gets tough - the need for insolvency protection of travel organisers

As today's UK news bring about information about two major holiday providers (Super Break and Late Rooms) going into administration (Super Break and Late Rooms holiday firms go into administration), the scope of consumer protection measures is again at the forefront of many travellers' minds. Already the previous Package Travel Directive (Directive 90/314/EEC) required the Member States to ensure that package travel providers had sufficient insolvency protection, but these rules have been further specified and strengthened in the new Directive 2015/2302 on package travel and linked travel arrangements. The UK has implemented the new Directive in the Package Travel and Linked Travel Arrangements Regulations 2018.

At the moment, the European Commission is reviewing whether the Member States have completely and properly implemented provisions of Directive 2015/2302 into their national laws. What happens to travellers who have booked their holidays with Super Break and Late Rooms will be a good example, on which to check how effective the UK protection against the insolvency of the package travel organiser is. However, even if the insolvency protection has been properly arranged many customers of Super Break and Late Rooms are likely to end up dissatisfied. Why? 

Well, first: they may not have concluded a package travel or a linked travel arrangement contract, which means that they would not benefit from insolvency protection.
Travellers who have been inconvenienced and do not have a separate travel insurance (as then it is best to contact the insurance company), should then first check whether their holidays are a package holiday or a linked travel arrangement, as in both cases insolvency protection had to be assured. Generally, this means that the traveller booked at least two different types of travel services (accommodation, travel, vehicle rental, etc.) for the purpose of the same holiday with either the same trader or through a linked booking process. If only accommodation was booked, without travel or vehicle rental, then the question whether a booking of another travel service makes it a package holiday depends on the value and importance of the provision of this additional travel service in the overall context of the package travel contract. 

Second, even if they fall within the scope of protection, their holiday has likely been ruined.
In case of package travel holidays or linked travel arrangements, travellers may at least expect the full refund of the payments they have made for the purchase of the package (but not additional payments that e.g. have been made after the package has already been concluded - e.g. to purchase additional attractions at their destination) and repatriation, in case they were already on holidays. Unfortunately, it is unlikely that they will be able though to enjoy their holidays as the insolvency insurance does not have to ensure the possibility of travellers continuing with their travel plans.