Third party litigation funding and consumer redress

The EU Commission has recenetly published a comprehensive Study on Mapping Third Party Litigation Funding in the European Union incliuding all EU member states. Although the study covers all aspects of third party litigation funding, it is a potentially powerful tool for enforcing consumer rights, especially complex and costly collective redress actions, and can therefore be of interest to practicioners and academics alike interested in better enforcement of consumer rights. See also BEUC's view on third party litigation funding for collective redress.

Commission's public consultation on the New Consumer Agenda

European Commission published a survey, answers to which will inform the future policymaking in the area of consumer protection. The first part of the questionnaire asks more general questions about the New Consumer Agenda (what should be prioritised), whilst the following three parts are devoted to various specific issues: sustainability/green consumption, review of consumer credit instruments, review of product safety framework. The survey is open until 6 October and all stakeholders, including (vulnerable) consumers, are invited to participate and express their opinion. Not all questions require an answer to submit the survey and it can be filled in stages, as it facilitates saving a draft of the answers. The link may be found here. Speak up!

Vouchers for cancelled flights should be an (attractive) alternative to a cash refund – EU Commission’s Recommendation

The reimbursement of cancelled flights due to the coronavirus has been a hot topic in recent weeks. Several airlines have been obscure regarding their refund policies, not providing the relevant consumer information on their websites, providing conflicting information or even refusing to provide any refunds. For example, in the case of Ryanair, there have already been at least 3 different approaches to this issue between the 25^th of March and today. Ryanair initially allowed for a choice between a refund and the re-booking of the ticket. Then, Ryanair emailed all passengers asking whether the passengers would accept a voucher instead of a refund and that, in any case, the refund would only be paid after ‘the COVID-19 emergency has passed’. Finally, Ryanair emailed all passengers again informing them that a voucher had been issued (without the passenger’s active choice in that sense, and after the passenger had explicitly asked for a refund). While this email mentioned the apparent option for the consumer to re-submit her refund request, Ryanair re-directed the consumer to their FAQ on how to use the voucher, without any actual means of contact or any form to re-submit the consumer’s claim (this account is based on personal experience and on reports by the media, e.g. https://www.bbc.com/news/business-52370158).

According to the very clear Article 8 of Regulation 261/2004, in case of a flight cancellation all passengers are entitled to a choice between a refund or rebooking of their ticket (reimbursement or re-routing). It therefore appears that a mandatory voucher goes against the rights of the passengers. The airlines can, however, offer a voucher to the passengers as long as this remains voluntary, that is, as long as passengers can alternatively opt for (and receive) a refund. This is also the official position of the European Commission, who has announced earlier today that it has adopted a recommendation on vouchers for cancelled flights, based on the EU’s plan on ‘Tourism and transport in 2020 and beyond’ (here). These guidelines and recommendations follow the interpretative guidelines on EU Passenger Rights Regulations from the 18^th of March (here). The Commission wants voluntary vouchers to be a ‘viable and attractive alternative to reimbursement for cancelled trips’ and therefore wishes to provide incentives for passengers to accept vouches instead of a refund. The Commission’s goal is to encourage consumers to accept voluntary vouchers in order to prevent the insolvency of several airlines heavily operating in Europe. The Commission highlights, however, that consumers retain their right to be given the possibility to receive a cash refund. Furthermore, the Commission states that the vouchers should be protected against insolvency, should be reimbursable after one year, and should provide adequate flexibility for consumers who wish to use them (e.g. regarding their transferability). It is important to highlight that this applies only when the airline cancels the flight – situations where passengers cannot travel or want to cancel a flight on their own initiative do not fall under EU’s passenger rights regulations. It is now up to the Member States to adjust their laws accordingly.

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.

Airbnb to unroll the transparency carpet for its users

Whilst the Court of Justice was keeping us busy this month, it is worth it to mention that Airbnb finally committed to adjusting its T&Cs in accordance with EU law (Airbnb commits to complying with European Commission and EU consumer authorities' demands). This follows the earlier action of the CPC Network and of the Commission against Airbnb that we reported on previously (EU Commission cracks down on Airbnb to comply with EU consumer protection). Apparently, they will change its policies by the end of this year ensuring, among other things, price transparency. This should follow from Airbnb presenting consumers with the total price of bookings, including extra fees (cleaning charges e.g.) or warning them explicitly that extra fees may apply, when it is impossible to calculate these in advance. Other terms that shall be amended refer to clearly informing consumers about the remedies available to them both against hosts and Airbnb, and that they may sue Airbnb in courts of their country of residence. In case of a contract's termination or Airbnb removing content from its website, they will inform consumers about this and allow them to appeal this decision as well as claim appropriate compensation.

 

An interesting commitment is for Airbnb to clearly identify whether the accommodation is offered by a consumer or a professional party. Considering that different rules apply in B2C and B2B cases, it is important for consumers to know who their counterpart is. However, it may not always be easy to determine the professional character of the host, as this will depend on the applicable national laws, as well as transparency in dealings between the server and the hosts. It will be interesting to observe what solutions Airbnb adopts in this respect. Whether e.g. they will rely on the self-declared private/professional party character of the host. 

 

If any of our readers are hosts with Airbnb, we would appreciate being informed about any notifications you may receive in the coming months as to the changes in the new policies and new obligations placed on you.

EU Commission cracks down on Airbnb to comply with EU consumer protection

On 16th July, the EU Commission published a press release calling on Airbnb to comply with EU consumer law, especially with regard to price transparency.

Airbnb's innovative sharing economy model has been very successful and has won a large part of the short term rental market; yet, that has not been without its share of controversy.

The press release focuses on the following issues:

1) Price transparency

The EU Commission points out that current Airbnb practices contravene the Unfair Commercial Practices Directive. More specifically, Airbnb should clarify on its platform whether the renter is a private person or a professional. As more and more traditional businesses, such as hotels, apartments and bed and breakfasts, are listed on Airbnb, consumers must be aware in a clear manner as to whether they are renting from a professional. If they do rent from a professional, the increased protection of EU consumer law applies.

Furthermore, Airbnb should present the total price for a rental on the initial search of the consumer, as at the moment, obligatory charges such as cleaning and service are added on in later steps, thus making it more difficult for consumers to compare offers.

2) Clarification or removal of unfair contract terms 

The terms and conditions of Airbnb should be amended in order not to create a significant imbalance between the parties. Also, the terms should be more transparent, presented in a clear and intelligible language in order to allow consumers to be better informed. However, even if the terms are presented in a more transparent manner, as they should, it does not ensure that consumers will be more likely to actually read them.

Some of the problematic terms highlighted in the press release include:

• that the company should not mislead consumers by going to a court in a country different from the one in their Member State of residence;
• Airbnb cannot decide unilaterally and without justification which terms may remain in effect in case of termination of a contract;
• Airbnb cannot deprive consumers from their basic legal rights to sue a host in case of personal harm or other damages;
• Airbnb cannot unilaterally change the terms and conditions without clearly informing consumers in advance and without giving them the possibility to cancel the contract.

Finally, in terms of redress, Airbnb should comply with art. 14(1) of  Regulation 524/2013 (the ODR Regulation) to display the link to the ODR platform. However, traders are not obliged to participate in the ODR platform scheme.

Now the ball is in the court of Airbnb, who has a deadline until the end of August to submit solutions to the Commission on how they intend to comply with EU consumer law. These suggestions will be discussed in a meeting between the Commission and the national authorities in September, and should they be found to be unsatisfactory, national authorities will use their enforcement powers.

It will be interesting to see how this story develops and whether this is the start of a new more consumer-friendly sharing economy.

EU Commission on its way to place barriers to the ban of harmful substances from cosmetics

On 22^nd June, the EU Standing Committee on Cosmetic Products met to discuss amendments on Regulation (EC) No 1223/2009 of the European Parliament and of the Council on cosmetic products. The Commission is required to submit its proposed measures to the Committee for scrutiny, as per art.32 of Regulation 1223/2009.

Regulation No 1223/2009 is designed to harmonise the rules as well as terminology on cosmetics in the EU with the double objective of promoting the internal market while ensuring a high level of protection of human health. The Regulation has been revised multiple times; what are the changes brought by this draft regulation and what dangers do they hide for consumers?

One of the proposed changes is on the use of carcinogenic, mutagenic or toxic for reproduction (CMR) substances. CMR substances are highly toxic and present lasting dangers for human health (for more info on CMR see OSH wiki). Relaxing the protection against CMR substances can have profoundly negative effects on the health of consumers, especially in the case of cosmetics which are everyday widely used products.

Art 15 of Regulation 1223/2009 prohibits the use of substances classified as CMR, as those are listed in ANNEX VI of the Regulation with some exceptions, as for example when there is no other suitable alternative or when the substance complies with food safety requirements. As stated in minutes of the Working Group on Cosmetic Products, the Commission now considers that adding a new substance to the CMR list requires amendment of the annex of the regulation via a new act. This presents a departure from the previous position where the ban was automatic as soon as the substance was placed on the list by the European Chemicals Agency.

The opinion of the Committee on the issue is not yet made available; yet BEUC in one of its press releases has drawn attention to the matter and the potential harm for consumers from such a reform. It is not an easy task to balance between innovation and protection of human health, hopefully the EU Commission will in this case demonstrate its commitment to maintaining a high level of protection by not allowing delays in the banning of harmful substances.

EFSA studies to be made public in proposed General Food Law reform

On 11 April the EU Commission announced a new legislative proposal for improving transparency in scientific studies about food, by reforming the General Food Law (Regulation (EC) No 178/2002) The Proposal is based on a European Citizens’ Initiative and supported by the findings of the fitness check on general food law, as both pointed out issues relating to transparency of the studies. What is surprising is that the press release points out that the fitness check is in need of updating even though it was published in 2018. The General Food Law fitness check has been a long time coming, as it had been announced from 2013.

The Proposal suggests a targeted revision of the General Food Law. It is worth remembering that the General Food Law was introduced in response to the food crises in late 90s, such as the BSE crisis, which had a big impact on consumers’ trust to food safety. But which are they key changes included in the proposal?

All studies submitted to EFSA are to be made public, proactively and automatically, thus increasing transparency with the exclusion of confidential information. In practice, when an applicant submits a dossier for a study they will submit a confidential and a non-confidential version. The confidential version will be made public immediately and the confidential version will be assessed by EFSA and additional data may be made available to the public, if EFSA qualifies the as non-confidential.

A consultation procedure is to be established to allow stakeholders as well as the general public to have their say on submitted studies. What is important is that the consultation will include not only studies for the authorisation of new substances but also studies on the renewal of previously authorised substances. This ensures that renewal processes will not avoid the scrutiny of the public as new scientific evidence as to their effects may come to light after the initial authorisation. 

Furtermore, it includes measures on the governance of EFSA including the choice of experts for the scientific panels of EFSA to be made from a pool of candidates put forward by the Member States, thus involving them further in the process, as well as allowing EFSA to commission studies on a case to case bases in exceptional circumstances, such as when a substance is highly controversial.

This Proposal will not necessarily mean a higher standard of protection for consumers. What it means is that citizens will be able to be more involved in the law making process in this area and the legislators and will be held accountable with greater ease. That it will be possible to check the objectivity of the evidence used to inform regulation. Food law legislation can be highly divisive and one that generates great interest from civic society from environmental organisations to parent associations for issues such as GMOs or food additives. 

This signifies a new era in food law where citizens are more involved than ever before; this can be seen also in the origin of the proposal, a European Citizens’ Initiative, only one of four successful ones making this truly bottom-up regulation. Even though that particular initiative was focused on stopping glyphosate the Commission took on the comments on improving transparency to effect a lasting structural change. The Commission appears keen to push the proposal forward aiming for it to be adopted by mid-2019.