Online traders may choose how to communicate with consumers - CJEU in Amazon EU (C-649/17)

On July 10, the CJEU supported AG Pitruzzella's opinion (Online chats...) in the case Amazon EU (C-649/17) that Article 6 of the Consumer Rights Directive does not place on distance selling traders an obligation to set up the means of communication specified in that provision (phone line, fax, e-mail). Such an interpretation could disproportionately burden especially small businesses (para. 48). Instead, this provision just specifies that the means of communication, which a given trader chooses, should facilitate quick and effective contact with consumers (para. 46).

Distance is not a factor - CJEU judgment in Case C-190/11 Mühlleitner

The Court of Justice of the EU is back from holidays. Today, it handed down its judgment in Case C-190/11 Mühlleitner. The case concerned the acquisition of a car by Ms Mühlleitner, who resided in Austria, from Autohaus Yusufi in Hamburg, Germany. Ms Mühlleitner had found Authohaus Yusufi's offer through the internet and had then travelled to Germany to sign the contract and take delivery of the car. When a dispute arose concering a defect of the vehicle, the question arose whether the Austrian courts were competent to hear the case. Did the courts' international jurisdiction require for the sales contract to have been concluded at a distance?

The CJEU is of the opinion that the fact that the contract was concluded in the Member State where the seller is based does not mean that the consumer-buyer cannot bring a case in her own Member State. The decisive factor is that the seller's commercial or professional activities were directed at the State of the consumer's domicile:

'If, therefore, (i) the trader domiciled in another Member State pursues commercial or professional activities in the Member State of the consumer’s domicile or, by any means, directs such activities to that Member State and (ii) the contract at issue falls within the scope of such activities, the consumer may bring proceedings before the courts of his own Member State against the trader, even if the contract was not concluded at a distance because it was signed in the Member State of the trader.'

See the press release on this judgment for further information.

Mondays are 'let's shop online'-days in Europe

Last month a new study was published about the way European consumers conduct their e-lives. It was conducted by a Japanese retail company, Rakuten and one of its main findings was that more people turn to e-commerce sites after work on a Monday (in the UK and Germany), than during any other time of the week. Apparently virtual shopping works just as well well as real life one in making us feel better when we are feeling a bit down (due to having gone back to work, again). Interestingly, in France such a peak appears on Wednesdays - when French children finish school early and their parents are more likely to get home early, too. Another finding is the opposite trend in the UK and France as to when smartphones and tablets are used for e-commerce. English commuters tend to shop more online on their way to work in the morning, while French ones do it on their way back home more often (between six and seven in the evening). (Study examines Brits' e-commerce habits) I hope European Commission has more luck than I did finding online the whole study (and not just its summaries) and will add it to its database on consumer shopping behaviour that should be consulted during any legislative process.

Consumers may remain passive while obtaining information about right of withdrawal - CJEU case C-49/11 (Content Services)

5 July 2012: the CJEU's case C-49/11 (Content Services)

The CJEU decided today that Article 5 of the Distance Selling Directive (97/7/EC) does not allow for service providers and sellers to convey information about, inter alia, a right of withdrawal to consumers only through a hyperlink placed on a website of the undertaking. Such a method does not fulfil the requirement of 'giving' the information to consumers, neither it can be said that consumers 'receive' the information, if an everyday meaning of these words is taken into account, that is the fact that consumers should not have to take any action in order to be provided with the information. (Par. 33-37) Moreover, a general website may not be seen as a 'durable medium' - for which there is another requirement in this provision. (Par. 43, 46, 49-50)

We have previously discussed the opinion of the AG Mengozzi in this case in details (Websites may be a click away from a durable medium), and since the CJEU followed his opinion we refer you, dear readers, to our previous post.

Special consumer jurisdiction not only for contracts concluded online: AG's opinion in CJEU case C-190/11 (Mühlleitner)

24 May 2012: AG's Cruz Villalón opinion in the CJEU case C-190/11 (Mühlleitner)

Some time ago we discussed two CJEU cases Pammer and Hotel Alpenhof (ECJ instructs businesses what NOT to publish on their website to keep operations domestic only...) in which matters of international private law that influence consumer protection were discussed. In the case Mühlleitner, once again a special jurisdiction in consumer cases is being discussed.

Daniela Mühlleitner lives in Austria and was looking online for a second-hand car for her private use. She filled in a form with the characteristics of a car she wanted on the website: www.mobile.de and one particular link to an offer caught her interest. Upon clicking on that link, she was re-directed to a website of Ahmad Yusufi and Wadat Yusufi (the defendants). She contacted them by phone, was informed that the car chosen by her was no longer available but they had similar ones to offer. She agreed to receive an email with more information about available cars including photos. Moreover, she indicated to the sellers that she lived in Austria and it was not considered to be an obstacle in concluding a sales contract. Some time later she went to Germany and concluded the sale contract with the defendants. Soon afterwards, upon her return to Austria with the car, she discovered defects in it. Since she could no longer get in touch with the sellers, she started legal proceedings to claim re-payment of the sale price and damages. The Austrian courts did not believe they had jurisdiction over these proceedings.

As a reminder, article 15 (1) (c) of the Regulation 44/2001 declares that the courts of consumer's country of domicile could have jurisdiction if the seller conducted his activity in this country or directed his activities to this country. In case, Pammer and Hotel Alpenhof the CJEU indicated certain factors that should be taken into account in order to determine whether sellers directed their activity to consumers from other Member States.

The question in Mühlleitner case was whether article 15 (1) (c) of the Regulation should be applied in this case, i.e. whether it applies only in situations of contracts concluded at a distance.

The AG Cruz Villalón argues that the applicability of this article is not limited only to contracts concluded at a distance. (Par.12) Firstly, historical arguments are being raised - previously binding Treaty of 1968 contained a similar provision whose application was neither limited to distance contracts. (Par. 15) Moreover, official statements of the Council and the Commission as well as previous judgments of the CJEU (e.g., Ilsinger) determine that article 15 refers to a number of sales methods, among others also distance sales contracts concluded online. (Par. 20) Therefore, it is clear that the Regulation did not aim at limiting a number of consumer contracts to which article 15 and a special jurisidiction in consumer cases would apply. (Par. 21)

Websites may be a click away from a durable medium - AG's opinion in case C-49/11 (Content Services)

6 March 2012 - AG Mengozzi's opinion in the case C-49/11 (Content Services)

The issue raised in this case concerned interpretation of Article 5 of the Distance Selling Directive (Directive 97/7/EC). Article 5 states that upon conclusion of a distance selling contract consumers must receive confirmation of certain information in a 'durable medium'. The question asked by the German court to the CJEU was whether information available on the vendor's website, that consumers can access by clicking on a link displayed at the time when the contract is concluded, may be regarded as having been given to the consumer in a durable medium. Short answer: no, it may not.

Practise:

The company Content Services operates an internet site (opendownload.de), which is configured in German and enables internet users to download free software by providing a collection of links to programs that are freely available on the internet. This website may also be accessed by internet users in Austria. (Par. 9) The subscription to use this website was EUR 96 for one year. Internet users enter into a contract by filling in an interactive web page form on which, in particular, they need to tick in a box accepting the general terms and conditions and waiving their right of withdrawal. The information on the right of withdrawal (that needs to be given pursuant to Article 4 and 5 of the Directive) is not shown directly to the consumer. The consumer may access this and other information by clicking on a hyperlink on the contract sign-up page. (Par. 10) After concluding a contract, the customer receives an email with his user name and a password. The email does not mention the right of withdrawal. Following communication is an invoice for EUR 96 which reminds the customer that he had waives his right of withdrawal. (Par. 11)

Legal analysis:

The problem of this case is that a customer who may want to download free software online, only upon signing up at a website may realise that he had just concluded a subscription contract. Normally, upon realising that fact consumers would have withdrawn from a contract, but in this case they had waived their right of withdrawal. The company claimed that this waiver was valid, taking into account the fact that they made the information on the waiver of the right of withdrawal available on their website, which is in accordance with Article 4 of the Directive. (Par. 18) Content Services argued that confirmation of that information is not necessary since Article 5 stipulates that such a confirmation should be given:

"(...) unless the information has already been given to the consumer prior to conclusion of the contract in writing or on another durable medium available and accessible to him."

The AG considers that Article 5 places two fundamental requirements on the vendor: firstly, the consumer must receive the information; secondly, the consumer must be able to take control of the information. (Par. 23-26). The first element means that the information must be conveyed without the customer having to make any active effort to obtain it (which is confirmed by the language chosen in the Directive). (Par. 24) This is justified by the protective purpose of the Directive, which should bind towards all customers, even the less careful ones, who may not be able to recover the relevant information. (Par. 25) The second element aims at making consumer protection more effective, by making sure that the information is not conveyed to customers fleetingly and that they may consult it at a later time in order to be able to enforce their rights. (Par. 26) The fact that the information shall be conveyed on a 'durable medium' means that the consumer should have an opportunity to store, recover and reproduce the information over an adequate period of time. (Par. 27)

Taking into account these fundamental requirements the AG states the following about the case at hand. Firstly, requiring the customer to click on a hyperlink on the contract sign-up page in order to view the necessary information means that the customer needs to undertake a deliberate act, putting him in the 'active' role. Even if the action involved in clicking on a hyperlink is not difficult, it still means that the information is not 'received' by the customer but needs to be obtained by him.  (Par. 31) The AG emphasises that there does not seem to be any technological difficulty that would prevent the Content Services to provide the customer with the necessary information, taking into account that they electronically correspond with their customers. (Par. 32) Secondly, the AG considers whether a website could be seen as a durable medium. He recalls a recent EFTA judgment of January 2010:

"In that judgment, the EFTA Court found that, in principle, a website too can constitute a durable medium, provided that three cumulative conditions are met. Firstly, the site must allow the consumer to store the information received. Secondly, that storage must be guaranteed for a sufficiently long period: the period of time for which it must be able to be stored cannot be specified generally, but must be determined case by case. Finally, for the user’s protection, it must not be possible for the person who provided the information to change it." (Par. 39)

What is important in that evaluation is the question whether the information has been placed under the customer's control and is no longer under the control of the person giving it. (Par. 42) Pursuant to the AG a general web page, such as the page of Content Services, does not satisfy these conditions, since it is not placed under the control of the person who consults it, but remains under the control of the person who publishes it. This means that, e.g., Content Services could alter or delete this information at will. The claim that the user could act to print or store the page before it is changed should be rejected since then the user would be generating the durable medium and not the vendor. (Par. 43) As a final remark, the AG mentions that even if a website could be seen as a 'durable medium', the consumer is still supposed to 'receive' the information which means that placing a link to such a website (either on home page or in an email) still does not satisfy the first element of this test. The AG suggests that placing that information directly in the text of the email seems to be much simpler and more in the spirit of the Directive.

I disagree with that last remark of the AG. Imagine that the consumer is aware of the fact that the information is stored on a website since, e.g., the online vendor could make visiting such a website a mandatory step of the sing-up process. The consumer could not move further with his online registration if he had not visited that website. Or, upon conclusion of the contract, the browser could automatically open the website with the information - without the need for the consumer to click on a hyperlink. Well, in such a situation, having a hyperlink to that website stored in an email should not be seen any differently then the consumer looking up a letter in his archive. In both cases in order to re-access and consult the information the consumer needs to take certain physical action. It doesn't seem to make much difference whether the action would consist of finding the right letter among others and opening an envelope, or finding an email in an inbox and clicking on a hyperlink in it.

Are we there yet?... Adoption of Consumer Rights Directive. Finally!

The new EU Consumer Rights Directive has been formally adopted today by Member States in the EU's Council of Ministers. The works on this Directive were stormy and its scope has changed tremendously from the first draft that we had seen in October 2008. The agreement between the institutions of the EU was difficult to reach, but after many compromises had been made, the Directive became a reality. The final text is not published yet, but from the news (New EU rules on consumer rights to enter into force; Council approves new directive) it seems that the text had not changed since June 2011, i.e. the last amendments adopted by the European Parliament. Spain was the only country who voted against adoption of this Directive in the Council. The Directive will enter into force 20 days after its publication in the Official Journal. The Member States will have 2 years to implement it.

For top 10 benefits for consumers in the new Directive see here. More detailed analysis will follow on this blog as soon as we get the official text.

Online traders' cooperation needed to open the internal market

Another interesting statistics have been made as far as consumers online shopping is concerned (Online shopping: cross-border deliveries found reliable but few traders sell abroad in the EU). Shoppers of 17 European Consumer Centres made a total of 305 online purchases from foreign EU-based traders in 28 countries. The products where then returned in conformity with EU rules on the right of withdrawal. What were the findings? Mainly: 94% of products were delivered (66% in 2003) and only 1% thereof was faulty or different than ordered, which suggests that purchasing products cross-border is as reliable as domestic transactions. When products were returned, in 90% cases the product cost was reimbursed. However, 57% of shopper had problems with reimbursement of original delivery costs. Also, some trader placed extra (illegal) restrictions on returning the goods (e.g. limiting the cooling off period or announcing that there is none). Another upsetting finding was that 60% of the websites was unsuitable for online shoppers from other countries (e.g. delivery abroad was impossible). It seems, therefore, that consumers have more and more reasons to trust in online cross-border transactions. However, the internal market will not develop further if sellers are not willing to conduct their business with customers living in other Member States, as well.

Full report may be found here.

Fancy going to a concert or a game? It's safer now to buy tickets online.

One week of holiday where I allowed myself not to check the internet and I now have quite a few news to catch up with and to report here about. 

What caught my attention first was a report on the EU "Sweep" investigation ("sweep" is an enforcement action led by the EU and carried out by national enforcement authorities) conducted as of September 2010 by national authorities of the Member States which checked for breach of EU consumer rules by websites selling tickets for cultural and sporting events (Buying on the internet: it's now safer for consumers to shop for tickets online following EU action). They were looking for websites that would give incomplete or misleading information to consumers (about the price of tickets, e.g. hidden charges or taxes; the trader, e.g. false claim of being an authorised representative; etc.) as well as for unfair terms and conditions (e.g. refund policy not explained or ticket delivery not guaranteed on time). The goal was to prevent sale of tickets to non-existent events, and make clear e.g. rules on the refund in case the event was cancelled. Owners of such websites were asked to correct the information provided (voluntarily or under penalties). The result of the Sweep is that nowadays 88% of websites (out of 414 websites checked) selling tickets comply with EU consumer laws (in comparison to 40% in 2010).

More information about this Sweep and its results may be found on this website: FAQ: Now safer to shop for tickets online following EU Sweep investigation.

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.

Statistics on online shopping in UK

Stuffed with all the delicious Easter food one of the few things I'm capable of doing tonight is searching the net for some interesting news and updates. One of the articles I found on BIZ Community website caught my interest since it relays how the trend to shop more online has grown in the past years in UK. I always like to find new statistics on that subject, since I believe digital transactions are still not getting as much attention as they should be and the regulation thereof is often unsatisfactory.

The survey of over 1000 consumers conducted by PwC showed that 14% of people buy online more that once a week nowadays, compared to only 4% in 2007. 60% of shoppers expect to spend more online in the coming 2-3 years. Why do more people choose for online shopping? Convenience - is the main answer (80%). You don't need to frantically look for shops that will be open in your neighbourhood when you are done with work, and other activities, you can just power on your computer. Another factor is that you don't need to move from one shop to another to find the best deal - again, your computer screen will show you many options and make it easy to choose the best one. It's interesting to observe that among people who use internet often and with ease to conduct online shopping, 20% thereof are over the age of 55. This means that it slowly stops being a domain of younger people.

You may read the PwC report over here.

And then there were two...

EU Member States formally adopted today the latest draft of the proposal for Consumer Rights Directive (read: European Commission's press release). The legislation still has to be approved by the European Parliament and the vote is now scheduled for March 2011.

The latest draft of the proposal for the CRD aims at harmonization of TWO currently binding directives: Directive 97/7/EC on Distance Selling and Directive 85/577/EC on Doorstep Selling. Unfortunately, in the works on the CRD no consensus was reached on what the desirables provision of the regular consumer sales transactions should be. Also the unfair contract terms regulation was left out of the final draft. Still, the EU authorities are optimstic that the CRD will "give consumers more confidence when they shop online", "will strengthen both the Single Market's functioning and consumer rights", "will make it easier for consumers to shop cross-border, in particular on the Internet", "will make it less costly for traders to offer their products to consumers in other countries", "businesses will benefit from lower costs, a level playing field and more legal certainty".

There are indeed certain much need changes to the doorstep and distance selling that the CRD introduces, taking into account the current consumers' problems with these transactions (e.g. hidden charges, lack of right of withdrawal from online auctions, default pre-ticked boxes). However, despite the high words used by Viviane Reding, the EU's Justice Commissioner, still falls short of its original goal to fully harmonize consumer protection in the most important areas of consumer rights.

Sweep investigation electronic goods

The ECJ today reported success as a result of the sweep investigation on the online sales of electronic goods (cameras, MP3 players, etc). The sweep, an enforcement action led by the EU and carried out by the national enforcement authorities, investigated the compliance of consumer rights by the major websites offering electronic goods online. While only 44% of the websites investigated complied with consumer rights in 2009, this figure has now climbed to 84%. Whether this has made buying electronic goods online "much safer" (as the Commission claims), remains to be seen.

The commission has also published the first results of another sweep, on online sales of tickets for cultural and sporting events.

Click here for more information.

No charge!... I'm talking to you, too, delivery costs! - ECJ in Heinrich Heine C-511/08

15 April 2010: ECJ case C-511/08 Heinrich Heine

In one of the previous posts I discussed the opinion of the AG in the case C-511/08 Heinrich Heine. It concerned the interpretation of Article 6 of the Distance Selling Directive 97/7/EC which gives consumers a right of withdrawal in case they concluded a contract through means of distance communication. Today the ECJ gave its judgment on this subject matter, supporting the opinion of the AG - which is a good news for the consumers all over Europe.

In general, according to Article 6, consumers are free to use the right of withdrawal within 7 days from the day of concluding the contract without having to pay any charges. Everything they paid for the good to the seller should also be returned to them. The only charge that the consumers might have to make is the direct cost of having to return the good to the seller. Since it is the consumer that chooses the method of returning the good to the seller, it makes sense that he will have to pay for it.

Heinrich Heine was a mail order company that decided to have its clients pay EUR 4.95 for delivery, which the supplier will not refund in the event of withdrawal from the contract.

The question brought to ECJ was whether provisions of the Directive are: 'to be interpreted as precluding national legislation which allows the costs of delivering the goods to be charged to the consumer even where he has withdrawn from the contract?'

The answer of the ECJ followed closely the opinion of the AG. The phrase 'the only charge that may be made to the consumer' should be interpreted strictly. (Par. 46) The Directive does not make a distinction between the price of the goods and the delivery costs but talks about the necessity of returning the 'sums paid'. (Par. 45) Furthermore, the ECJ notices that if the consumers had to pay back the delivery costs, that charge might dissuade them from using the right of withdrawal altogether which goes against the protection of the Directive (Par. 56) and that effect is not diminished by the consumer being aware of the amount of the delivery costs. (Par. 58) Additionally, charging the consumers with the costs of delivery and the costs of returning the goods, would distort the balance in payment for transporting the goods between the parties. (Par. 57)

Decision:

Suppliers are not allowed under a distance contract to charge the costs of delivering the goods to the consumer where the latter exercises his right of withdrawal.

One could not agree more with this decision of the ECJ. It does not come difficult, to imagine a following situation:

- Hello? I saw on TV your advertisement for this new drink to lose weight. I would like to buy it for the price of 5 euro that you mentioned.

- Yes, of course. We charge 5 euro extra for delivery.

- Alright. I can use my right of withdrawal, right?

- Yes, sir. On our website you may found all provisions that will be applicable to this contract.

- Alright. *address and bank account number data follows*

3 days later.... SURPRISE! If you use your right of withdrawal you will not get back 10 but only 5 euro since the supplier will keep the delivery price and you will still have to pay, say, 3 euro for returning the goods. Most consumers would decide it is not worth the effort to withdraw from the contract in such a situation and the protection offered by the Directive would indeed be practically non-existent. Luckily, the ECJ saw through this possibility.

ECJ - Heinrich Heine

28 January 2010: ECJ Advocate General's opinion in case C-511/08 Heinrich Heine

Heinrich Heine is a German mail-order company. Its general conditions of sale provide that the consumer is to pay a flat-rate charge of EUR 4.95 for delivery, which the supplier will not refund in the event of withdrawal from the contract. A German consumer association brought an action against Heinrich Heine for an injunction to restrain it from charging consumers the cost of delivering the goods in the event of withdrawal as contrary to the aim of the Article 6 of the Distance Selling Directive 97/7/EC.

The German Supreme Court was not sure how to interpret provisions of the BGB (German Civil Code) in accordance with the Directive and issued a question whether these provisions are: 'to be interpreted as precluding national legislation which allows the costs of delivering the goods to be charged to the consumer even where he has withdrawn from the contract?'

The Advocate General argues that Article 6(1) gives consumers rights to withdraw from a distance contract 'without penalty and without giving any reason' which means that in principle the consumer should not suffer any negative consequences as a result of making a decision to withdraw from a contract. The only charge that may be made to the consumer because of the exercise of that right is the direct cost of returning the goods. According to the Advocate General the words 'only charge' require strict interpretation.

At the same time Article 6(2) obligates the supplier to reimburse 'the sums paid' by the consumer 'free of charge' in case of a withdrawal. The principle of 'full refund' means according to the AG that 'sums paid' includes not only the purchase price of the goods or the charge for the service provided, but also amounts paid by the consumer to the supplier in connection with the conclusion or performance of the distance contract, including delivery costs. (par. 34) The AG uses also a systematic argument pointing out the obvious difference between the term 'sums paid' that has been used in this provision and 'price' that has been used in some other provisions of that Directive. (par. 36)

The recommendation of the AG to ECJ is: 'Article 6(1), first subparagraph, second sentence, and Article 6(2) of Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts are to be interpreted as precluding national legislation which, in the context of a distance contract, requires the cost of delivering the goods to be charged to the consumer after he exercises his right of withdrawal.'