Happy Data Protection Day!

(Un)acknowledged legislators

In celebration of today's Dutch poetry day, tomorrow's European data protection day and tomorrow's tomorrow's European contract law, here are some pages for

iConsumers: an eYou guide on digital rights

citizens, organisations and public authorities with an interest in European contract law: a possibility to take part in the public consultation on the Commission's green paper regarding this field (deadline Monday 31 January 2011!)

and other poets.

Viviane Reding on cloud computing and data protection

“Cloud computing conjures up images of floating zeroes and ones – data liberated from the desktop and drifting effortlessly from one server to the next.”

While this poetic line from Viviane Reding’s speech for tomorrow’s data protection day already makes a post on this blog worthwile, you may well be asking yourself what this ‘cloud computing’ is all about and what on earth it has to do with consumer law.

First of all: what is ‘cloud computing’? Cloud computing concerns online software which can be used by consumers and businesses without them having to install the software on their computers. Think of online data storage, but also of online network software such as LinkedIn or Facebook.

These programs are of great value to consumers and businesses, but also bring along risks concerning data protection (privacy as well as the risk of loss of data). The EU Data Protection Directive is running old (15 years) and so the Commission is announcing improvements in order to safeguard the consumer’s confidence in cloud computing services. Or, in the words of Reding: ‘A cloud without robust data protection is not the sort of cloud we need.’

For more beautiful poetry (as well as information on Reding’s proposals on cloud computing), click here and here.

Happy data protection day tomorrow!

[Picture: David Kleinert Photography]

Second chance for UK

While Sweden has been referred to the ECJ, the UK has received a second chance as far as the proper implementation of the Consumer Credit Directive 2008/48/EC is concerned.

The purpose of this Directive was to ensure that consumers can easily compare various credit offers available in all Member States, e.g. by setting out requirements on standard information to be provided when advertising unsecured lending services (Chapter II of the Diretive) or by harmonizing calculation of the Annual Percentage Rate of Change (APR - no idea what it means? check here) (Chapter V of the Directive).

The deadline for implementation of the Directive was set on 11 June 2010. The infringement procedure had been initiated last year already since UK has not communicated to the European Commission all measures implementing the Directive. Today UK has received two more months to comply with the European requirements. In two months European Commission may refer UK to the European Court of Justice.

Swedish dilemma

The European Commission referred Sweden to the European Court of Justice for inadequate transpotition of the Directive 2002/65/EC on the distance marketing of consumer financial services. This Directive offers consumers similar level of protection as the Distance Selling Directive, however, it applies to the marketing and sale of financial services (and not goods) via means of distance communication, e.g. when a consumer takes a loan from a bank via telephone, or signs up for a credit card online.

Sweden infringed consumer rights by e.g. leaving an option open to the service providers to require from consumers who are trying to use their right of withdrawal a compensation for costs associated with screening before consumers are granted a loan. According to Article 7 of this Directive consumers using a right of withdrawal may only be required to pay for services provided to them directly.

Since Sweden did not timely amend its legislation after first being notified by the European Commission of its infringement, the matter will now be directed to the ECJ. The reference procedure is one of the most important elements in protecting indvidual rights and insisting on adequate remedies for consumers that European Commission may use. The EC does not make use of it too hastly, but sometimes the national legislative authorities are just too slow in giving their citizens the necessary (European) standard of protection.

Consumers - patients

The European Parliament voted on 19 January in favor of the EU Directive on patients' rights in cross-border healthcare.

John Dalli, European Commissioner for Health and Consumer Policy, said it was an important step forward for all patients in Europe.

The Directive will benefit patients across Europe by clarifying their rights to access safe and good quality treatment across EU borders, and be reimbursed for it. Generally speaking, people prefer to receive their healthcare closer to home. No one wants to travel further than necessary when they are sick. However, sometimes the need for certain treatment leads patients to go abroad. Another reason could simply be that the nearest hospital lies across a border.

In addition to providing a clear and coherent set of rules on cross-border healthcare, this Directive will benefit patients in several other ways. It will help patients who need specialized treatment, for example those who are seeking a diagnosis or treatment for a rare disease. It will bring about closer and improved health cooperation, including the recognition of prescriptions, between Member States. Health experts across Europe will be able to exchange best practices and mutually benefit from innovations in health technology assessment and eHealth.

Is it fair?

The web page www.isitfair.eu contains practical information for consumers on how to check if they have fallen victim to an unfair commercial practice, and how to get help.

The burning question for consumers undoubtedly is: “How can I tell when a particular commercial practice is unfair?” The Unfair Commercial Practices Directive simplifies the answer to this question. Certain commercial practices are always prohibited under the Directive throughout the European Union while the legality of others can be determined by applying clear and common criteria.

First of all, certain commercial practices are always prohibited under the Directive. To ensure that traders, marketing professionals and customers are clear about what is banned, a black list of 31 unfair practices has been drawn up. The same list applies in all 27 Member States of the EU. The legality of a commercial practice that is not banned outright can be assessed by evaluating it against specific legal criteria. Two main categories of unfair commercial practices – "misleading" and "aggressive" – are described in detail in the Directive. The vast majority of practices which would be considered unfair fall under these provisions.

Hedgehogs online

A brief follow-up to last week's post on consumers' fundamental rights and Dworkin's 'Justice for Hedgehogs'. On the website related to the book, Dworkin responds to comments and questions. On the topic of 'horizontal human rights' he writes:

'Human rights conventions are constructed with the high responsibilities of coercive governments in mind: they assume that government must show all those over whom it exercises power an equal concern. We must therefore approach the question whether people have comparable rights against giant transnational corporations by first fixing the level of concern these organizations owe to those whose lives they affect. Which analogy should we use? Ordinary commercial enterprises do not owe the same concern to customers as to shareholders: they are obliged to seek a profit for the latter by enticing the former. They are subject to the constraints of decency of Part 4 [of 'Justice for Hedgehogs', CM] but not the much stronger constraints of coercive government. But giant corporations have many powers that strike critics as coercive and it might therefore be right to hold them to the greater level of concern we associate with governments. I have not attempted argument for or against that different analogy, but nothing in my discussion of human rights in Chapter 15 rules it out.'

Question: where would (or should) the line be drawn between 'ordinary' and 'giant' corporations?

And: can a theory of (international) fundamental rights do without a further explanation of the addressees of these rights, i.e. without explaining against whom fundamental rights may be asserted, and why? (compare Sloane, p. 985-986)

(Which reminds me of another previous post on the scope of fundamental rights protection)

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.

Ill customs and bad advice are seldom forgotten (B. Franklin)

Guardian has an interesting article today by Heather Connon: "Bank customers need more protection against bad investment advice". It so happens I have researched how the warnings are given to consumers in banking sector when they take out bank loans for investments and I fully agree with the message of this article.

The author gives as an example the famous case of Barclay's Bank who was sued against and ordered not only to pay fines but also to compensate its customers who lost their money on risky investments, that they originally did not intend to make it. Many of the victims in these cases where older people, close to retirement age, who came to Barclay's to invest some of their savings in order to increase their chances for better life after their retirement. However, Barclay's employees did not take into account that the investments they were recommending to these clients had a highly risky profile and did not fulfill the clients expectations (of secure and cautious investment). It is often debated what the banks could/should do in such situations. Some say that the banks have to protect their own business and it is in their interest to sell such investments to the consumers that would bring the bank the most return. They suggest that the consumers should hire independent financial advisers to protect themselves from bank's abuse. Others, however, mention the specific, confidential character of the bank-client relationship which can lead to the increase of the bank's duties of care towards the client, including the bank's duty to advise/inform and warn the client that a certain investment does not fit that client's investment profile.

In the article you may find a description of a solution that UK is about to introduce in 2013: on retail distribution review (which would e.g. ban commission to financial advisers directly from investment products). However, the article criticizes this solution and mentions how unlikely it is that things will change. What we need for a real change to happen is not another regulatory instrument that leaves lots of gaps and ways for the banks to go around the duties of care, but a change of approach of the banks themselves. What we need is a basic understanding that a happy customer is a long-time customer and that a short-time gain may lead to long-time reputation/customer loss. After all, as Benjamin Franklin once said: "Ill customs and bad advice are seldom forgotten".