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Emil ALEXIEVBulgaria

Recent developments in the EU Consumer acquis

Belgrade – 24 January 2013

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New developments in the EU Consumer law since 2010

A. Consumer Program 2014-2020;

EU Parliament resolution for a Strategy for vulnerable consumers

B. Consumer Safety;

C. Consumer rights;

D. Passengers'’ rights;

E. Consumer redress

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A. Consumer Program 2014-2020Proposal for a regulation of the European Parliament and of the Council on a Consumer Program 2014-2020

In November 2011, the EU Commission presented a draft regulation of the European Parliament and of the Council on a Consumer Program 2014-2020;

This draft regulation aims at establishing a Consumer Program for the period 2014-2020, as a successor to the 2007-2013 Consumer Program of Community Action in the field of consumer policy.

Actions under the new Program 2014-2020 are grouped in the following four categories:

safety; consumer information and education consumer rights and redress enforcement

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Objectives of the draft regulation on a Consumer Program 2014-2020

4 Objectives: 1. Safety: to consolidate and enhance product safety through effective market

surveillance throughout the EU; 2.Information and education: to improve consumers' education,

information and awareness of their rights, to develop the evidence base for consumer

policy and to provide support to consumer organisations; 3. Rights and redress: to consolidate consumer rights in particular through

regulatory action and improving access to redress including alternative dispute resolution;

4. Enforcement: to support enforcement of consumer rights by strengthening

cooperation between national enforcement bodies and by supporting

consumers with advice.

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2. European Parliament resolution on aStrategy for strengthening the rights of vulnerable consumers

The European legislation first introduced the issue of consumer vulnerability in Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices, establishing a concept of vulnerability adapted to said practices and focusing on ‘undue influence’ that could be exerted over consumers whose volition is not fully formed;

However, the Unfair Commercial Practices Directive only protected consumers’ economic interests and did not cover other possible areas such as their health, their safety or even their moral integrity.

On May 21, 2012, the EU Parliament adopted a resolution on a Strategy for strengthening the rights of vulnerable consumers.

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European Parliament resolution on aStrategy for strengthening the rights of vulnerable consumers

This document of the EU Parliament: defines what 'vulnerable consumers' are - the elderly, the needy as well as

those with mental and physical disabilities. Every consumer can be considered vulnerable;

establishes that children and young people as well as the mentally disabled are more receptive to aggressive marketing and as a result more vulnerable to commercial messages than others. Elderly and physically disabled people can have problems reading or hearing the information needed to make a purchase, the resolution said;

points out that, in the case of contractual relations, the consumer is frequently the weaker party; calls on businesses to promote and develop self-regulatory initiatives to reinforce the protection of vulnerable consumers’ rights, ensure that they have access to better and clear information and develop practices that enhance all consumers’ capacity to understand and assess an agreement;

It considers “vulnerable consumers” as a broad expression that does not refer to just a small group: every consumer can run into situations where they become vulnerable considers that children and adolescents are particularly vulnerable to aggressive marketing and advertising;

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European Parliament resolution on aStrategy for strengthening the rights of vulnerable consumers

considers that children and adolescents are particularly vulnerable regarding the use of communication technologies such as smart phones and games on the internet; considers that protection measures to avoid excessive bills in such circumstances should be put in place;

noted that in spite of existing legislation, consumers still frequently encounter difficulties when travelling and often find themselves in vulnerable situations, especially if their trip is cancelled or delayed, and that these difficulties are exacerbated when the consumer suffers from a disability; calls on the Commission and the Member States to take the necessary measures to ensure better information provision and access to claim procedures regarding, inter alia, passengers’ rights and transparency of fares;

It identifies some particularly problematic sectors, such as liberalized markets, e-commerce, financial services, banking, transport, food.

Complexity of financial markets; liberalization of markets has not resulted in a general lowering of prices; energy and telecommunication sectors: not transparent bills, difficulties in changing providers and understanding the items billed; the use of unfair terms in the sector of transport, telecommunications and energy.

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C. Consumer Rights

Consumer Rights Directive; Unfair Commercial Practices Directive; Common European Sales law; Access to basic payment services; Mortgage credit; Banking fees;

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C. Consumer RightsConsumer rights directive

On 8 October 2008 the European Commission published a proposal of the “Consumer Rights Directive. It was part of the review of the acquis communautaire for consumer protection. The reason for the review was the “fragmentation” of the EU consumer law due to the fact that Member States introduce stricter rules than the EU legislation. The European Commission considers that traders cannot trade on the basis of one single set of contractual terms across the EU. On the other hand, that fragmentation of the market hinders consumers’ access to the internal market;

The objectives of the review were: unlocking the internal market by removing regulatory barriers; improving and updating the EU consumer regulatory framework;

Scope of the review: Consumer Sales; Unfair Contract Terms; Distance Selling - revised in 2011; Doorstep Selling - revised in 2011; Timeshare - revised in 2008

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C. Consumer rightsConsumer rights directive

Package Travel - to be revised in 2013 Price Indication Injunctions The Directive on Consumer rights was adopted by the European Parliament

and the Council on 25 October 2011. It repeals Directives 85/577/EEC on doorstep contracts and 97/7/EC on distance contracts by the new provisions on off-premises and distance contracts subject to “full harmonisation”, while Directives 93/13/EEC on unfair terms in consumer contracts and 99/44/EC on sales of consumer goods and associated guarantees has only be amended on a rather minor points and continue to be based on the minimal harmonisation principle, in contrast to the initial proposal of the Commission ;

Provisions of the Directive 2011/83/EU provide for a single set of core rules for distance contracts (sales by phone, post or internet) and off-premises contracts (sales away from a company’s premises, such as in the street or the doorstep) in the European Union.

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C. Consumer rightsConsumer rights directive

Scope of the Directive 2011/83/EC on consumer rights: It covers all consumer contracts including contracts for the supply of water, gas and electricity;

However, there are certain exemptions from the scope (shall not apply to contracts for social services, healthcare, gambling, financial services, for the creation, acquisition or transfer of immovable property, for the construction, for package tours, for timeshare and some other exemptions);

Information requirements: General information requirements: Provisions of Chapter II of the

directive contain core information to be provided by traders prior to the conclusion of all consumer contracts. Member States may add on further national information requirements. Provisions of chapter II are subject to a minimal harmonization. If a directive establishes minimum harmonization standards, which means that it sets a threshold which national legislation must meet. However, national law may exceed the terms of the legislation;

Specific information requirements: Provisions of Chapter III of the directive, which only apply to distance and off-premises contracts, provide for specific information requirements. They contain formal information requirements for off-premises contracts and formal information requirements for distance contracts

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C. Consumer rightsConsumer rights directive

Provisions of Chapter III of the directive on off-premises contracts and on distance contracts are subject to maximal harmonisation;

If a directive establishes maximum harmonisation standards, that means that national law may not exceed the terms of the legislation. In practice, this prohibits higher standards in the national law;

Provisions of Chapter IV of the directive introduce new harmonized rules on delivery and passing of risk applicable to contracts for the sale of goods as well as certain rules applicable to all types of consumer contracts;

Member States have to transpose Directive 2011/83/EU into the national laws by 13 December 2013 and the rules will be applied in all Member States at the latest by 13 June 2014. This Directive will replace the current Doorstep Selling and Distance Sales Directives.

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C. Consumer rightsUnfair commercial practices directive

In July 2011, the EU Commission launched an on-line legal data base (the Unfair Commercial Practices Directive Database;

UCP Data base of the EU Commission:

https://webgate.ec.europa.eu/ucp/

The UCP Directive Database aims at promoting a common understanding and a convergence of the Member States when implementing and applying the Directive;

It contains the laws and case-law of all Member States related to the Directive, as well as other relevant material such as any relevant academic work;

The country sections include an overview of the national enforcement system of the EU Member States.

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C. Consumer rightsCommon European Sales Law In October 2011, the European Commission presented a proposal for a

Regulation for a Common European Sales law which if adopted will present an alternative legal regime in the form of an optional instrument available to cross border business-to-consumer (B2C) and business-to- business (B2B) contracts;

Scope of the proposed regulation on the Common European Sales law Territorial scope of the CESL: Limited to cross-border contracts. The scope

of the Common European Sales Law is focused on cross-border situations. It is left to the discretion of Member States whether to apply the regulation to domestic contracts as well;

Personal scope of the Common European Sales Law (CESL): Focus on B2C contracts and B2B contracts where at least one party is an SME. Contracts concluded between private individuals (C2C) and contracts between traders where neither of the parties is an SME are not included. The Common European Sales Law leaves Member States the option to decide to make the Common European Sales Law also available for contracts concluded between traders neither of which is an SME;

C. Consumer rightsCommon European Sales Law

Material scope of the Common European Sales Law:sales contracts; contracts for the supply of digital content whether or not supplied on a tangible medium which can be stored, processed or accessed, and re-used by the user; related service contracts;

The draft regulation on the Common European Sales law contains rules on distance and off-premises contracts, unfair contract terms, digital content, conformity of the goods and digital content, consumer’s remedies, performance of the contract, termination of the contract, passing of the risk, obligations and remedies of the parties to a related services contract;

The use of the Common European Sales Law will require an agreement of the parties to that effect.

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C. Consumer rightsAccess to basic payment services

In July 2011, the EU Commission adopted a Recommendation on access to a basic payment account, promulgated in the OJ L 190 of 21 July 2011;

The aim of this Recommendation is to ensure that any consumer who does not have access to payment services can open and use a basic payment account at a reasonable charge. His financial situation and his place of residence should not be used as an excuse to refuse him access to a basic payment account in a Member State where he seeks to open such an account;

The Recommendation also defines the essential characteristics that basic payment accounts should include as a minimum: it should enable the consumer to deposit and withdraw cash, to receive payments (e.g. salary, benefits, pension including by means of credit transfers) and to execute payment orders (e.g. paying bills, purchasing goods and services, transferring money to third parties including by means of direct debits);

A payment card should be included, enabling the withdrawal of money from ATM machines and the purchase of goods and services;

C. Consumer rightsAccess to basic payment services

A basic payment account shall not include overdraft facilities; Access to a basic payment account should not be made conditional on the

purchase of additional services by the consumer; Member States have to ensure that where an application for access to a basic

payment account is refused, the payment service provider immediately informs the consumer on the grounds and the justification for such a refusal, in writing and free of charge. They have to ensure that a basic account is provided either free of charge or at a reasonable charge;

Service providers of payment services are required to provide information to consumers about the specific features of the basic accounts on offer, their associated charges and their conditions of use.

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C. Consumer rightsMortgage credit

In March 2011, the European Commission presented a draft on Directive on credit agreements relating to residential property;

The proposed Directive follows the structure of Directive 2008/48/EC on consumer credit agreements;

The proposed directive introduces requirements for the advertising of mortgage credit, for example wording that may create false expectations for a consumer regarding the availability or the cost of a credit will be prohibited;

Advertising and marketing communications concerning mortgage credit should be fair, clear and not misleading;

Creditors will be required to assess the consumer's ability to repay, based on information provided by the borrower;

The directive on mortgage credit is expected to be approved by the Council and Parliament by the end of 2013.

C. Consumer rightsMortgage credit

The proposed directive on mortgage credit contains requirements on standard information which is to be included in advertising. The proposal contains rules on the:

provision of general information by creditors or by credit intermediaries; lenders and credit intermediaries will be required to make general

information available at all times on the range of credit products they offer; provision of pre-contractual information by creditors and credit

intermediaries; provision of adequate explanations by creditors and credit intermediaries on

the proposed credit agreements and ancillary services; disclosure of certain information by credit intermediaries concerning for

example, the identity, status and relationship with the creditor, to render transparent any potential conflicts of interest;

calculation of the annual percentage rate of charge; responsible lending, i.e. obligation for creditor to assess the creditworthiness

of the consumer. In addition, Member States are required to ensure that lenders benefit from provisions enabling them to access information in credit databases on a non-discriminatory basis.;

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C. Consumer rightsBanking fees The European Commission considers that banking fees related to the holding

and uses of bank accounts are very often not transparent;

Consumers suffer from confusion and a lack of understanding of what they are actually paying for, are unable to compare offers from different banks and, as a result, risk ending up with services they do not need and/or paying unnecessarily high fees;

In November 2010, the EU Commission asked the European banking industry to identify and put in place measures to improve the access to, the understanding and the comparability of information on bank fees;

This self-regulatory initiative has failed to produce a satisfactory outcome. Further, evidence of persistent problems regarding the clarity of bank fee information makes it difficult for EU citizens to make informed choices;

As a result, consumers tend to refrain from switching accounts as offers are difficult to compare. The Commission will make legislative proposals in 2013 to address these issues

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D. Passengers’ rights Air Passengers rights (APR):

Communication from the Commission to the EU Parliament and the Council of 4 April 2011 on the application of Regulation 261/2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights;

Public consultation on the possible revision of Regulation 261/2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flight – launched in December 2011;

The EU Commission is expected to make legislative proposal on the Revision of Regulation 261/2004/ in March 2013;

Rights of passengers travelling by sea: Regulation 1177/2010 on Passenger Rights;

Rights of passengers in bus and coach transport; Regulation 181/2011 of the EU Parliament and of the Council of 16

February 2011 concerning the rights in bus and coach transport and amending Regulation 2006/2004/EC

Communication from the Commission to the EU Parliament and the Council of 19 December 2011: Communication on Passengers rights in all transport modes

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E. Consumer redressWhat is alternative dispute resolution (ADR)?

The European Commission issued two Recommendations (in 1998 and 2001), defining common principles for efficient and effective ADR entities;

Member States have informed the EU Commission about those national ADR entities which comply with these principles;

There are currently more than 750 ADR entities in the EU; However, in most Member States, existing ADR entities handle consumer

disputes in a limited number of sectors; There a numerous sectors of the economy which are not covered by existing

ADR entities; Not all of the existing ADR entities in Member States meet the quality criteria

set in two EU Commission Recommendations; If consumers are to shop with confidence in other Member States and enjoy

their rights under European legislation, they need reassurance that they can obtain redress in the event of a problem.

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E. Consumer redressChallenges for the ADR bodies

gaps in the coverage (uneven geographical and sectoral availability of ADR bodies);

lack of consumer and business awareness and info prevent consumers and traders from using ADR;

uneven quality (a significant number of ADR bodies are not in line with the core principles laid down by EC Recommendations;

Consumers and businesses are not sufficiently aware of existing alternative dispute-settlement schemes, which still do not exist in a number of sectors. In the financial services sector, for example, consumers often have no choice but to enter into costly and protracted court cases;

In some Member States, there are no out-of-court dispute resolution mechanisms;

Moreover, the existing mechanisms have not up to now proven suitably effective at dealing with cross-border disputes;

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E. Consumer redressChallenges for the ADR bodies (2)

On the other hand, businesses may suffer distortions of competition due to the absence of a level playing field;

Improving alternative dispute resolution mechanisms for disputes between businesses and consumers, would bring substantial benefits for consumers, strengthen consumer confidence and contribute to the development of the single market;

This is why, on 28 November 2011, the European Commission presented a directive on the alternative dispute resolution (ADR) in the EU;

It proposed also a regulation on ODR for the settlement of online disputes for digital transactions;

The aim of these two initiatives is to ensure that simple, reasonably priced out-of-court settlement procedures are established to deal with cross-border consumer disputes.

 

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E. Consumer redressDraft directive on alternative dispute resolution (ADR)

According to the proposed directive on ADR, Member States have to set up alternative dispute resolution entities which will operate in all sectors of the economy with the exception of health and higher education;

The scope of the proposed directive covers both domestic and cross-border disputes concerning contractual obligations stemming from sales contracts or services contracts between a trader established in the EU and a consumer resident in the EU;

The proposed directive sets up quality criteria which are to be met by ADR entities in order to be notified to the EU Commission;

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E. Consumer redressDraft directive on alternative dispute resolution (ADR)

These quality criteria guarantees that ADR entities operate in an effective, fair, independent and transparent way and include the following principles:

expertise: knowledge, skills and experience independence: not subject to any instruction, appointed for a term of

office of sufficient duration impartiality; transparency: information to be disclosed to consumers on the rules of

procedure, legal effect of the outcome of the procedure, source of financing, costs, length of procedure

effectiveness: simple, fast, free of charge or at moderate costs, easily accessible;

fairness: the parties are given possibility to express their point of view, can withdraw from the procedure

liberty: agreement between consumer and trader not binding if concluded before the dispute has happened and if it deprives the consumer of his rights to bring an action in court;

legality

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E. Consumer redressDraft directive on alternative dispute resolution (ADR). General information on ADR bodies:

Traders should make info of the ADR bodies to which they are committed, publicly accessible, directly, prominently and permanently wherever possible (at their premises, on their websites etc.);

ADR bodies, consumer associations, business associations, should make publicly available in their premises and on their websites a list of competent ADR bodies;

According to the proposed directive on ADR, traders will need to inform consumers about ADR entity or ADR entities by which they are covered, when the trader commits to or is obliged to use these entities to resolve disputes with consumers.

 

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E. Consumer redressDraft regulation on online dispute resolution (ODR) - new legislative proposal of November 2011

Proposal for a Regulation on Online Consumer Dispute Resolution for dispute resolution of e-commerce complaints.

Aim: establish ODR platform, interactive website, a single point of entry to consumers (and traders) who seek to resolve out-of-court a dispute which has arisen from a cross-border e-commerce transaction.

The Regulation on Online Consumer Dispute Resolution will enable EU consumers and traders to submit disputes concerning contractual obligations stemming from the online sales or service contracts between a consumer and a trader established in the EU through the intervention of an alternative dispute resolution entity notified to the EU Commission, thanks to the EU-wide dispute resolution platform (‘ODR platform’);

The online-dispute resolution platform will link all the national alternative dispute resolution entities;

The platform shall be an interactive website which can be accessed electronically and free of charge in all official languages of the EU.

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Draft regulation on online dispute resolution (ODR)Online dispute resolution platform

How will the ODR platform work in practice? The Regulation on ODR will set up an EU-wide online platform for handling disputes between consumers and traders, arising from online transactions;

The platform will link all the national alternative dispute resolution entities and will operate in all official EU languages; Online traders will be required to provide consumers with adequate information on ADR and ODR and with an electronic link to the ODR platform on their websites.

The ODR platform shall have the following functions:to provide an electronic complaint form which can be filled in by the complaining party;to inform the respondent party about the complaint;identify the competent ADR entity or entities and transmitting the complaint to the ADR entity, which the parties have agreed to use;

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Draft regulation on online dispute resolution (ODR)Online dispute resolution platform (1)

The ODR platform shall have the following functions:to provide the parties and ADR entity with the translation of information which is necessary for the resolution of the dispute and its exchange through the ODR platform;to provide general information on alternative dispute resolution as a means of out of court dispute settlement;information on ADR entities that have been notified to the EU Commission;an online guide about how to submit complaints via the ODR platform.Consumers who encounter a problem with an online purchase will be able to submit a complaint online through the ODR platform, in the language of their choice;The ODR platform will notify the trader that a complaint is lodged against him. The consumer and the trader will then agree on which ADR entity to use to solve their dispute;When they agree, the chosen ADR entity will receive the details of the dispute via the ODR platform.

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Draft regulation on online dispute resolution (ODR)Online dispute resolution platform (2)

The ODR platform will be connected to the national ADR entities, set up and notified to the Commission;

The platform will help speed up the resolution of the dispute by allowing ADR entities to conduct the proceedings online and through electronic means;

A set of common rules will govern the functioning of the ODR platform; These will include the role of national contact points acting as ODR advisors

in their respective countries; Their task will be to provide general information on consumer rights and

redress in relation to online purchases, assist with the submission of complaints and facilitate communication between the parties and the competent ADR entity through the ODR platform;

For this purpose, ODR advisors will also be linked electronically to the platform.

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Draft regulation on online dispute resolution (ODR)Online processing of complaints

Consumers (and traders) will be able to submit their complaints through an e- complaint form, in all official languages of the EU;

The ODR platform will check if a complaint can be processed; The ODR platform will seek the agreement of the parties to transmit the

complaint to the ADR body which is competent to deal with the dispute; The competent ADR body will seek the resolution of the dispute according to

its own rules of procedure in 30 days from the date of receipt of the complaint.

ODR Advisors Network A network of online dispute resolution advisors; One contact point for online dispute resolution in each MS, The ODR advisors' network will provide support to the resolution of disputes

submitted via the ODR.

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E. Consumer redressEuropean Parliament resolution on “Towards a coherent EU approach to collective redress” of 2 February 2012

Protection of the collective interests of consumers: types of collective actions in court;

Action for injunction in court for the protection of the collective interests of consumers;

Representative judicial action; Collective redress judicial action

The resolution of the EU Parliament of 2 February 2012 calls on the Commission to strengthen and increase the effectiveness of Directive 2009/22/EC on injunctions for the protection of consumers' interests;

emphasizes, the fact that Directive 2009/22/EC does not allows consumers to be compensated for the damage suffered. Directive 2009/22/EC on actions for injunction is not linked to any mechanism to effect redress for the consumer, i.e. qualified entities” set up by the directive may not bring a claim for compensation on behalf of affected consumers.

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E. Consumer redressEuropean Parliament resolution on “Towards a coherent EU approach to collective redress” of 2 February 2012

The main aim of the procedure set up by Directive 2009/22/EC is to secure the cessation of acts which infringe consumer rights. Main remedy is the stop of the consumer rights infringement and the prohibition to the future;

The resolution of the EU Parliament on collective redress calls for the adoption of a horizontal framework instrument for collective redress within the EU allowing compensation of damages suffered by consumers;

This horizontal instrument for representative action should allow compensation for damages suffered by a clearly identifiable group of consumers and identification of the group members must have taken place before the claim is brought

This framework instrument for collective redress shall not exclusively dealing with the infringement of consumers' rights. It could cover also competition and environmental court actions.

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Emil ALEXIEV Tel.+359.885.957.340 E mail: enalexiev@hotmail.com

THANK YOU FOR YOUR ATTENTION!

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