Effective Protection for the E-Consumer in light of the Consumer Rights Directive?

• Date: 01 January 2012
• Author: Aonghus Mcclafferty

Effective Protection for the E-Consumer in

light of the Consumer Rights Directive?

AO NGHU S MCC L A F FER T Y

Introduction

Consumer Protection and the Directive on Consumer Rights

The internet is becoming an increasingly popular means for the sale of

goods and mor e and more transactio ns are being made online. A recent

survey shows that 85% of internet users across the globe have made online

transactions.1In Europe, 40% of consumers bought goods or services over

internet in 2010.2Furthermore, the Commission has proposed an optional

European Sales law (di scussed below) which it is hoped will expand the

online market.3

The increase in online transactions rais es the issu e of whether or not

there is sufficient protection for the e-consumer. Due to the risks inherent in

online transactions there is a need for these types of transactions to be

specifically acknowledged and regulated. While recent European directives

acknowledge modern technolog ies they have pr edominantly failed to

effectively protect the e-consumer.

In 2008, the European Commission proposed to consolidate much of the

consumer acqui s into one Direct ive: the propose d Directive on Co nsumer

Rights.4This was an attempt to establish a clear, coherent and effective

consumer code. However, much of it was a patchwork of existing Directives

and the initiative was criticised by the Sales Law Review Group and other

academics. Furthe rmore, the proposed Direct ive represented a missed

opportunity to bolster consumer confidence. T his article will describe the

shortcomings of existing legislation and how the proposed Directive failed

1Survey carried out by Nielsen, “Trends in Online Shopping” (2008), available a http://

th.nielsen.com/site/documents/GlobalOnlineShoppingReportFeb08.pdf [Accessed 27

February 2012]

2 European Parliament, “Consumer Rights: What the new EU rules will mean”, available

at http://www.europarl.europa.eu/en/pressroom/content/20110622BKG2 2276/html/

Consumer-rights-what-the-new-rules-will-mean [Accessed 1 March 2012]

3 Digital agenda f or Europe, Action 13, available a t http://ec.europa.eu/informat ion_

society/newsr oom/cf/fiche-dae .cfm?action_id= 171&pillar_id=4 3&action=Action %

2013 %3A%2 0Comp leme nting %20t he%20 Cons umer% 20Rig hts% 20Dir ecti ve

[Accessed 1 March 2012]

4 Proposal for a Directive of the European Parliament and of the Council on Consumer

Rights COM (2008) 614 Final

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to c orrect some of these shortcomings and widened gaps in e-consumer

protection in other areas. The Consumer Rights Directive as adopted shall

also be discussed, concentrating on the effects it has on the e-consumer.

Issues affecting E−Consumers

According to a Commission report concerning cross-border e-commerce in

the European Union there are a num ber of facto rs that disc ourage online

shopping. Among these are t he risk s of disappointment ( especially since

goods must be bought before they can be touched or tried), fraud, difficulty

in returning or repairing goods and the risk of non-delivery.5Despite these

concerns, e-commerce is experiencing huge growth.6

Although electronic contracts are contextually different to traditional

contracts there is no legal distinction between the two. Electronic documents

were granted equivalence to written documents by Section 9 of the Electronic

Commerce Act 2000 (the “2000 Act”). Section 19 of the 2000 Act states an

electronic contract shall not be denied legal effect, validity or enforceability

solely on the grounds that it is wholly or partly in electronic form.

When is there an offer and how is acceptance effected in an elec tronic

contract? Although traditional contract law principles have been applied to

these questions, other difficulties arise. For exam ple, the way in which

assent is communica ted and whether or not there is a vali d a greement.

There are questions surrounding whether the consumer actually comes to an

agreement with the trader because most electronic contracts are standard

form contracts. This means the consumer has had no opportunity to

influence the terms of the contract. The consumer often accepts the contract

by merely cli cking or browsing, which will be discussed b elow.7These

standard form contracts are s een as contract s of adhesion and as such

should be construed strictly against their proponents.8

The difficul ties mentioned above mean that the c onsumer is at a

considerable disadvantage. It was as a result of this disadvan tage that the

EU proceeded to introduce legislation in the 1990s (discussed below) which

5 Commission Staff Working Docum ent, Report on Cross-Border E-Commerc e in the

EU, February 2009, available a t http://ec .europa.eu/consu mers/strategy/doc s/com

_staff_wp2009_en.pdf [Accessed 27 February 2012]

6 Ibid

7 Lemley, “Terms of Use” 91 Minnesota Law Review 459, Clapperton and Cor ones,

“Unfair Terms in ‘Clickwrap’ and Other Electronic Contracts” (2007) 35 Australian

Business Law Review 152

8 McCord v. E.S.B. [1980] I.L.R.M. 153 at 1 61. In this case, the Electricity Supp ly

Board (E.S.B.) were under statutory oblig ation to provide electricity and presented a

contract to all customers with general conditions that could not be in dividually

negotiated but were subject to unilateral variation. Henchy J. commented on the type

of contract that was in place (contracts of adhesion) and stated these contracts would

be viewed scrupulously because of their take it or leave it nature.

86 AON GHU S McCL AFF ERT Y

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offered further protections to the online consumer who could already rely

on the existing provisions of the Sale of Goods Act 1893 and Sale of Goods

and Supply of Services Act 1980 (hereinafter referred to as the Sale of

Goods Acts 1893 and 1980).

Existing Legislative Protection for the E-Consumer and the new Consumer

Rights Directive

The legislation w as introduced in the form of minimum harmonisation

directives. Minimum harmonisation directives contain clauses that allow

member states to e ither maintain or introduce, in the area cove red by a

particular Directive, mo re stringent provisions to ensure a higher level of

consumer protection.

This article analyses the legislati on that is currently i n place to protect

consumers who enter online contracts, the proposed Consumer Rights

Directive (“pCRD” or “the proposal”) and the Consumer Rights Directive

(CRD) as adopted. The pCRD atte mpted to cons olidate the r ules in the

Unfair Contract Terms Direct ive9; the Directive on the Sale of Consu mer

Goods and Associated Guarantees10; the Doorstep Selling Directive11; and

the Distance Selling Directive12 under one umbrella directive. The aim of the

pCRD was to eradicate inconsistencies and fragmentation that had arisen at

national level as a result of patchwork implemention of rules based on

minimum requirements. However, due to criticism of the initial proposal of

2008,13 the Directive has been rigorously revised and the version approved

by the European Parliament (23 June 2011) and adopted by the Council (10

October 2011) now differs significantly from the initial proposal.

The C RD must be clear, coheren t and sufficient in nature in order to

increase consumer confidence, especially since consumer confidence is at an

all time low due to the current economic climate. Viviane Reding, the then

EU Commissioner for Information Society and Media, stated that Europe’s

digital economy has tremendous potential to generate huge revenues across

all sectors and could potentially lift Europe out of the economic crisis. 14A

9 Council Directive 93/13/EEC of 5 April 1993 on Unfair Terms in Consumer Contracts

[1993] O.J. L095/29

10 Directive 99/44/EC of the European Parliament and of the Council of 25 May 1999 on

Certain Aspects of Consumer Sales and Associated Guarantees [1999] O.J. L171/12

11 Council Directive 85/577/EEC of 20 December 1985 to Protect Consumers in

Respect of Contracts Negotiated Away From Business Premises [1985] O.J. L372/31

12 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 [1997] O.J. L144/19

13 Sales Law Review Group, Po sition Paper on the Proposal for a Directive of the

European Parliament and of the Council on Consumer Rights, 2009 available at

http://www.djei.ie/publication s/commerce/2009/slrgcr dpositionpaper.pdf [Accessed

12 March 2012]

14 Press Release, “Digital Economy Can Lift Europe out of Crisis, Says Commission

Effective Protection for the E-Consumer 87

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