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Digital Single Market: The Evidence

EU rules on online and digital purchases (official)

In a DSM, the rights and obligations arising between e-commerce traders and their customers should be governed by a common set of rules and principles. EU law provides protection for EU consumers, irrespective of how goods are purchased. Harmonized EU legislation ensures safety of the goods being placed on the market. Moreover, the Consumer Rights Directive (2011/83/EC) has fully harmonised certain aspects of consumer and contract law applicable to online sales to consumers, such as pre-contractual information the customer should receive and the right of withdrawal from the contract. However, in other areas there are only minimum EU rules, which Member States may supplement with stricter requirements. For example, the Consumer Sales Directive (1999/44/EC) has set a minimum level of harmonisation for the remedies available when tangible goods are not in conformity with the contract of sale. Member States can also go beyond the requirements of the Unfair Contract Terms Directive (93/13/EEC), which provides protection against unfair clauses which have not been individually negotiated in B2C contracts relating to both tangible goods and digital content products.

There is also sector specific European legislation that protects consumers when buying specific products online. For instance, in the area of consumer credits, borrowers have the right to obtain standardised advertisements, pre-contractual and contractual information. If the medium does not enable full information, the creditors have to provide full information immediately after the conclusion of the contract. More generally, in all cases of distance marketing of financial services, consumers have the right to receive information about the identity of the trader and about the features of the product sold before the contract is concluded, and then have the right to withdraw from the contract during 14 days after its conclusion (or after reception of terms and conditions).

For digital content products (e.g. web-streamed music or movies or sport events broadcasted over the internet) national contract laws apply, but the relevant rights and obligations as well as the remedies differ. This is not only because the different national laws diverge, but also because the relevant contracts for the supply (e.g. download or streaming) of such products are qualified differently in the Member States. Some Member States are applying the rules on service contracts, other those on rental contracts and again others those on sales contracts. This complex legal situation leads to real or perceived legal uncertainty which further discourages businesses from going cross-border. In addition, there is a discernible risk that specific, divergent national laws are appearing. For instance, the United Kingdom recently proposed new rules on the quality of and the corresponding remedies for all digital content products. The Netherlands also proposed rules on conformity and remedies, but intends to apply these rules only to certain categories of digital content, thereby excluding on-line services such as news- and movie subscriptions and sport events.

As the situation now stands, while online traders may choose the contract law of their own Member State to apply in B2C transactions, when a product or service is targeted to a consumer in another Member State, the mandatory protections afforded to that consumer by their national law must be respected. Also, in case of conflict in such situations, the consumer may go to the courts of their country of domicile. In practice, traders appear to have difficulties in understanding how the existing rules apply in a digital environment. In addition, consumers of digital content products are often faced with unbalanced contracts. Digital content products are sold as off-the-shelf products on the basis of non-negotiable contracts, i.e. the user can influence neither the product features not the contract clauses. These existing contracts contain many contract clauses which could not be subject to challenge in court on the basis of the UCTD as they may be found to be below the level of the “unfairness threshold” of the UCTD. Nevertheless they put potential risks and losses on the shoulders of the user and favor unilaterally the supplier. They thereby increase the users’ detriment and reduce their trust.