Consumer Rights Directive

August 2011 | April 2011 | February 2011 | December 2010 | May 2010 | November 2008

Update August 2011

The new directive covers mainly distance and off-premises contracts and focusses especially on online shopping for goods and digital content (such as music and video downloads). Tourism and leisure services are covered by parts of it. When implemented, it will replace the current distance-selling directive.

What the new directive means for IAAPA Europe members

No right of withdrawal for consumers from accommodation bookings

Tourism services continue to be exempt from consumers' right of withdrawal from contracts. The relevant contracts are those covering

• "the provision of accommodation other than for residential purpose, […], car rental services, catering or services related to leisure activities if the contract provides for a specific date or period of performance".

This is welcome recognition of the perishable nature of accommodation bookings and vindicates the representations made to MEPs by IAAPA/NET during parliamentary scrutiny of the draft directive.

Information requirements for distance contracts

Accommodation bookings will be covered by the pre-contractual information requirements applying to distance contracts. This is new.

These requirements will include the requirement to provide traders' name and contact details and pricing information. Others relating to the ordering and delivery of goods will clearly not apply.

Note that there is a requirement for the information to be provided "in plain and intelligible language" and for consumers to be given written confirmation of the contract they are entering into "before the performance of the service begins".

Telephone bookings

Accommodation businesses taking bookings over the phone may, in future, be required by law to provide their customers with written confirmation of their bookings. Whilst this will not cause any difficulties in processing advance bookings, it could affect businesses' ability to take late/last-minute reservations.

This development is a direct result of bringing accommodation bookings within the scope of the directive's pre-contractual information requirements.

Yet the directive is not clear on the issue and seems to give member states the power to decide their own policy, as the clause below shows:

"Where a distance contract is to be concluded by telephone, member states may provide that the trader has to confirm the offer to the consumer who is committed only once he has signed the offer or has sent his written consent. Member states may also provide that such confirmations have to be made on a durable medium."

[By 'durable medium' is meant paper or any form of electronic mechanism that allows the storage of information.]

Package travel

The directive will not apply to contracts covered by the package travel directive.

Using credit cards

Traders will not be able to charge consumers more for paying by credit card (or other payment methods) than the actual cost of providing that payment facility.

Tick-boxes on websites

Visitor attractions taking bookings online and offering customers the opportunity to buy additional services (such as insurance) through their websites will have to abide by new rules governing the use of 'tick-boxes'. These are boxes in which customers use ticks [√] or crosses [x] to indicate whether or not they require the services being offered.

Sometimes businesses place ticks/crosses in the boxes, thus obliging the customers to remove them if they do not want the extra services. This practice will be banned by the new directive. All tick-boxes will have to be left empty for completion by the customer.

Update April 2011

At a plenary session on 24th March, the European Parliament agreed on the final text of its report on the EC's proposed consumer rights directive.

Its recommendations for accommodation, leisure, transport and catering bookings made at a distance are as follows:

• No right of withdrawal for consumers [as now].

• No requirement for written confirmation of telephone bookings by the trader or for written acceptance by the consumer [as now].

• Bookings made in other ways (including on the internet) will, however, require written confirmation 'on a durable medium'. Websites will have to be designed in such a way that a binding contract cannot be entered into until the consumer has confirmed that he has read and understood the information that the directive requires the trader to provide [new requirement].

• This information includes the total price of booking, payment arrangements, address for making complaints etc.. It will have to be provided in all cases, irrespective of booking method.

• Distance contracts covered by the package travel directive will have to comply with its requirements; they will not be covered by the provisions of the consumer rights directive on information and rights of withdrawal from distance contracts. In other words, the provisions of the package travel directive will take precedence over those in the consumer rights directive.

The Parliament will now begin negotiations with the Council in a bid to reach early agreement on the final text of the directive. This could be tricky as the Council has already expressed its wish to delete half of the original EC proposal (including the section on unfair contract terms) and limit the directive to dealing with distance and off-premises contracts.

However, there appears to be no appetite in either institution for prolonging the scrutiny process and noises have been made that suggest a rapprochement between the EP and the Council. There is tentative talk of political agreement in the Council on 30th May.

Update February 2011

Decision time approaches on the draft text published by the Commission.

After nearly two years of scrutiny and debate, the Parliament's Internal Market and Consumer Protection (IMCO) Committee will be voting on 1st February on the draft report written by Andreas Schwab MEP - and on the nearly 1600 amendments that have been proposed.

If the committee adopts Mr Schwab's report, the document will be debated by a plenary session of the Parliament, probably in March.

Meanwhile, in January, member states signalled a radical change of approach to the Commission proposal. They agreed that the directive should focus exclusively on distance and off-premises contracts and they proposed deleting two chapters, including the one on unfair contract terms. This move was criticised by consumer representatives in Brussels. It remains to be seen how the Parliament reacts. At present, it is going ahead with plans to vote on the whole EC proposal.

IAAPA concerns

As we have reported previously, probably the single most important issue for the attractions sector is the rules governing consumers' right of withdrawal from contracts. Currently, consumers do not have the right to withdraw from bookings of holiday accommodation, transport services or leisure services. As the preamble to the EC's draft proposal says:

"The application of a right of withdrawal may be inappropriate for certain services relating to accommodation, transport and leisure. The conclusion of the corresponding contracts implies the setting aside of capacity which, if a right of withdrawal were introduced, the trader might find difficult to fill. Therefore these distance contracts should not be covered by the provisions on [… ] the right of withdrawal."

This position is supported by both the Council and the Parliament's rapporteur, Mr Schwab, and recognises the special circumstances of such services.

In spite of this, a number of MEPs have tabled amendments going against their rapporteur's recommendation and giving consumers the right of withdrawal from such bookings. IAAPA Europe is working with its colleagues in NET to counter this threat and has signed a letter from all NET members urging members of the IMCO committee to support Mr Schwab and maintain the status quo - and explaining why it is important to do so.

The NET letter also supports:

- an additional exemption for off-premises contracts (a particular concern of our colleagues in ECTAA, the association representing travel agents and tour operators in Europe), and

- amendments which ensure that the package travel directive takes precedence over this new consumer rights directive in the package travel market (the package travel directive is itself likely to be revised in the next year or two).

We will know soon how IMCO members voted. You can read the NET letter here.

Update December 2010
Discussions continue on the European Commission's 2008 proposal for a single new directive to replace four existing directives on distance selling, unfair contract terms, sales (of consumer goods) and guarantees, and doorstep selling. The aim is to simplify, strengthen and harmonise the consumer protection these offer across the EU.eu-flag

Progress is slow, but the debate is nearing a critical stage in both the European Parliament and the Council. Current forecasts show that:

• the Parliament is expected to complete its first reading of the text in March 2011. The Internal Market and Consumer Protection Committee (IMCO) is currently drafting the Parliament's opinion. A German MEP, Andreas Schwab, is the rapporteur co-ordinating the report.

• national ministers meeting in the Employment, Social Policy, Health and Consumer Affairs Council are expected to debate the text in a few days' time. They will inevitably continue this debate in 2011 once the parliament has completed its first reading.

Given the complexity of the issues being discussed, there is likely to be a second reading of the draft directive in 2011. Final agreement and implementation is still some way off.

Issues of interest to IAAPA members
Holiday accommodation bookings: under the existing distance-selling directive, these are excluded from the rules governing consumers' right of withdrawal from contracts. If the current thinking in the Council and in the Parliament's draft report is maintained, this exclusion will continue under the new directive. This is good news. However:

• Consumer groups are known to be unhappy about consumers not having the right to withdraw from contracts for holiday accommodation. Several MEPs have recently proposed amendments to the draft IMCO report that would overturn the existing rules (and the current draft of the report) to give them this right. IAAPA Europe is working with its NET colleagues to persuade committee members not to give consumers the right to withdraw from such contracts.The committee is due to vote on the report at the end of January; the Parliament as a whole votes in early March.

• Such bookings may no longer be exempt from the general information and contractual requirements set for distance and off-premises contracts. These requirements cover details such as information on complaints procedures and the need to draft contracts in "plain and intelligible language".

Contracts governing the sales of goods: Goods will have to be delivered within 30 days of contracts being signed and there will be an EU-wide right to refund in the event of late delivery or non-delivery.

Contract terms: the draft directive includes a list of contract terms that would be regarded as unfair. The draft parliamentary report proposes several more.

Comment
There are good reasons for the slow progress of the debate on this draft directive. One of these is the complexity of the text and the issues raised. This is proving to be rather more than just merging four existing directives into one.

Much of the complexity is to do with the legal language used and whether or not the text can successfully realise its authors' ambitions to harmonise consumer law across Europe. There is also concern that the proposal, in its current form, would lower the level of consumer protection in some member states of the EU.

IAAPA Europe will continue to follow developments, keeping a close eye especially on developments that could affect consumers' right of withdrawal from accommodation bookings.

Update May 2010
NET (the Network of European private entrepreneurs in the Tourism sector) of which IAAPA Europe is a member, has created a position paper on the European Commission’s proposal for a new Directive on consumer rights. You can download the position paper here.

Update November 2008
On October 8th, 2008 The European Commission proposed a new directive aiming at making it easier for consumers purchasing products and services. The new proposal will guarantee consumers clear information on price and additional charges and fees before they sign a contract. It will strengthen consumer protection against late delivery and non delivery, as well as setting out EU-wide consumer rights on issues from cooling off periods, returns, refunds, repairs and guarantees and unfair contract term.

The proposed Consumer Rights Directive simplifies 4 existing EU consumer rights directives - Unfair contract terms, Sales and Guarantees, Distance Selling and Doorstep Selling - into one set of rules. It targets e-commerce as part of a wide ranging overhaul and up grading of existing EU consumer rights. The aim is to boost consumer confidence as well as cut red tape.

The new Consumer Rights Directive sets out a standard set of consumer contract terms concerning sales of goods and services from business-to-consumer (B2C). Generally all contracts are covered, i.e. purchases made in a shop, at a distance or away from business premises, taking into account new technology and sales methods. Some of the main elements of the Directive are:

Pre-contractual information. The Directive obliges the trader to provide the consumer with a clear set of information requirements, for all consumer contracts so the consumer can make an informed choice, for example, the main characteristics of the product, geographical address and identify of the trader, the price inclusive of taxes, all additional freight, delivery or postal charges.

Rules on delivery and passing of risk to the consumer. The trader has a maximum of 30 calendar days to deliver the goods to the consumer from signing the contract. The trader bears the risk and cost of deterioration, loss of the good until the moment the consumer receives the goods. For late or non delivery, the consumer will have a right to a refund as soon as possible and no later than 7 days from the date of delivery.

Cooling off periods (Internet sales, mobile phone, catalogue and pressure sales). An EU wide cooling off period of 14 calendar days when you can change your mind, hereunder an introduction of an easy-to-use standard withdrawal form.

Repairs, replacement, guarantees. There will be one and the same standard set of remedies available to all consumers who have bought a faulty product (i.e. repair or replacement in the first place, followed by the reduction of the price or the reimbursement of money).

Unfair Contract Terms. A new black list of unfair contract terms which are prohibited across the EU in all cases and an EU wide grey list of contract terms deemed to be unfair if the trader does not prove the contrary.

Online auctions. The Directive requires auctions, including e-auctions, to meet the standard information obligations.

Pressure Selling. Protection against pressure selling - sales negotiated away from business premises / "direct selling" - is significantly strengthened with a broader new definition of direct selling contracts and other steps to close loopholes.

The Contract Rights Directive must be approved by the European Parliament and EU Governments in the Council of Ministers before coming into law. You can read more about the proposal here.