The Consumers on the New Marketplace: Novelties in the Protection of Consumers in Consumer Contracts

Yeni Pazar Yerinde Tüketici: Tüketici Sözleşmelerinde Tüketicilerin Korunmasındaki Yenilikler

Neda ZDRAVEVA

Regardless of the marketplace, being physical or online one, the position of the consumer remains the same - it is the weaker party to the contract due to their lesser bargaining powers and the lack of knowledge, as established by the case-law of the Curt of Justice of the European Union. The rules of the market should provide that the disproportionality of the information that the trader and consumer have is balanced by protection rules that provide the consumer adequate remedies in particular in the digital market shaped by the fast technological developments. In 2019 the consumer law of the European Union has been significantly changed by three new directives that set (new) rules on the protection of consumers in contracts for supply of goods and services including digital content and digital services. The article examines the scope of these directives and the legislative approach as well as the specific novelties they introduce with regard to the protection of consumers in consumer contracts.

Sale of Goods, Digital Content, Digital Services, Lack of Conformity, Remedies.

Fiziki ya da çevrimiçi olsun, pazar yerinden bağımsız olarak tüketicinin konumu aynıdır; Avrupa Birliği Adalet Divanı içtihadınca da ortaya konduğu üzere, pazarlık gücünün zayıflığı ve bilgi eksikliği dolayısıyla sözleşmenin zayıf tarafıdır. Piyasa kuralları, özellikle hızlı teknolojik gelişmelerle şekillenen dijital pazarda, sağlayıcı/satıcı ile tüketici arasındaki bilgi orantısızlığını dengeleyen nitelikte tüketiciye hukuki koruma sunan kuralları sağlamalıdır. Dijital içerik ve dijital hizmetleri de kapsayan mal ve hizmetlerin sağlanmasını konu edinen sözleşmelerde tüketicinin korunmasına dair (yeni) kurallar koyan üç yeni yönerge ile Avrupa Birliği tüketici hukuku, 2019’da önemli ölçüde değişmiştir. Bu çalışma, söz konusu yönergelerin kapsamını, yasama yaklaşımını ve tüketici sözleşmelerinde tüketicinin korunması konusunda getirdiği özellikli yenilikleri incelemektedir.

Malların Satışı, Dijital İçerik, Dijital Hizmetler, Uygunluğun Bulunmaması, Hukuki Korumalar.

1. The Marketplace and the Legislative Approach

The CoViD-19 global crisis accelerated the process of changes in the market. The supermarkets’ racks have been replaced by pixels, shopping charts by icons and money by data. The ‘goods’ available on the market change - the digital become the new consumers’ demand. The behaviour of the consumers may have changed but their need to be protected remains the same, if not arises. The information disbalance between the trader and the consumer increases, as the technological advancements do not always mean a level of technological literacy that supports the process. The consumer protection legislation reacts to these changes. The law does not develop so fast as to ‘predict’ them. Regardless of the marketplace, being physical or online, the position of the consumer remains the same - it is the weaker party to the contract due to their lesser bargaining powers and the lack of knowledge, as established by the case-law of the Curt of Justice of the European Union.¹ The rules of the market should provide that the disproportionality of the information that the trader and consumer have is balanced by protection rules that provide the consumer adequate remedies in particular in the digital market shaped by the fast technological developments. It is considered that many problems can be solved by shaping the interpretation and application of the existing European and national rules according to the new needs of the ‘digital world’. However, when the developments are so ground-breaking that it is no longer possible to adapt existing legal rules to new circumstances it is necessary to reshape them. In doing so, the legislator should draw up new rules having adequately weighing all the relevant elements of the new market relationships, having in mind that rules that are too stringent and limiting may have a disruptive effect on technological progress and on economic developments.²

The year of 2021 is the year when a new set of rules in consumer protection will become applicable. In 2019, three new directives have been enacted so as to enable legal environment for proper function of the single market that is becoming more and more digital.

Directive (EU) 2019/770 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the supply of digital content and digital services,³ provides rules on certain requirements concerning contracts between traders and consumers for the supply of digital content or digital services, in particular, rules on: - the conformity of digital content or a digital service with the contract, - remedies in the event of a lack of such conformity or a failure to supply, and the modalities for the exercise of those remedies, and - the modification of digital content or a digital service. Directive (EU) 2019/771 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the sale of goods, amending Regulation (EU) 2017/2394 and Directive 2009/22/EC, and repealing Directive 1999/44/EC⁴ puts forward new rules on the consumer sales and related guarantees (regulated by Directive 1999/44/EC) in particular having in mind the digitalization of the market. Both directives are maximum harmonization directives that provide an option for application of own rules of the states only in the core issues of the contract law. Both of the directives are to be transposed in the national legislation by June 2021 and t be applicable starting January 2022. Directive (EU) 2019/2161 of the European Parliament and of the Council of 27 November 2019 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU of the European Parliament and of the Council as regards the better enforcement and modernization of Union consumer protection rules⁵ significantly changes the Consumers’ Acquis. The directive modifies and amends the existing rules on unfair contract terms (Directive 93/13/EEC),⁶ unfair commercial practices (Directive 2005/29/EC),⁷ price indications (Directive 98/6/EC)⁸ and consumer rights (Directive 2011/83/EU).⁹ The objective of the directive is better enforcement and modernization of consumer protection law, dealing with the issues of price indication, rights of consumers in particular in distance sales and unfair business-to-consumer commercial practices in the internal market. The Directive explicitly recognizes that these objectives ‘cannot be sufficiently achieved by the Member States but can rather, by reason of the Union-wide character of the problem, be better achieved at Union level’, so it adopts the specific measures. Again, the leverage of the states to provide for their own rules is rather low.

The DCD and the SGD came as a result of the efforts of the European Union to develop harmonised rules aimed to enable the potentials of the digital single market in the EU to be realized to full extent. In 2015 the European Commission proposed a directive on contracts for the supply of digital content the proposals for the directives¹⁰ were part of the Commission’s Digital Single Market Strategy, aiming to “reduce barriers and offer more opportunities for consumers and businesses to contract across European Union borders in a legal, safe, secure and affordable way.”¹¹ The proposals were also consistent with the Commission’s 2018 New Deal for Consumers strategy,¹² where the importance of these proposals “to provide consumers with clear and effective rights when accessing digital content and to ensure that both consumers and businesses can rely on uniform and effective rules across Europe” was emphasised and both proposals were expressly acknowledged as “a central element of the Digital Single Market strategy aiming to modernise consumer contract rules”. Both of the proposals, aiming for maximum harmonisation, sought to ensure that traders in the Internal Market are not deterred from cross-border trading by differences in mandatory national contract laws, while providing consumers with a higher level of protection. In addition to this, there were discussions that the main reason for the directives was in fact “the stimulation of the EU economy, while the creation of consumer trust in the internal market is being used as a means to achieve growth.”¹³ The deliberation on the directives took almost four years. The regulation of the matters covered by the DCD was a novelty, while the proposal on the Sale of Goods Directive intervened by improving the rules on a matter already regulated in the consumer contract law of the EU and the member states.¹⁴ The fact that the scope of the proposal Directive on Online Sale of Goods included only on the distance sales contracts made the whole system seem unworkable, so it was argued that “the Member States will only agree to adopt the proposal Directive on Online Sale of Goods if its scope is enlarged to include also on- and off-premises contracts”.¹⁵ Finally, in January 2019, the Council and Parliament agreed on “an ambitious yet balanced compromise between guaranteeing rights for European consumers while creating new business opportunities for EU companies. Consumers will now be better protected when they buy a shirt in a shop, a smart fridge online or download music. Companies will be able to cut red tape when they want to expand and start selling across the Union.”.¹⁶ In May 2019 both of the directives were adopted.

The Directive (EU) 2019/2161 is a result of the efforts of the European Commission to improve EU consumer law through its Regulatory Fitness and Performance Programme (REFIT). Within the REFIT, consumer and marketing law assessment was carried out by the Commission in 2016 and 2017, that concluded that ‘the effectiveness of Union consumer protection law is compromised by a lack of awareness among both traders and consumers and that existing means of redress could be taken advantage of more often’.¹⁷ The MED most significantly affects the rules on unfair commercial practices. The aim is to ensure that there is a clear framework for individual remedies that could provide for private enforcement as well. In addition, the Enforcement and Modernization Directive provides access to compensation for damage and, where relevant, a price reduction or termination of the contract, in a proportionate and effective manner.¹⁸ Further the directive broadens the notion of product, that now includes not only goods and services, but also digital service and digital content,¹⁹ adequate to the needs of the digital market and to the rules introduced by the Digital Content and Digital Services Directive and the Sale of Goods Directive. The purpose of the directive to provide better enforcement and modernisation of consumer law. This is seen through “First, the Directive aims to strengthen and further develop the existing common European enforcement mechanism of consumer law, which had previously demonstrated a number of shortcomings. Second, the Directive adapts the existing legislative framework to adequately address the challenges to consumer law brought about by new technologies, such as the development of online platforms or trader’s increasing engagement in new forms of unfair commercial practices, typical for the digital market.”²⁰

The three directives are maximum harmonisation directives. This approach is significantly different to the ones existing in the legislation that is affected by all of them. While only in the Directive 2011/83/EU had the targeted harmonisation approach - maximum harmonisation only where necessary for the objectives of the directive, the others were minimum harmonisation directives allowing the member states to introduce or maintain more stringent provisions for the purpose of the consumer protection. This, in course of the years, resulted with differences in the legislative framework that were hindering the efforts of the internal market. Thus, maximum harmonisation was provided as a principal rule. Still, there are certain exceptions to this. The DCD and the SGD do not in interfere with the core national rules related to the formation and validity of the contract as well as the right to compensation for damage as a remedy for lack of conformity²¹ including time limits for liability for lack of conformity²² and notification requirement.²³ The EMD is a maximum harmonisation directive, but when it comes to the liability for unfair commercial practices it provides for the possibility the member states to maintain or introduce rights to other remedies such as repair or replacement for consumers harmed by unfair commercial practices in order to ensure full removal of the effects of such practices. Member States are also not prevented from determining conditions for the application and effects of remedies for consumers.²⁴

2. The New General Rules on Contracts

The online marketplace is defined as a ‘service using software, including a website, part of a website or an application, operated by or on behalf of a trader which allows consumers to conclude distance contracts with other traders or consumers.’.²⁵ The definition is made in a similar manner as in Regulation (EU) No 524/2013²⁶ and Directive (EU) 2016/1148²⁷ but updated and rendered more technologically neutral in order to cover new technologies.²⁸ The definition of ‘online marketplace’ is relevant in reference to the unfair commercial practices and the consumer rights, for the information consumers using online marketplaces should receive, whether they enter into a contract with a trader or a non-trader, such as another consumer. Such information is of essence for the consumer so as to be able to establish if they enter in B2C contract or C2C contract as the consumer protection legislation of the EU does not provide protection mechanisms for the later and they will relay in the national contract law. The confirmation of the status of the trader is not an obligation of the providers, defined as ‘any trader which provides an online marketplace to consumers’.²⁹ They are obliged to inform consumers whether the third party offering goods, services or digital content is a trader or non-trader, however based on the declaration made to them by the third party.³⁰ When the third party declares its status to be that of a non-trader, providers of online marketplaces should by means of a short statement inform the consumers that the consumer rights as provided in the EU protection law do not apply to the particular contract concluded between the non-trader and the consumer. In doing so, the providers are not required to list the (non-)applicable rights. In addition, the consumers should be informed on the relation between the third party (trader or not-trader) and the provider i.e., how obligations related to the contract are shared between them. Such information should be provided in in a clear and comprehensible manner, and provision of the standard terms and conditions or similar contractual documents are not considered to be sufficient for this requirement to be met. The information requirements for providers of online marketplaces should be proportionate, so as to provide for an adequate balance between a high level of consumer protection and the competitiveness of providers of online marketplaces. Still, the consumer information requirements provided for in Directive 2011/83/EU (in particular in Article 6(1)) being a cornerstone of the concept for strengthening the consumers’ position, are not affected. The provider of the online marketplace could indicate that a third-party trader is solely responsible for ensuring consumer rights, or describe its own specific responsibilities where that provider assumes responsibility for certain aspects of the contract.

In defining the trader³¹ there are no new developments in the exiting EU consumer law introduced by the directives. However, the Directive (EU) 2019/770 and Directive (EU) 2019/771 introduces the possibility the digital platform providers to be considered traders if they act for purposes relating to their own business and as the direct contractual partner of the consumer for the supply of digital content or a digital service, stipulating that “Member States should remain free to extend the application of this Directive to platform providers that do not fulfil the requirements for being considered a trader”.³²

Directive (EU) 2019/770, Directive (EU) 2019/771 and Directive (EU) 2019/2161 do not introduce novelties when it comes to the definition of ‘consumer’ in the EU Law. The notion of ‘consumer’ includes “any natural person who, in relation to contracts covered by this Directive, is acting for purposes which are outside that person’s trade, business, craft, or profession”.³³ However, the directives provide that the national legislation may extend the protection afforded by the directives to other persons who are not qualified as consumers according to the definition, such as non-governmental organisations, start-ups or SMEs.³⁴ When it comes to dual-purpose contacts and the established criterion on predominant use.³⁵ The directives provide that “Member States ... [are] free to determine, ... where the contract is concluded for purposes that are partly within and partly outside the person’s trade, and where the trade purpose is so limited as not to be predominant in the overall context of the contract, whether and under which conditions that person should also be considered a consumer”.³⁶ Compared to this, Directive 2011/83/EU always considers these persons as consumers.³⁷ This position of the DCD and SGD regarding the dual-purpose contracts, opens the possibility to different approaches and cases where a same person has different position in different Members States.