|The European Commission frames a number of current and new programs as a paradigm shift in consumer rights in the EU.|
The European Commission (EC) has published its New Consumer Agenda that envisions nothing less than a remaking of the European Union’s (EU) approach to a number of key realms, including the digital world. If enacted, these sweeping reforms could drive change in other nations the same the General Data Protection Regulation (GDPR) has informed revisions of data protection regimes around the globe. Some of the proposed changes have been rumored for some time, some are already in progress, and some are new. Nonetheless, the EC has repackaged a number of digital initiatives under the umbrella of the New Consumer Agenda in its document detailing the provisions. Incidentally, the document serves as a good crib sheet to get up to speed on a number of EU’s digital programs and policy goals. Having said that, much of the New Consumer Agenda may prove aspirational, for there are a number of moving pieces and stakeholders in making policy in the EU, and this can play out over a number of years (e.g., the plans to revise the e-Privacy Directive). So, inclusion in this policy superstructure does not guarantee enactment, or if changes are made, they may be years in coming.
The EC stated
The New Consumer Agenda (the Agenda) presents a vision for EU consumer policy from 2020 to 2025, building on the 2012 Consumer Agenda (which expires in 2020) and the 2018 New Deal for Consumers. It also aims to address consumers’ immediate needs in the face of the ongoing COVID-19 pandemic and to increase their resilience. The pandemic has raised significant challenges affecting the daily lives of consumers, in particular in relation to the availability and accessibility of products and services, as well as travel within, and to and from the EU.
The EC identified the five prongs of the Agenda and given the emphasis the EC’s new leadership has placed on digital matters, one of them is entitled “digital transformation.” The Agenda is meant to work in unison with previously announced and still to be implemented major policy initiatives like the European Green Deal, the Circular Economy Action Plan, and the Communication on shaping the EU’s digital future.
The EC suggests that current EU law and regulation may address what some consider among the worst abuses of the digital age:
Commercial practices that disregard consumers’ right to make an informed choice, abuse their behavioural biases, or distort their decision-making processes, must be tackled. These practices include the use of ‘dark’ patterns, certain personalisation practices often based on profiling, hidden advertising, fraud, false or misleading information and manipulated consumer reviews. Additional guidance is needed on the applicability of consumer law instruments such as the Unfair Commercial Practices Directive and Consumer Rights Directive to these practices. Ultimately, consumers should benefit from a comparable level of protection and fairness online as they enjoy offline.
The EC seems to be suggesting that should those directives be found wanting, they could be revised and expanded to adequately protect EU citizens and residents, at least in the view of the EC.
The EC made reference to two long anticipated pieces of legislation expected new week in draft form:
- First, the Commission’s upcoming proposal for a new Digital Services Act (DSA), will aim to define new and enhanced responsibilities and reinforce the accountability of online intermediaries and platforms. The DSA will ensure that consumers are protected effectively against illegal products, content and activities on online platforms as they are offline.
- Second, to address the problems arising in digital markets prone to market failures, such as the gatekeeper power of certain digital platforms, the Commission is planning to present also a Digital Markets Act. It would combine the ex ante regulation of digital platforms having the characteristics of gatekeepers with a dynamic market investigation framework to examine digital markets prone to market failures. Consumers will be the final beneficiaries of fairer and more contestable digital markets, including lower prices, better and new services and greater choice.
Regarding artificial intelligence (AI), the EC previewed its next steps on putting in place a regulatory structure to regulate the new technology in the consumer space, including extra protection and an appropriate civil liability scheme:
- a proposal to guarantee a high level of protection of consumer interest and the protection of fundamental rights, in turn building the trust necessary for the societal uptake of AI;
- as regards civil liability, measures to ensure that victims of damage caused by AI applications have the same level of protection in practice as victims of damage caused by other products or services.
The EC is also floating the idea of revising other consumer protection directives such as “the Machinery Directive, the adoption of delegated acts under the Radio Equipment Directive, and the revision of the General Product Safety Directive.” The EC aspires to refresh the General Product Safety Directive, “which provides the legal framework for the safety of non-food consumer products” to account for “AI-powered products and connected devices,” the latter of which may be a reference to Internet of Things (IOT). The EC also remarked on the consumer safety issues posed by a regulatory system that cannot police items sold online that originate from outside the EU, which often raises product safety issues. The EC vowed that “[t]he forthcoming proposal for a revision of the General Product Safety Directive, foreseen for 2021, should provide a solid response to these increasing challenges.”
The EC also referred to an existing lawmaking that would allow EU citizens and residents to use “a universally accepted public electronic identity.” This new system would allow people to “to manage the access and use of their data in a fully controlled and secure manner” “based on the consumers’ choice, their consent and the guarantee that their privacy is fully respected in line with the General Data Protection Regulation (GDPR).”
The EC is addressing another facet of data protection, privacy, and consumers’ rights: data portability. The Commission stated that the “European Strategy for Data aims to facilitate the effective individuals’ right to data portability under the GDPR…[that] has clear potential to put individuals at the centre of the data economy by enabling them to switch between service providers, combine services, use other innovative services and choose the services that offer most data protection.” The EC claimed this strategy “will also drive the creation of a genuine single market for data and the creation of common European data spaces.”
The Commission made note of its Geo-blocking Regulation to address the practice of discriminating “between EU consumers to segment markets along national borders.”
The EC also described laws and regulations to revamp the digital facets of the financial services sector that “will improve consumer protection” in new areas of FinTech and other new realms.
The EC is touting how a previously announced proposal to foster the use of recycled materials and products fits into the Consumer Agenda. The EC stated “the new Circular Economy Action Plan sets out a number of specific initiatives to fight early obsolescence and promote durability, recyclability, reparability, and accessibility of products, and to support action by business.” The EC all but said new regulations are coming to address electronic waste and products designed not to be repairable. The EC noted “[a]dditional regulatory and non- regulatory measures will be needed to address specific groups of goods and services, such as ICT, electronics or textile, and packaging…[f]or instance:
- The Circular Electronics Initiative aims to ensure that electronic devices are designed for durability, maintenance, repair, disassembly, dismantling, reuse and recycling, and that consumers have a ‘right to repair’ them including software updates.
- The initiative on a common charger for mobile phones and other portable devices, aims to increase consumer convenience and reduce material use and e-waste associated with production and disposal of this particular item used daily by the vast majority of consumers.”
The EC discussed other aspects of consumer protection with implications for technology policy. The EC stated
The new Consumer Protection Cooperation (CPC) Regulation which entered into force in January 2020, provides a stronger basis for joint EU action. It strengthens enforcement authorities’ online capacity, cooperation mechanisms and intelligence gathering system to address large-scale infringements of EU consumer law, ensure consistent level of consumer protection and offer a ‘one-stop-shop’ for businesses. The Commission will not hesitate to make use of its powers under the Regulation to trigger coordinated enforcement actions on EU-wide issues where necessary.
The EC is proposing to address algorithmic biases and how technology companies are exploiting certain human behavioral inclinations to drive engagement:
- The risk of discrimination is at times exacerbated by algorithms used by certain goods and services providers, and which may be formulated with certain biases often resulting from pre-existing cultural or social expectations. Whereas this may lead to discrimination among consumers generally, it often affects certain groups more than others, and in particular people from minority ethnic or racial backgrounds. The upcoming proposal for a horizontal legislative framework on Artificial Intelligence will aim to specifically address how to limit risks of bias and discrimination from being built into algorithmic systems.
- Lastly, evidence from behavioural economics shows that the behaviours of consumers are often affected by cognitive biases, especially online, which can be exploited by traders for commercial purposes. Such new forms of risks can affect virtually all consumers. Transparency obligations are certainly important in tackling information asymmetries (as also mentioned above in the context of the digital transformation), but further assessment is required to determine the need for additional measures to address this dynamic form of vulnerability.
The EC acknowledged the international nature of commerce and vowed to take certain steps to ensure the products, goods, and services entering the EU are safe. Notably, the EC is aiming to develop “an action plan with China for strengthened product safety cooperation for products sold online.”
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