E-commerce “Sweep” Finds Large Non-compliance with Providing Information on Basic EU Consumer Rights

On 31 January 2020, the European Commission published the results of an EU-wide screening (a so-called “sweep”) of nearly 500 e-shops selling, among other items, clothing, footwear, furniture, household goods and electric appliances. It was found that two-thirds of the screened websites did not comply with basic EU consumer rights when providing information to consumers. As Regulation 2017/2394 (the “Consumer Protection Cooperation Regulation”) has entered into force on 17 January 2020, granting new investigative and enforcement powers to national consumer protection authorities, the Commission is advising traders to ensure that their online information policy is up-to-date with EU law requirements.

Hong Kong traders who conduct e-ecommerce within the EU will want to take note of a heightened focus by the Commission on the enforcement of consumer protection laws as well as the recent coming into force of the Consumer Protection Cooperation Regulation. This Regulation grants further monitoring and enforcement powers to national authorities responsible for the enforcement of EU consumer protection laws.

The EU-wide sweep covered 27 countries and was carried out by the Consumer Protection Cooperation Network which is a network of authorities responsible for enforcing EU consumer laws to protect consumer interests in all EU countries plus Iceland, Liechtenstein and Norway. In response to the findings of the sweep, Commissioner for Justice Didier Reynders stated that “[i]t is not acceptable that European consumers are not being properly informed of their rights relating to online deliveries in 2 out of 3 web shops. EU rights, such as the right to return goods within 14 days, boost consumers' online trust. They should not be buried in small print”. Commissioner Reynders further emphasised that the “EU Consumer Rights Directive (which applies to all contracts concluded between a “consumer” and a “trader”) ensures that while making an online purchase every consumer has the right to receive clear, correct and comprehensible information about delivery arrangements, withdrawal rights and the legal guarantee in case the product is faulty.”

Some of the key results of the screening, showing irregularities with EU law, include websites which did not do the following:

• inform consumers about how to withdraw from a contract. This information must be presented in a clear and understandable manner, specifying the consumer’s right to withdraw within 14 days of receiving the item without the need to give a justification;

• clearly express the time-limit to return the item, i.e., within 14 days from the moment the consumer has notified the trader of their intention to withdraw;

• show an accurate price, as the initial price shown did not contain delivery, postal or other possible additional charges or information about the possibility of such charges;

• include an easily accessible link to the Online Dispute Resolution platform on their website, informing consumers of their possibilities in case of a dispute;

• inform consumers about the minimum two-year legal guarantee to have a good repaired, replaced or reimbursed in case it was faulty at the moment of delivery; and

• respect the Geo-blocking Regulation which allows consumers to shop from websites not delivering in their country of residence, provided they can get it delivered to an address in the country served by the trader i.e. the “shop like a local principle”.

Around 67% of the websites in the sweep were flagged for further investigation, and the flagged websites were spread out evenly across the categories of goods sold, including clothing apparel, household items and electric appliances. National authorities will now carry out an in-depth investigation of the irregularities found, and the traders will then be requested to correct their websites.

Hong Kong traders will want to be aware that national authorities, according to the Consumer Protection Cooperation Regulation, shall have the power to: access any relevant documents, data or information related to an infringement covered by the Regulation; carry out necessary on-site inspections; purchase goods or services as test purchases; adopt interim measures to avoid the risk of serious harm to consumers; obtain or accept commitments from the trader responsible for the infringement; and the power to bring about the cessation of infringements covered by the Regulation. Further, “where no other effective means are available to bring about the cessation … of the infringement covered by this Regulation”, the national authority shall have the power to: remove content or to restrict access to an online interface; order a hosting service provider to remove, disable or restrict access to an online interface; order domain registries or registrars to delete a fully qualified domain name; and impose penalties.

Moreover, Hong Kong traders should know that the powers of investigation and enforcement provided for in the Consumer Protection Cooperation Regulation are minimal powers and the Regulation is without prejudice to national laws providing for compensation to consumers or further enforcement actions against traders.

In short, Hong Kong traders will want to familiarise themselves with EU consumer protection laws given the focus of the Commission in the enforcement on these rules and the new powers given to national authorities to enforce these laws. Additionally, attention should be given to the consumer protection laws in relevant Member States as these rules may be more extensive and apply in addition to the EU rules.