Belgrade, 29 March 2011

The Internet and EU consumer law: Issues with distance selling

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• EU law provides consumers with a set of rights. In order to evaluate if such rights have a practical value, was created the Consumer Markets Scoreboard.

• The first edition was published on 29 January 2008.• Actually, the Scoreboard measures the quality of

consumer conditions in EU countries through the Consumer Conditions Index.

Consumer Conditions Index

• The key components of the consumer conditions index are:

• the quality of regulation concerning consumers and businesses,

• the effectiveness of resolving disputes and handling complaints,

• consumer trust in authorities, retailers, advertisers and consumer organisation.

Scoreboard data-Consumers

• Last year, 37% of all EU consumers made a distance purchase on the Internet, and

– 21% used the post (catalogues, mail order, etc.)and – 13% made a distance purchase by phone

Scoreboard data-Consumers

Regarding cross-borderThe proportion of consumers shopping across borders within the EU (online/offline) has grown only very slightly in 2010:→ 30% of EU consumers made at least one cross-border purchase in the past year, compared with 29% in 2009 and 25% in 2008

Scoreboard data-Consumers

Scoreboard data-Consumers

It shows also an healthy growth of e-commerce in general, with 40% of EU consumers having ordered goods and services online (whether from national or foreign sellers) in 2010 (37% in 2009).

• And, about 4 in 10 (39%) EU consumers were willing to purchase goods or services using another EU language;

Scoreboard data-Consumers

However:

• 6 in 10 (59%) of EU consumers agreed that they were not interested in cross-border shopping because they were worried about falling victim to scams or frauds when purchasing products or services in another country (34% “totally agreed”).

Scoreboard data-Consumers

• The Scoreboard also suggests that consumers' perceptions appear to be a important barrier to cross-border e-commerce. Among consumers who have not made a cross-border distance purchase:

- 62% are worried about fraud and scams;- 59% are concern about what to do when problems arise;- 49% are put off by expected delivery problems.

Scoreboard data-Consumers

• Men, 25-39 year-olds, those with the highest level of education and the self-employed were less likely to agree they were not interested in cross-border shopping because they were worried about:

- falling victim of scams or frauds: for example, 56% of 25-39 year-olds agreed with this statement, compared to 62% of the over 54 year-olds

- difficulties that could arise in the resolution of complaints: for example, 53% of men agreed with this, compared to 60% of women

- difficulties with the delivery of products purchased abroad: for example, 39% of the self-employed worried about this, compared to 52% of manual workers.

Scoreboard data-Consumers

• In actual consumer experience, cross-border e-commerce appears to be at least as reliable as domestic e-commerce:

- the delivery was delayed for 16% of cross-border purchases- the product did not arrive in 5% of cross-border cases

Scoreboard data-Consumers

• A sixth of EU consumers (18%) – who used the Internet, postal service or phone to buy products or services from a national seller or provider in the past 12 months – had experienced a delay in the delivery of their order and 6% said that the product or service was not delivered at all.

• In 2008, the corresponding proportion for “a delay in delivery” was eight percentage points higher (26% vs. 18% in 2006 and 2010).

Scoreboard data-Consumers

• In the last 12 months, about 6 in 10 (61%) EU consumers felt they had come across unsolicited commercial advertisements or offers.

• 43% felt that they had seen misleading or deceptive advertisements or offers.

Scoreboard data-Consumers

• and 29% had seen fraudulent advertisements or offers.

• The current results are closer to those observed in 2008 when 42% of EU consumers stated that they had seen misleading or deceptive advertisements and 27% said the same about fraudulent advertisements.

Scoreboard data-Retailers

• Almost three-quarters of retailers in the EU used the traditional method of selling goods or services to consumers via shops (73%; compared to 75% in 2009)

• A similar proportion said they used at least one “distance” sales channel; for example, Internet sales or sales by phone or post (72%; compared to 70% in 2009).

Scoreboard data-Retailers

• The Internet is the most common distance sales channel: a slim majority of retailers said they sold goods or services via the Internet (53%; up from 51% in 2009).

• The use of the telephone as a sales channel was mentioned by 43% of retailers and mail order (e.g. selling by “post”) was offered by 29% of retailers; these results were unchanged compared to 2009.

Scoreboard data-Retailers

• Companies with at least 50 employees, those with subsidiaries or outlets in another EU country, companies using distance sales channels and those prepared to carry out transactions with customers in more than one EU language were more involved in cross-border advertising and sales activities

Scoreboard data-Retailers

• One-third of all retailers answered that they would be interested in making cross-border sales if laws regulating transactions with consumers were the same across the EU, and

• 31% of retailers thought their cross-border sales would increase in a more harmonised regulatory environment.

Scoreboard data-Retailers

• More than 8 in 10 (82%) of retailers felt they were at least well informed about legal obligations towards consumers arising from consumer legislation in force in their country.

• This figure was practically unchanged compared to 2009; in 2008, on the other hand, a lower proportion of retailers felt at least well informed about consumer legislation (77%).

Scoreboard data-Retailers

• Almost 9 in 10 retailers, that sell consumer products, felt at least well informed about rules and regulations relating to product safety (86%; +6 percentage points compared to 2009).

• About 8 in 10 (81%) retailers, that sell food products, felt at least well informed about legislation on food safety.

Scoreboard data-Retailers

• About a quarter (26%) of retailers knew the exact period during which consumers have the right to return a defective product.

• Among retailers that use distance sales channels, less than 3 in 10 (27%) could correctly state the length of the “cooling-off” period for distance sales in their country.

Scoreboard data-Retailers

• In terms of knowledge about prohibited practices, a fifth, or more, of retailers incorrectly assumed that it was not prohibited in their country: – to describe a product as “free” although it is only freely

available to customers calling a premium rate phone number (21% “incorrect” responses)

– to advertise products at a very low price compared to other offers without having a reasonable quantity of products for sale is prohibited in their country (29% “incorrect” responses)

– to include an invoice or a similar document seeking payment in marketing material (26% “incorrect” responses).

Scoreboard data-Retailers

• About a fifth of retailers had come across fraudulent advertisements or offers made by competitors in the past 12 months (21%; practically unchanged compared to 2009), and

• A quarter had come across misleading or deceptive advertisements (25%; -3 point compared to 2009). Among retailers that sell consumer products, 7% said they were aware that their competitors had knowingly sold unsafe products in the past 12 months (unchanged compared to 2009).

Sources

• Fifth Edition Scoreboard (2011): • http://ec.europa.eu/consumers/strategy/facts_en.ht

m#5CMS• Eurobarometer 2011:• http://ec.europa.eu/consumers/strategy/docs/consu

mer_eurobarometer_2011_en.pdf• http://ec.europa.eu/consumers/strategy/docs/retail

ers_eurobarometer_2011_en.pdf

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Thank you for your attention

Lurdes Cunha