“New Deal for Consumers” Directive

What is the “New Deal for Consumers” Directive? Where has it got to? And how will it impact my business?

The background

The European Parliament and the Council have provisionally agreed the “New Deal for Consumers” Directive (also called the Omnibus Directive). The Directive has not yet been formally approved and published in the Official Journal (as at the publication date). However, it is expected that the Directive will be finally adopted this Autumn. 

The new directive

The Directive will update four existing consumer law directives, namely the Unfair Commercial Practices Directive, the Consumer Rights Directive, the Unfair Contract Terms Directive and the Price Indications Directive.

It makes provision for more serious sanctions in the event of a breach of consumer law. For breaches across several EU Member States, the available maximum fine will be up to 4% of a trader’s annual turnover in each respective Member State.

Additionally, the Directive will extend consumer rights to digital content and will increase transparency in online market places. One example of the way that rights relating to digital content have increased is the 14-day “withdrawal right”. Currently, consumers who pay for digital services can cancel their contracts within 14 days after having paid for the service. Under the new Directive, this withdrawal right will also extend to the use of free digital services for which consumers provide their personal data (eg social media, cloud services and email accounts).

The Directive also updates certain other current consumer regulations. For example, consumers will no longer be able to return products that have already been used, rather than merely trying them out. Also, traders may not need to reimburse consumers before actual receipt of the returned goods.

Finally, the Directive will include new tools for consumers to enforce their rights and get compensation, in particular through representative actions open to consumer organisations monitored by a public authority.

Why is this important?

Sanctions under the new Directive have the potential to be more serious than under the previous consumer law framework. Moreover, the reach of the new Directive will be broader than the directives which are currently applicable (for example, further extending consumer rights to digital content).

Any practical tips?

Breach of consumer rights is soon going to attract (almost) GDPR – level fines. This means not just reviewing the Directive to see how the new rules will impact your business, but also running the rule over your existing processes, agreements etc. The time to sharpen your pencil on your businesses’ compliance with consumer rights (across the spectrum) is now!