Creating consumer confusion – the dilemma of online, offline, and digital returns

Way back in November 2014, President Juncker gallantly informed Vice-President Ansip that he must modernise and simplify consumer rules for online and digital purchases. However, current legislative developments could create an unappealing shopping environment for consumers, and suppliers, as they tackle divergent rules for tangible and digital goods, confusion over rights for goods bought online or offline, and differing warranty periods for different parts of a product.

These developments are particularly worrying given that online businesses depend on the consumer’s trust and user experience. I’m sure we can all think of websites that we avoid simply due to a bad user experience or a burdensome returns policy. Conversely, an unappealing brick and mortar store may still earn our custom simply due to being in a convenient location. With online companies vying for attention in a crowded marketplace, a bad consumer experience means pressing ‘x’, opening a new tab, and going somewhere else. For this exact reason, the EU needs to ensure that online rules are simple and accessible for consumers.

What do you mean I should have bought it online?

MEP Pascal Arimont (EPP, BE) has correctly identified that the Directive for the online sale of tangible goods (i.e. shoes, clothes etc.) focuses on “a question of consumer confidence” and “depends on consumers”. However, the Directive creates a certain level of confusion for consumers as it falls into an already crowded field of blandly named consumer legislation with the Consumer Sales Directive, the e-commerce Directive, the Directive on un-fair contract terms, and several others. Indeed, MEP Dennis de Jong has queried this “lasagne of legislation”, while several MEPs complain that it creates a separate online system.

One such example is that, if adopted in its current form, the proposed Directive for tangible goods sold online would establish a two year period for the ‘reversal of burden of proof’, which means that the seller must presume any defect existed at the time of delivery. Conversely, physical stores would be subject to the current Consumer Sales Directive which provides a 6 month timeframe. In practice, this means that if you buy a pair of shoes in a store, then there is a 6 month timeframe within which the ‘reversal of burden of proof’ exists. However, if you purchase the exact same pair of shoes from the exact same seller but this time online, then there exists a 2 year timeline. Modern business models increasingly require a multichannel sales approach, and having divergent requirements for different sales channels does not benefit the consumer, or supplier. Buying a product online should not become focused on whether it offers more or less rights than purchasing in a shop. Consumers do not think like this, and neither should EU policymakers.

These cloudy waters for consumers buying physical goods online or offline, are further muddied when delving into the ability to purchase digital goods (i.e. apps, software).

I promise, it’s digitally broken

The proposed Digital Content Directive (DCD) hopes to define rights for consumers that purchase apps and other digital products. Once again, the proposal imposes a ‘reversal of burden of proof’, but this time it is “not limited in time” as the Commission reasons that digital content is not subject to wear and tear. While this seems practical for dealing with apps and software, consider the broader implications for the increasingly blurred line between physical and digital goods, as inspired by the Internet of Things (IoT).

The Council and Parliament has grouped this discussion under the catchy title of ‘embedded software’, and they are desperately trying to find a solution. A worrying idea that has been proposed in both institutions is a system of ‘defect location’ whereby the relevant legal regime depends on whether the goods software or hardware is defective. Imagine your internet connected coffee maker breaks down, the chances of knowing whether this was due to a ‘software’ or ‘hardware’ defect is very low. Nonetheless, the divergent standards for the ‘reversal of burden of proof’ mean you have to hope that it’s the software and you’ll no doubt convince yourself that’s what it is. To highlight the confusion, a recent hearing on the DCD ended with the rapporteur, MEP Evelyne Gebhardt, commenting that she now had more questions than she did at the start. If EU experts are struggling to comprehend the situation, it will be even more difficult for consumers!

The consumer’s need for clarity in the Digital Single Market

As it currently stands, the interactions between existing legislation and the proposed Directives for Digital Content and the sale of tangible goods online will give consumers severe migraines. In upcoming years, if an internet connected device of yours breaks down, consumers may need to ask themselves whether the physical or digital product is broken and whether they bought it online or offline. Similarly, suppliers may have to handle, and consequently fix, products that could be returned in 6 months, 2 years, or an unlimited time period.

Whilst not lacking in good intentions, EU policymakers seem to have spun themselves in circles. The harmonisation of consumer rules across Europe is of key importance to the Digital Single Market as it provides consumers and suppliers with a simple legal certainty. In this respect, the EU institutions need to make sure all these proposals are more closely aligned. Both proposals on digital goods and tangible goods sold online are currently under discussion, while a further 7 Directives will be up for review under the Commission’s Fitness Check (REFIT) of EU consumer laws in Q2 2017, including the Consumer Sales Directive. In this context, industry experts can provide first-hand information on what consumers need and what works best when dealing with online digital markets, be this through meetings with MEPs, taking part in Commission stakeholder groups, or attending the 2016 EU Consumer Summit on 17 October. If this does not happen, there is a growing concern that every 5 years a Commissioner will be told that they need to modernise and simplify consumer rules for online and digital purchases.

Crispin Maenpaa is an Account Executive on FleishmanHillard’s Technology Team. You can find him on Twitter at @CrispinMaenpaa