The EC is pushing ahead with a number of proposals aimed at harmonising the EU consumer protection framework, while the UK is preparing to deal with the impact of Brexit.
UK developments
In November, we reported on preparations for Brexit in consumer protection.
The UK government has published a series of technical notices to help businesses prepare for a no deal Brexit. In October 2018, the UK government published a technical notice on consumer protection and cross-border enforcement setting out the impact on consumer protection in the event of a no-deal Brexit.
The government has also published the Draft Consumer Protection (Amendment etc.) (EU Exit) Regulations 2018 and the Draft Consumer Protection (Enforcement) (Amendment etc. (EU Exit) Regulations 2018. These will apply (largely) from exit day.
The draft Amendment Regulations amend EU-derived consumer protection legislation to ensure that it will work after Brexit. The changes relate mostly to the removal of references to EU legislation and institutions and to ensuring that contracts which deal with imports from the EEA to the UK are treated in the same way as those dealing with imports from non-EEA countries. The Regulations also revoke the operation of the Online Dispute Regulation in the UK.
The draft Enforcement Regulations provide for the removal or amendment of references to EU legislation relating to enforcement of consumer protection law and cross-border enforcement and investigatory powers. They:
- Revoke the Consumer Protection Cooperation Regulation (2006/2004).
- Amend Part 8 of the Enterprise Act 2002 (which implements the Injunctions Directive).
- Amend Schedule 5 of the Consumer Rights Act 2015 (which grants enforcers investigatory powers for use in EA proceedings).
It is unlikely that consumer protection law will be impacted more severely under a no deal scenario than with a deal, so the technical notice is relevant in both situations, as are the draft Regulations.
UK consumers will suffer some impact in terms of their protection when buying goods and services in the EU. They will also no longer be able to use UK courts to seek redress from EU-based traders and may find enforcement of UK judgments more difficult. There will no longer be reciprocal obligations between the UK and Member States to investigate breaches of consumer law or progress enforcement actions.
The UK will no longer have access to the EC Online Dispute Resolution platform (although it's extremely debatable as to whether this will really affect anyone as there has not been significant take up of this platform since its inception). Obligations on ADR will not change aside from the fact that UK-based ADR organisations will no longer be required to act in cross-border disputes.
For UK businesses, the consumer protection aspects of Brexit present more of a compliance issue than a high risk area. For starters, online traders to consumers will need to remove references to the ODR platform from their terms and conditions and websites. The most important aspect going forward will be to stay on top of any changes, both to the UK regime, EU-wide law and in other EEA Member States, and to be prepared for any changes needed to terms and conditions.
EU developments
Consumer protection is probably the area in which the least progress has been made in the EU's ambitious Digital Single Market project. Consumer confidence is crucial to a genuine digital single market; confidence that personal data will be safe, confidence that disputes can be easily resolved; confidence that consumers will get access to the best prices; confidence that they will be treated fairly.
Consumer protection law is, however, notoriously difficult harmonise. The Commission's last attempt was the Common European Sales Law (CESL) which aimed to create an optional pan-European contractual instrument for cross-border online sales between businesses and consumers and businesses where one business was an SME. The European Parliament strongly backed CESL but it faltered in the Council. The UK, along with France and Germany, were strongly opposed.
The Commission had more success with the Consumer Rights Directive 2011 (implemented in the UK as the Consumer Contracts Regulations 2013). This harmonised rules on pre-contractual information, cancellation and additional charges in consumer contracts but did not tackle issues like statutory implied terms and remedies.
In December 2015, as part of the DSM project, the EC published proposed Directives on the online and distance sale of goods (re-published in June 2018 to cover all goods, not just online and distance sales), and the sale of digital content. This was followed in May 2016, by a Regulation on Member State cooperation on enforcement of consumer protection law which became law in December 2017.
Despite having been published fairly early on during the Digital Single Market project, progress has been slow in this area. It is fair to say that the UK, in particular, was not overjoyed at the prospect of these Directives. This was less because it disagreed that rules needed to be overhauled, than because it had recently done its own overhaul of consumer protection law, passing the Consumer Rights Act (CRA) 2015. The EC proposals cover similar ground to the CRA with respect to digital content and goods, however, there are some crucial differences. Read more.
Two other draft consumer Directives are pending: the draft Directive on better enforcement and modernisation of EU consumer protection rules; and the draft Directive on representative actions for the protection of the collective interests of consumers. The primary effect of these Directives would be to introduce GDPR-level fines for breaches of consumer protection law (up to 4% annual turnover in all EU countries in which the breach had an impact), and to introduce an EU class action option for consumers.
Defective products
In June, we covered a case in which the High Court examined the meaning of a defective product under the strict liability regime in the Consumer Protection Act. In a significant decision for manufacturers, distributors, suppliers of goods and consumers, the High Court provided welcome clarity on when a product will be considered to contain a "defect" under section 3 of the CPA. In a complex judgment running to over 170 pages, the court considers the interpretation and application of the CPA and particularly those factors to take into account when determining if a product is defective or fails to meet the safety standards generally expected.
