New deal for consumers #2: online platforms should be transparent!

As mentioned in our previous post, the European Commission has recently launched the “New Deal for Consumers”, a new package of initiatives aimed at strengthening consumer rights and harmonizing consumers laws across the European Union.

This article is just the first piece of a puzzle of posts that we will publish on the main innovations that the new consumers package will introduce. Our analysis will start from the proposal for a directive on better enforcement and modernization of EU consumer protection (“Proposal 1”).

One of the motto of the Proposal 1 is online transparency. Based on the results of a behavioural study on transparency in online platforms, consumers are highly influenced in the selection of products by information relating to the contractual identity, the criteria for ranking search results and the presence of user reviews or ratings. In a view to adapt the EU consumer protection legislation to the digital economy environment, the Proposal 1 provides for a number of rules addressed to improve transparency standards and responsibility of online platforms.

  1. Online marketplace. The Proposal 1 introduces additional information requirements to the Consumers Rights Directive 2011/83/EU. In particular, when buying from an online marketplace, consumers will have to be clearly informed about whether the third party offering the goods, services or digital content is a professional or another consumer, whether consumer laws apply and whether the third party supplier or the online marketplace is responsible to grant consumers the rights stemming from to the contract, such as the right of withdrawal or legal guarantee.Such information will enable consumers to assess whether they hold any right to compensation or reimbursement and understand how to protect themselves if a problem arises.
  2. Online search. More transparency is required also in relation to search results provided against consumer’s online search queries. Generally consumers are not informed on whether a professional has paid to have a certain search result appear and whether the search result contains paid placements, i.e. where third parties paid for higher ranking, or paid inclusion, i.e. where third parties paid to be included in the list of search results. With the Proposal 1, consumers will have to be clearly informed when a search result is sponsored by a professional, thus extending the scope of the Unfair Commercial Practices Directive 2005/29/EC not only to editorial content in media.

Moreover, online marketplaces will have to inform consumers about the main parameters determining ranking of offers presented to the consumers as a result of their search query on the online marketplace.

The approach proposed by the European Commission will certainly benefit consumers which will be able to enjoy greater freedom when buying online, but also honest businesses, that will appear more attractive to consumers, and fair competition. We will see in the next months how the European Parliament and the Council will react to the proposal. What is certain is that e-commerce operators and marketplaces will need to go through a profound review of their online policies and practices.

If this article is of interest to you, don’t forget to check out our next post on the New Deal for Consumers! Contact Laura Borelli or Alessandro Ferrari if you wish to discuss or receive more information and share on your favorite social media!