Legal Updates

E-Business – Distance Selling – Consultation re Distance Selling Directive 1997/7/EC

On 21 September 2006, the European Commission adopted a Communication on the implementation of the Distance Selling Directive 1997/7/EC (Directive) and has launched a consultation in order to assess the need to update it. The Distance Selling Directive governs contracts where the seller and buyer do not meet face to face. Its objective is to make a non face-to-face sale (such as a transaction completed over the internet) and a face-to-face sale (such as a transaction completed in a shop) effectively the same.

Currently, all EU Member States have (to varying degrees) incorporated the Distance Selling Directive into their legislations, but some problems have emerged with the practical application of the Directive. These problems are highlighted in relation to the following ‘new technologies’:

• ‘Mobile Commerce’ using SMS;
• Online auctions; and
• Online marketing.

According to the EU Commission, it has become questionable whether such ‘new technologies’ relating to distance selling are effectively regulated. One of the reasons that this has now arisen is that member states have radically different levels of consumer protection which is due to the operation of the ‘minimum clause’. The ‘minimum clause’ gives member states the power to introduce into their legislations more stringent provisions to facilitate a higher level of consumer protection for their citizens. As different states have introduced different levels of protection, the internal market has become diverged and distorted. Markos Kyprianou, Commissioner for Health and Consumer Protection, gave the following reason for launching the consultation:

“Member States have shown they are engaged in ensuring a high level of consumer protection across the EU. Some of them have gone even further in transposing this key piece of EU legislation into national law. What I am most worried about are possible loopholes or areas of legal uncertainty created by new and fast-growing distance selling products and technologies, which might create confusion for consumers and serious business alike, or be exploited by rogue traders. The consultation we are launching will help us gather valuable stakeholder feedback on whether and how to update the Distance Selling Directive. It will also feed into our broader review of the Consumer Protection body of legislation next year.”

The consultation addresses issues such as:-

• the clarity and adequacy of legal terms used in the Distance Selling Directive
• the need to modify exemptions
• requirements for prior information
• written confirmation
• right of withdrawal
• performance of distance contracts; and
• other questions including links to EU legislation on privacy and electronic communications.

The consultation  will last until 21 November 2006, after which a summary of responses will be published on the Commission's website. Interestingly, later this year the Commission will publish a Green Paper launching a broader consultation on other aspects of EU Consumer Protection legislation. The objective is to pool together these consultations in order to decide whether the overall consumer regulatory framework should be revised.

Please contact us for more information on [email protected]. Visit http://www.rtcoopers.com/practice_corporatecommercial.php; http://www.rtcoopers.com/ebusiness.php

© RT COOPERS, 2006. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.