What is a consumer?
In Europe, there is a fundamental distinction between Business-to-Business contracts (“B2B”) and Business-to-Consumer contracts (“B2C”). The European Union (“EU”) and the United Kingdom (“UK”) consider that individuals buying goods, services, or digital content in their personal capacity (and not for business) are consumers. These consumers are protected when making a purchase, because, on the whole, businesses may be more knowledgeable about the law, their products, and their business than their consumers. Therefore, businesses may have an unfair advantage over consumers (individuals acting in a personal capacity).
Why does it matter if I sell goods, services, or digital content to EU or UK consumers?
European lawmakers created a substantial body of law aimed at balancing power between companies and consumers. These laws cover misleading practices, unfair terms, and abusive exclusions of liability. Although these laws are not new, they are more relevant than ever. The EU has recently made efforts to modernize, enhance and enforce the current EU consumer protection regime, giving it more “teeth” and ensuring that businesses are held accountable.
The European Commission’s review of the then-current framework for EU (and, at the time, UK as part of the EU) consumer rights resulted in a modernized and enhanced consumer protection regime known as the New Deal for Consumers. It primarily consists of two new directives: (i) Collective Redress Directive, and (ii) the Omnibus Directive (i.e., Enforcement and Modernization Directive).
The New Deal for Consumers builds on existing EU (and UK) consumer policy regulations and directives, including the following:
- UK Consumer Rights Act 2015
- EU Payment Surcharges Regulations 2012
- EU Consumer Contracts Regulation 2013
- EU Consumer ADR Regulations
- EU Consumer Protection Trading Regulations 2008
- EU Provision of Services Regulations 2009
- EU E-Commerce Regulations 2002
- Consumer Rights Directive (2011/83/EU)
- Unfair Contract Terms Directive (93/13/ECC)
- Unfair Commercial Practice Directive (2005/39/EC)
- Sales and Guarantees Directive (1999/44/EC)
- ADR Directive (2013/11/EU)
- Services Directive (2006/123/EC)
- E-Commerce Directive (2000/31/EC)
The New Deal for Consumer’s Omnibus Directive amends some of this legislation, including directives regarding unfair contract terms, unfair commercial practices, consumer rights, and price indications. The amendments include increased transparency obligations, an extension of consumer rights to free goods and services, and the ability to set GDPR-like fines.
The Omnibus Directive went into effect in January 2020, and each EU member state has until November 28, 2021 to incorporate these amendments into their local laws. If your business serves EU or UK consumers, you'll need to ensure your policies and processes comply with these local laws by November 28, 2021.
What about the UK? How did Brexit change UK consumer protection?
As of January 1, 2021, the UK is no longer a member state of the European Union. However, the UK copied this EU legislation, meaning the consumer laws listed above have remained in effect for the UK. Additionally, much of the original EU consumer legislation had already been incorporated into UK law by the Consumer Rights Act of 2015.
Looking ahead, it is important to note that those consumer laws will not remain the same for the EU and UK. The EU’s New Deal for Consumers (including the Omnibus Directive) does not apply to the UK, meaning that EU and UK laws may diverge. Termly will continue to monitor UK developments.
What should I be doing to comply with EU and UK laws with respect to my consumers?
If your company has EU or UK consumers, you will need to inform them of their statutory rights and how your company’s policies, processes, and legal terms will honor these rights. You must do this in a form that is easy for them to find and understand. The best way to do this is by presenting the required information across your consumer-facing terms and policies — ideally by having a set of legal terms (e.g., Terms and Conditions), Shipping Policy, and Return Policy.
Some of the statutory rights afforded to EU and UK consumers under local laws are directly applicable to what you include in your legal terms and policies. Your legal terms and policies will need to include the information you make available about your company, how you handle purchases of goods, services, and digital content, and your delivery of the goods and their potential return.
Companies have to honor these statutory rights and make them clear (be accessible and understandable) to EU and UK consumers. Examples of these rights include that deliveries should be made promptly — meaning all goods should be delivered within 30 days of purchase in the absence of a specific delivery timing agreement — and that consumers also have certain cancellation rights. Consumers may be able to cancel if they change their minds, if the goods are late, and more.
What happens if I fail to abide by these laws?
Breach of consumer law in the EU runs the risk of litigation and soon may attract GDPR-like fines.
How can Termly help?
If you have EU or UK consumers, Termly’s legal terms and policy generators can help you create the customizable legal terms and policies you need to comply with EU and UK laws. Go to your dashboard to start generating your own legal terms for your website, ecommerce site, SaaS, or online store.