At a Glance
As an online marketplace, eBay enables buyers and sellers across the globe to connect, find a match, establish trust, and transact overcoming geographical distance, cultural differences, and other trade barriers.
Despite the adoption of the EU Consumer Rights Directive in 2011, the lack of harmonization and the prescriptive nature of some pieces of consumer rights law continue to pose challenges to technology-enabled SMEs and their service providers. The Commission should address the situation by proposing further harmonization measures and guidance on the implementation of current legislation. Such measures should cover:
- More clarification on the ultimate objectives behind requirements should be provided
- Responsibility should be clearly attributed to traders when requirements lie on them, and not on online marketplaces
- Legally mandated information should be made available to the consumer in a way appropriate to the channel, screen and device used
- Dialogue-oriented policy design should be employed in this context, as the trader and/or commerce service provider is the best placed to appraise how the obligation would be best achieved with regards to the particularities of its business model, and of its different sales channels and interfaces.
Issue in Detail
As an online marketplace, eBay enables buyers and sellers across the globe to connect, find a match, establish trust and transact overcoming geographical distance, cultural differences and other trade barriers. Such technology-based trust mechanisms offered by the private sector can however never address all elements necessary to overcome lack of trust and must be complemented and supported by policy efforts. In the past, the lack of harmonization of consumer rights laws in different EU Member States undermined consumer trust and legal certainty for small businesses engaged in cross-border online transactions. The EU’s Consumer Rights Directive adopted in 2011 was the first significant step towards more equal consumer protection across the EU. It was followed by the New Deal for Consumers in 2019, a package of Directives aimed at strengthening and modernising EU consumer protection rules in view of the development of cross-border e-commerce in the EU. However, a relatively high level of divergence can still be observed in the way different Member States apply the rules in practice.
This has led to a patchwork that confuses businesses and consumers alike. Overlapping requirements, conflicting national implementations, and diverging enforcement have created a complicated environment for providing online commerce services.
Notably, numerous and inflexible information obligations required at several stages of the purchasing process lead to a disordered user experience. This risks overwhelming users rather than informing them. It also obstructs the merchant or service provider (e.g. the online marketplace where the merchants operates a webshop) from providing consumers with a user-friendly and simple experience.
To address this situation the Commission should publish guidance and principles to help Member States with how consumer information obligations across the board apply to online and mobile commerce services. We propose the following as the baseline:
- The objective is what matters
The European Commission should provide general as well as more specific clarification on the ultimate objectives behind information requirements within consumer protection laws and should give traders’ greater flexibility on how those objectives are best realized in specific instances.
To provide an example: Article 5(1)(a) of the Consumer Rights Directive (CRD) 2011/83 requires the display of the “main characteristics” of the product prior to the conclusion of the purchase. Court rulings in Germany have indicated that the definition of “main characteristics” (i.e. information that needs to be displayed on the confirmation page) depends on what has been displayed earlier in the buying flow. As a result, it has proven difficult in practice for sellers to understand what information is actually required from them as well as for an online marketplace to technically display the required information on the page just before the order is placed. A preferred way forward would be to leave additional flexibility to the trader to decide where and when information should be provided in order to enable consumers to make informed decisions. The trader’s decisions would depend on the type, context and stage of the transaction and still be submit to minimum requirements and the general principles.
- Clear attribution of responsibility
The European Commission needs to clarify the attribution of responsibility for adhering to legal consumer protection obligations. eBay is not a trader and we will never take that role; we are always a partner, and never a competitor to our sellers. This means that eBay is responsible to give them the means necessary for their compliance. In other words, eBay cannot let sellers into trouble because of any platform shortcoming. At the same time, sellers must be incentivized to do the right thing towards consumers and be responsible for their compliance.
- Recognize the particularities of different technologies, services and devices used for commerce
Consumers turn to multiple devices (and different channels) throughout the purchasing process. Mobile devices are becoming increasingly popular for shopping; illustrated by how today they are used in 50% of all transactions on eBay. Intriguingly, what makes a “mobile device” is not set in stone as new technologies from digital storefronts to wearables to interactive textiles gain traction. Screens will be both larger and public as well as smaller and attached to the user; moreover, the interface through which the purchase is made may not even have a screen but be a detached button, a physical space or a command. The way consumer information is displayed across these screens, devices and interfaces will and should vary so as to best serve the objective behind the information requirement. Even though individuals are comfortable buying high-value items on a smartphone, for example, we find that a “PC mindset” still lingers in laws and enforcement practices. Policymaking needs to firmly move into the mobile (or interface) era; and so at least for a passage of time, language along the lines of Article 8 (1) and (4) of the CRD recognizing the particularities (or limitations) of certain “means of distance communication” is required.
We therefore recommend that the European Commission provides guidance on the ultimate objectives behind information requirements. Such guidance could indicate that legally mandated consumer information should simply be “made available to the consumer in a way appropriate” to the channel, screen and device used, and that it is the trader and/or commerce service provider who is best placed to appraise how the particularities of certain channels, screens, devices and interfaces are most effectively leveraged to achieve the objective behind the information obligation in question.
In addition, the Commission must reform the EU regulatory approach in order to stimulate the digital economy going forward. To that end, new policymaking process must be explored including:
- Develop and interpret policy through dialogue
Dialogue-oriented policy design should be employed in the context of consumer information requirements. Especially in the context of disruptive services and business models, the application and interpretation of legislative requirements are better shaped through a process of dialogue between market actors and regulators than through top-down commands that fail to recognize the valuable and relevant knowledge market actors sit on. We envisage a system within the consumer protection area where a basic regulation would set out the objectives; it would be complemented by non-binding soft law, developed together with stakeholders and describing “acceptable means of compliance”; the soft law would create a presumption of legal compliance to be recognized by national authorities; traders would have the option of alternative means of compliance where those demonstrably achieve the objectives; and mechanisms would be used to ensure consistency and coherence across the EU.
In this system, marketplaces could play an important role. In fact, we already educate sellers on the necessary compliance they have to ensure with applicable consumer rules in the countries where they sell. The challenge is often that these rules vary from market to market, whereas in a global marketplace context it is often hard for the trader to predict from which country the next order is going to come from. This highlights again the need for greater EU harmonization, not only to ensure a more predictable framework for traders, but also to facilitate greater compliance where such smaller, multi-channel SMBs are involved.
Finally, we feel that more cooperation between national authorities for the effective enforcement in all Member States of the current laws is essential. This is essential to the creation of a level-playing field, whereby rules apply equally regardless where the marketplace or the seller is established.