DIGITAL SINGLE MARKET IN THE EU IS BEHIND THE PROPOSAL FOR A NEW CONSUMER PURCHASE ACT
A long-term project was launched several years ago within the EU to harmonise the legislation for the so-called Digital Single Market. The project has resulted in a number of practical regulatory changes that affect EU citizens and European businesses on a daily basis. For example, the EU has adopted data roaming rules that allow you to use your phone in other EU countries and pay the same amount for calls, texts and data as at home. The right of EU citizens to privacy was prioritised and regulated within the framework of the project by the now well-known General Data Protection Regulation (GDPR).
Several new rules will be introduced in 2022 as part of the EU's efforts to achieve equal competition within the Digital Single Market. One of these new features is that in January this year the Government proposed a new Consumer Purchase Act in Sweden in order to modernise consumer law when buying goods and in connection with contracts for the provision of digital content and digital services. The bill relating to the new Consumer Purchase Act has now been submitted for preparation in the Riksdag and the Government proposes that the act should enter into force in May this year.
The EU has noted that the potential growth of e-commerce within the Union has not yet been fully exploited and that the strategy for the Digital Single Market in Europe comprehensively addresses the most important obstacles to the development of e-commerce within the Union. As a step in reducing the obstacles, the EU has adopted two directives in the field of consumer law, which constitute the basis for the proposal for a new consumer law. Both directives are being implemented in a single law in Sweden.
IMPORTANT RULES FOR E-TRADERS UNDER THE NEW CONSUMER PURCHASE ACT
It is important to be aware of the principle of stronger consumer protection
Clear and mandatory rights when purchasing give consumers enhanced protection in the new act. This applies in particular in the area of digital content and digital services where there are currently no rules relating to consumer law. According to the Government, uniform and modern consumer purchase rules will help to reduce the inconveniences suffered by consumers in the event of faults or delays in delivery, and will increase consumer confidence in the digital market and security in connection with their purchases. However, the principle places high demands on e-traders to familiarise themselves with the new regulations.
Digital services and content are specifically regulated by the Act
Digital content includes, for example, computer programs, applications, video and music files, digital games and eBooks, while digital services can comprise video and audio sharing, online games or word processing offered in cloud computing environments and social media.
The rules that are now being proposed include contractual compliance of digital content, and remedial measures when requirements placed on the services are not met, or if delays in delivery arise. In general, much of what relates to goods in the Consumer Purchase Act now also applies to digital services and digital content. For example, according to the proposal, the legal warranty of three years relating to goods shall also be applied to digital services and content, as well as goods with individually supplied digital content. The legal warranty extends even further, as long as the agreement is valid, if the digital service or content is provided in accordance with, for example, a subscription or SaaS service and is supplied on a continuous basis.
Do not market anything that the e-trader cannot guarantee – new requirement
According to the bill, the goods, digital services or digital content must comply with such information about the features and use of the goods, digital services or digital content that has been provided by or on behalf of the e-trader or another party in a previous sales channel during marketing or in some other respect prior to the purchase. This means that the commitments made by the e-trader's distributors or suppliers can also affect product warranties and that the e-trader will need to make more extensive efforts than is currently the case to ensure uniform marketing both prior to and in connection with the purchase.
Subjective and objective requirements placed on the goods/digital service
Subjective requirements placed on the goods or digital service by the bill mean that a product must comply with the implications of the agreement in terms of factors such as type, description, quantity, quality, functionality and compatibility. The goods shall also be supplied with the accessories, instructions and updates stipulated by the contract. A product or digital service shall be appropriate for the specific purpose for which the consumer needs it and has informed the e-trader of, provided that it has accepted that purpose at the time of purchase.
Besides the subjective requirements placed on the goods agreed between the parties, objective requirements must be set for the goods that fundamentally correspond to the requirements in the current Consumer Purchase Act. The parties can agree on deviations from the objective requirements, provided that the e-trader has informed the consumer of the deviations in conjunction with the purchase, and the consumer has explicitly and separately approved them.
In that the e-trader now, for example, needs to be able to show how the product deviates from the objective requirements, i.e. in what ways the product is not suitable for the purpose for which goods of the same type are normally used, for it to be regarded as agreed with the consumer, the e-trader needs to ensure technical and communicational conditions for the digital purchasing process and the e-trader's potential interaction with the consumer in connection with the purchasing experience that meet the requirements and what is to be agreed with the consumer.
More detail regarding faults in the product/digital service – reverse burden of proof
Faults can occur if the consumer does not receive information about, and obtain the updates that are necessary, for the product or service to accord with the contract.
Digital content that is supplied continuously over a period differs from traditional goods, as well as from digital content provided through an individual delivery, in that there is, among other things, neither handover nor any actual delivery. One aspect of this is that it can be discussed whether interruption in a continuous provision constitutes a fault in the digital content, which can give rise to contractual sanctions, or whether it constitutes a delay on the part of the e-trader in supplying the content, which can result in delay charges. The bill states that short-term interruptions in the supply of digital content should be treated as faults if these interruptions are more than negligible or if they are reoccurring. This means that in terms of sales to consumers, the question can be asked as to whether the law affects the suitability of a commitment and restricted availability of a certain digital service or whether such is considered to contravene the objective requirements and trigger the right to rectification of faults in accordance with the law.
However, what simplifies things if there is a fault when integrating a service with the consumer's hardware, software or network connection, is that the e-trader shall only be responsible if it has also undertaken to perform the integration itself.
The reverse burden of proof for when the starting point is a fault on the part of the e-trader if it does not demonstrate otherwise and without the consumer needing to specifically show that it applies currently for faults that arose within six months from a product being supplied.
The reverse burden of proof will apply in the proposed new consumer act:
- one year with a single act of supply of digital content or a digital service;
- during the contract period with continuous supply of digital content or a digital service;
- two years with supply of goods that contain digital elements that constitute a single act of supply of digital content or digital service, and
- three years or the longer period that the contract applies with supply of goods that contain digital elements that entail a continuous supply of digital content or digital service.
Possible for e-traders to receive payment with personal data – but how?
The new Consumer Purchase Act will be applicable when the consumer pays for the digital content or the digital service, regardless of whether it is with ordinary cash or or credit means of payment, or if, instead of paying for the content or the service, the consumer provides his or her personal data. However, the possibility of receiving payment through personal data does not apply if the e-trader only processes the personal data in order to meet legal requirements for this, or to provide the digital content.
If this is something that is of interest for an e-trader, questions of how the payment is to be regulated should be carefully considered. Some of the questions that we feel should be considered are how the payment will take place in purely technical terms, which information and to what extent such data shall be provided, and what such payment covers for performances of the digital services or content that the e-trader supplies to the consumer. Further, should the purchasing terms regulate what the e-trader intends and does not intend to do with the personal data in order to make the means of payment attractive for the consumer?
Would you like us to assist you in considering the new features of the Consumer Purchase Act in your business, or reviewing your purchasing terms in view of the bill? Of perhaps you have other questions regarding the legal framework for your e-commerce?