On 3 October the European Commission published its long-awaited Digital Fairness Fitness Check report (see link here).
Based on the findings, the new Commission which is due to take office by the end of 2024 will bring its reflections together and work towards an upcoming Digital Fairness Act, as announced in the mission letter to incoming Justice Commissioner Michael McGrath in which he is tasked with developing ‘a Digital Fairness Act to tackle unethical techniques and commercial practices related to dark patterns, marketing by social media influencers, the addictive design of digital products and online profiling especially when consumer vulnerabilities are exploited for commercial purposes’.
Since May 2022, officials in the Commission’s Directorate General for Justice have been gathering evidence and working to deliver the Digital Fairness Fitness Check report that is intended to be a comprehensive evaluation of related EU legislative acts to assess whether they have contributed or not to attaining EU policy objectives. This Fitness Check covers three Directives which form the core of the framework of consumer protection that applies to most traders and consumer-facing sectors in the EU:
- Unfair Commercial Practices Directive 2005/29/EC (UCPD)
- Consumer Rights Directive 2011/83/EU (CRD)
- Unfair Contract Terms Directive 93/13/EEC (UCTD)
The Commission found that the functioning of these directives is undermined by a lack of compliance by traders leading to consumer detriment, ineffective enforcement, legal uncertainty and regulatory fragmentation (compounded by the increased complexity of the rapidly changing regulatory landscape with the arrival of new legislation). In addition, the areas where consumer law was perceived as having been less effective in addressing problems, mainly concerned emerging technologies and practices for which there are no specific provisions in the Directives.
The Fitness Check examines specific ‘problematic practices’ that make up a significant portion of the consumer complaints and fall under the scope of EU consumer law. These practices are divided in to the following five categories:
- Dark patterns;
- Addictive design and gaming;
- Personalisation;
- Social media; and
- Digital contracts.
As a result of this report, the new College of Commissioners and the new Justice Commissioner in particular, will take a political decision as to how the findings can be translated into legislative and non-legislative action. A review of the CPC Regulation which governs cooperation between national authorities responsible for the enforcement of consumer protection laws would appear to be on the cards, whilst more detailed and focused work to prepare a new Digital Fairness Act will be undertaken in the next weeks and months. A key area to watch will also be how legislators see the enforcement and application of existing instruments such as the Digital Services Act (DSA), the Digital Markets Act (DMA) and whether any alterations will need to be made to address some of the issues identified. In parallel, incoming Commissioner McGrath will also tackle challenges with e-commerce platforms together with incoming Executive Vice-President Henna Virkkunen who in turn will seek to launch an EU-wide enquiry on the impacts of social media.
Industry active across sectors whether in gaming, social media, streaming and others will need to pay close attention as to how these interlinked workstreams will evolve to ensure a workable and coherent regulatory framework can be applied that will deliver the consumer protections EU policymakers and decision makers are striving for.
For further background on all these topics please see our blog on key developments in consumer protection here.