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Tailoring Consumer Protections for Digital Services

Europe’s consumer protection framework is currently under review, which is a good thing: strong consumer protection for Europeans is a must. This review provides an opportunity to assure consumers of a reliable standard of protection throughout the European single market and to reduce the regulatory and legal burden on companies by harmonizing the cacophony of consumer protection rules that exist for physical goods in Europe.

However, last week, the European Parliament adopted amendments to the European Consumer Rights Directive which threaten to undermine consumer protection for digital services like software in the European Union. Its decision to apply the provisions intended for physical goods to software and other digital services could, in practice, weaken consumer protections for digital services and increase costs for consumers.

Take, for example, the rules on repair and refund. With a physical good, traders are responsible for product defects that exist on the date of delivery. Unlike a toaster or sofa, a software program is supplied under a license agreement, which routinely includes provisions for the delivery of patches and updates to protect consumers from viruses and malware throughout the software lifecycle — terms specifically tailored to software. Folding software under the rules for physical goods would mean traders are obliged only to deal with defects that exist on the date of delivery, providing consumers with less protection than current industry practice. This is counterproductive and clearly doesn’t make sense.

The European Commission has two studies underway to better understand the needs of consumers with regard to digital services and to determine whether and what measures are necessary to address consumer protection in the online world. Refocusing on these efforts will ensure appropriate safeguards are applied that protect consumers given the unique ways in which digital services are acquired, delivered, and used.

The Consumer Rights Directive is simply not the appropriate instrument in which to address remedies for digital services. The European Council and the European Commission have, so far, agreed.

The end game in this is effective protection for consumers — on that we agree. Last week’s vote is but one step in the process. We urge the Parliament to reconsider whether applying ill-fitting provisions intended for physical goods to digital services is the best means of modernizing the European consumer protection framework.

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