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EP approves new Consumer Protection Cooperation Regulation

As of November 14th 2017, the European Parliament approved a new Consumer Protection Regulation, effectively repealing Regulation EC 2006/2004 once the regulation comes into force. Through the new laws, national consumer authorities will have broader powers to protect consumers from harmful practices or defrauding schemes and to ensure the smooth functioning of the internal market.

While the purpose of the Regulation is to ascertain the protection of consumers in the EU, the general reception to its approval is somewhat negative. Why would a regulation enhancing the security and safety of consumers be met with scepticism and disapproval? The answer to this lies in Article 8(3)(e) of the regulation, which vests consumer protection authorities with inflated powers allowing them, where no other effective means are available, to remove or restrict access to websites, to order a hosting service provider to remove, disable or restrict access to a website, or even order domain registries to delete a fully qualified domain name and allow the authority concerned to register it. All of this is done without the need of approval from the judiciary.

The underlying issue of creating a website blocking infrastructure is the future risk of possible abuse for other purposes or even misuse by the authorities, as was the case in Australia when ASIC, a company regulator, accidentally blocked 250,000 websites whilst trying to block a small number of websites which allegedly had defrauded Australian customers. A recent example of abuse resulting from the implementation of a website blocking infrastructure occurred during the Catalonia independence saga, where websites related to its independence were blocked, and thus abusing the actual purpose for which the infrastructure had been built.

Aside from the questionable website-blocking article, the regulation provides consumers affected by harmful practices the opportunity to be compensated for their losses “at the trader’s initiative”. It should be noted that prior to a series of amendments, consumer compensation was mandatory through national consumer protection agencies.

However, despite the negatives, the regulation carries a sturdy legal frame which is able to combat and take down websites selling scam products, or which break EU consumer protection laws, such as using fake images or selling inexistent products. A clear example would be the case of ‘Infurn.com’ where a website was set up and “sold” modern furniture that was never delivered, while the identity of the owners was hidden through data protection laws. Along with scam websites, this regulation will further help copyright enforcement agencies to take down illegal torrenting websites putting out fake versions of the products produced by movie or music studios.

To further aid consumer protection, authorities are provided with the ability to request information from banks in order to expose the identity of fraudulent traders, to freeze assets and to act as mystery shoppers in order to determine if there are any geographical discriminations. Overall, disregarding the website blocking clause, the new regulation is more oriented towards modern commerce, also giving consumers the possibility of being compensated.

For more information on Consumer Protection matters, IT Law and related areas please contact Dr Ian Gauci on igauci@gtgadvocates.com

Disclaimer: This article is not intended to impart advice and readers are asked to seek verification of statements made before acting on them.