Why were digital content websites selected for this Sweep?
The use and sale of on-line games, books, videos and music which can be downloaded (“digital content”) have become popular among European consumers. A 2011 study indicated that 79% of total respondents across a sample of EU countries have used on-line music services within the previous 12 months and 60% on-line games1. The number of users is expected to rise further in the future. The same study indicated significant percentages of service users experiencing at least one problem; 21% for music and 27% for games. In 2011, the European Consumer Centres reported around 30 complaints in this area. These factors highlighted the urgency for this specific examination of digital content websites.
What are the results of the investigation?
Of the 333 websites checked, only 24% (79) passed the first test for compliance with the relevant EU consumer rules and 76% of sites (254) were flagged for further investigation.
Member States were free to choose the number of sites to check, e.g. on basis of the resources they could spare for the Sweep. As a result, some Member States checked more sites than others. Most websites were chosen for the popularity of their products and via keywords.
Why does the Sweep take place simultaneously across the EU?
Deceptive online selling practices often concern operators located in several Member States. Ill-intentioned operators can be detected and tackled more effectively thanks to EU wide co-operation. Under the Consumer Protection Cooperation (CPC) Regulation, European authorities co-operate to suppress illegal practices which spread over several Member States. Compliance checks carried out simultaneously in a specific sector across the EU enhance the overall effectiveness of controls and demonstrate the EU willingness to tackle seriously such problems. Cooperation reduces fragmentation in the European internal market, for the benefit of both consumers and reputable businesses.
What did national authorities check?
In this Sweep, national authorities checked whether traders provided essential information on the main characteristics and price of digital content which can be downloaded, as well as contact details of the trader. They also looked at the contract terms.
Why was a complementary study carried out?
The Commission contracted a study which looked at two additional issues: information to consumers about whether they can use downloaded digital content in another country and about games targeting children which are advertised for free, but may involve payment at a later stage (“in-game purchases”).
What kinds of problems do consumers face on this market?
The biggest problems are the existence of unfair terms by which traders try to limit their liability as much as possible and thereby limiting consumers’ legitimate right not to receive products which damage their equipment or to get reimbursed in case these products do not function. Another issue is that consumers do not get the information which they are supposed to receive, such as on the price, the main characteristics of the product, the exercise of the right of withdrawal and the identity of the trader. In addition, consumers are not informed that they cannot use the digital content in another Member State and that games advertised for “free” are involving payments at a later stage. See table 2 in the Annex for details.
Which sensitive issues came up?
The Sweep and particularly the study looked at the issue of the vulnerable consumers, particularly children, in relation to on-line games. The Sweep found that websites targeting young children often use contract terms which are difficult to understand. The study detected that websites lure children into purchases after having advertised games for free. While the game progresses, they need to pay in order to continue the game or to buy advanced features (e.g. better cloths for their avatar, better decoration for their house or better food for their virtual pet).
What EU rules is the Sweep based upon?
The following EU consumer rules and their translation into national laws are relevant here:
- Directive 2005/29/EC – Unfair Commercial Practices: Under this Directive, traders must display in a clear and intelligible way all the key information that consumers need in order to make an informed choice, such as any restrictions on content/features that inhibit access to the full functionality of the digital content or the fact that no right of withdrawal exists for downloaded digital content.
- Directive 2000/31/EC – Electronic commerce: Under this Directive, traders are obliged to provide their identity, geographical and e-email address on their website.
- Directive 97/7/EC – Distance Selling Directive: It applies to any consumer distance contract made under the law of a Member State and requires for example that the trader provides to a consumer essential information prior to the conclusion of the contract, e.g. on the price of the product, the main characteristics of the goods or services and the right of withdrawal.
- Directive 93/13/EEC – Unfair Contract Terms: It requires that the terms and conditions of the sale contract are fair (i.e. do not create a significant imbalance between the parties to the detriment of the consumer) and clearly drafted.
Did the results demonstrate a cross-border dimension?
1 out of 4 websites flagged for further investigation (69) were directing their offer cross-border. This shows that digital content is often offered from a company located in one Member State to consumers in other Member States.
How long does it take to ensure compliance of websites with EU rules?
Some companies are immediately willing to correct errors when enforcers contact them, while others use all available tools (including legal ones) to postpone mandatory changes. The length of the enforcement phase depends on how complicated the individual cases are or whether they require international coordination, in which case it may take more than a year. Here to read the report.