Consumer protection is playing an increasingly important role in the supervisory and enforcement policy of the Netherlands Authority for Consumers & Markets (“ACM”). This year, ACM is mainly targeting the energy sector, sustainability, the digital economy and the housing market (its “focus areas”). It is also presently extra alert for possible abuse of the current market conditions, such as the aftermath of the corona pandemic and the skyrocketing inflation as a result of the war in Ukraine, leaving a growing group of consumers in a financially vulnerable position. The Commission is also increasingly cracking down on the misleading of consumers. This blog lists the main developments and trends.
ACM
ACM is remarkably busy in the field of consumer law. It imposed an order subject to an penalty of €12,500 on VodafoneZiggo, for instance, for violating free modem choice. After an earlier warning, a €89,000 penalty was imposed on Allfree for misleading information on its website. AliExpress agreed to amend its general terms and conditions following a joint action by ACM and the European Commission (“Commission”). The same joint action previously put an end to Wish’s sham discounts and personalised pricing. ACM has furthermore taken action against influencers and companies using fake likes and fake followers. The deliberate use of fake likes and fake followers misleads consumers about a company’s quality and popularity. Webshop Sneakerstad must also make a number of changes on its website, on pain of a penalty, to comply with consumer protection rules.
ACM has furthermore accepted commitments from several Dutch (sports) clothing chains relating to misleading (or potentially misleading) sustainability claims. The (sports) clothing chains have agreed to clarify the sustainability claims on their clothing and websites. Interestingly, instead of a fine or damages, ACM accepted their offer to donate an amount to various sustainability initiatives as “compensation”. Other companies are reportedly still under investigation. More information on consumer law in sustainability claims can be found in this blog.
ACM has also investigated consumers’ knowledge and use of sustainability labels. Consumers who want to contribute to sustainable consumption find it increasingly important to make sustainable choices. ACM ensures that companies’ sustainability statements are clear, transparent and verifiable for consumers. Its investigation has shown that consumer have very little knowledge of sustainability labels. Even in the case of well-known labels such as Fairtrade or Beter Leven, consumers often do not know what exactly they stand for and who issues them. Moreover, only 25% of consumers trust sustainability labels. According to ACM, it is up to the legislature to set clear rules on the use of sustainability labels.
Following the amendment of the Telemarketingwet (Telemarketing Act), ACM is also specifically focusing on countering misleading telephone sales. Two energy suppliers were fined €1.8 million and €400,000 respectively by ACM for misleading consumers when selling energy contracts by telephone. Both companies engaged intermediaries who did not tell consumers they were calling on behalf of the energy supplier. They also concealed important information, such as the term of the contracts and the termination penalties. Travelance was also fined €50,000 for misleading and aggressive business practices when selling travel vouchers for city trips. Servicecollect, which operates in the sale by telephone of puzzle subscriptions, was fined €25,000 by ACM. Consumers were insufficiently informed about the details of their subscriptions. ACM furthermore blocked two directory assistance services to the Tax Information Line due to indications that they were misleading callers. See in this regard ACM Guidelines on the Prevention of Misleading Practices with regard to Directory Assistance Services.
ACM also introduced a certificate for telecom subscriptions price comparison websites. This certificate is meant to ensure that consumers can rely on the fact that the website in question provides independent, up-to-date and clear information. Consumers can make informed choices on that basis. Price comparison websites for telecom subscriptions can now apply to ACM for a certificate that serves as evidence that the price comparison website meets eight qualitative conditions. The introduction of the certificate was made possible by the recent amendment to the Telecommunicatiewet (Telecommunications Act) and the European Telecom Code.
Commission
The Commission also regularly takes action against the misleading of consumers. For instance, the Commission and several national consumer authorities agreed with Amazon that users should be able to cancel their subscription to Amazon Prime in two clicks. Also, following a call by the European Consumer Organisation (BEUC), the Commission forced TikTok to make changes on its platform. In order to protect children, the platform must distinguish more clearly between commercial and non-commercial content. The Commission furthermore sent another letter to WhatsApp, calling on it to inform its users more clearly about its policy on the use of personal data. Following a complaint by the BEUC, the Commission had called on WhatsApp in an earlier letter already to clarify its terms of service and its privacy conditions.
Several national consumer organisations in the EU have filed a series of privacy complaints against Google, accusing the tech giant of misleading business practices. When creating new Google accounts, for instance, Google allegedly deliberately steers consumers to the options with the fewest privacy safeguards. Google’s registration process is therefore unclear, incomplete, and misleading. This violates the privacy obligations that follow from the GDPR. Enforcement requests have now been filed in five countries (in the Netherlands, the Data Protection Authority was notified). This is expected to become clearer over the course of next year. The €405 million fine that was recently imposed on Instagram (Meta) in Ireland for violating children's privacy in any event does not bode well.
New legislation
Consumers will soon be even better protected by new Dutch and European legislation, in particular in the energy, sustainability and digital economy sectors. A new Energy Bill will be introduced in the Netherlands that will form the foundation for the energy transition. The bill replaces the current Gaswet (Gas Act) and Electriciteitswet (Electricity Act) and regulates, among other things, the protection of end customers of gas and electricity. Better contractual conditions on transparency, termination, invoicing and complaint handling will apply, for instance. ACM is also being called on to take action against rogue energy suppliers. The bill is currently before the Council of State for advice, after which the Lower House will consider it, with a request for fast-track consideration. Several European consumer directives are furthermore being (or have been) implemented in the Netherlands:
- The Directive on representative actions for the protection of the collective interests of consumers should allow organisations to bring mass claims on behalf of consumers against companies that violate consumer law. Member states must develop a mass claims settlement system for that purpose. The Dutch Implementatiewet (Implementation Act) was adopted by the Lower House on 25 May. The rules will apply in the EU from 25 June 2023.
- The Directive on certain aspects concerning contracts for the sale of goods has two concrete aims: (i) to protect consumers when they buy goods digitally; and (ii) to promote the sale of goods by businesses to European consumers. It sets out provisions on guarantees and procedural options for consumers in the case of defective products. The Dutch Implementation Act entered into force on 27 April 2022.
- The Directive on the better enforcement and modernisation of Union consumer protection rules focuses on the enforcement of consumer law by member states. The directive sets out deterrent sanctions, for instance, that may be imposed by member states. It furthermore expands and clarifies the rules for online platforms. The Dutch Implementation Act entered into force on 28 May 2022. More information can be found in this blog.
A number of new legislative proposals are also in the pipeline in Brussels that have yet to be approved by the Council and the Parliament. The legislative proposals for a regulation on general product safety and a directive on consumer credit should better protect consumers against dangerous products or misleading credit offers in digital commerce. The legislative proposal amending the rules on distance contracts for financial services aims at increasing consumer protection in cross-border financial services. Finally, in March 2022, the Commission presented a legislative proposal for a directive on empowering consumers for the green transition. With this proposal, the Commission aims to help consumers make informed purchasing decisions, in order to thus contribute to sustainable consumption.
The Commission is thereby continuing its mission to ensure a high level of consumer protection within the EU. To that end, the Commission launched a pilot for a Green Consumption Pledge in 2021: a pledge by companies to accelerate their contribution to energy transition. This autumn, revolutionary bills for a Digital Markets Act and a Digital Services Act are expected to enter into force. These acts should protect consumers from big tech companies such as Amazon, Google, Apple and Meta. More information can be found in this blog.
Case law
The Supreme Court has provided more clarity on the information duties in distance selling that follow from the Consumer Rights Directive. It follows from the directive that a seller must inform a consumer in a clear and comprehensible manner about the main characteristics and prices of its products or services (Article 6:230m(1) of the Dutch Civil Code). The question before the Supreme Court was whether it should assess on its own initiative whether the information duties under the directive have been met and (if not) whether a sanction should be imposed. According to the Supreme Court, that is the case in adversarial and default proceedings. Furthermore, this only applies to (i) information duties to which the law attaches specific legal consequences in the event of non-compliance and (ii) essential information duties (Unfair Commercial Practices Directive). The court must also apply, on its own initiative, the sanctions attached to the information duty in question.
The Trade and Industry Appeals Tribunal (CBb) has furthermore ruled in a case concerning an order subject to an penalty that ACM imposed on a rental agency. The reason for the penalty was the fact that the rental agency charged tenants registration and administration fees. According to ACM, that constituted an unfair commercial practice. Referring to the Airbnb judgment, the CBb subscribed to the rental agency’s position that an unfair commercial practice is involved only if the rental agency conceals these costs. This was not the case here. The CBb therefore ruled that ACM should not have imposed the order subject to a penalty.
In January 2022, the Rotterdam Court ruled that an ACM fine for an energy supplier should not have been imposed. ACM had imposed the fine (of €1.25 million) on the energy company for allegedly offering energy contracts with excessive termination fees to self-employed persons with a home-based business. ACM held that self-employed persons are entitled to consumer protection if they are supplied with energy at home. The Rotterdam Court ruled that it is not apparent from the law that ACM may distinguish between small business users and consumers. It therefore annulled the fine in its entirety. The appeal in this case is expected to take place in 2023.
The CBb has also yet to rule in a case concerning a co-branding partnership between Amex and KLM, among others. In March 2019, ACM imposed an order subject to a penalty on Amex with the aim of ensuring that Amex pay KLM (in the context of their co-branding partnership) a interchange fee of up to 0.3% of the transaction value per transaction (Article 5 of Regulation (EU) 2015/751). The Rotterdam Court annulled ACM’s order subject to a penalty, ruling that fees vary from case to case and cannot all be considered interchange fees. ACM has filed an appeal. To be continued.
The Court of Justice of the EU (ECJ) has handed down an important judgment on the right of consumer organisations to bring a (collective) claim for breach of the General Data Protection Regulation (GDPR). According to the ECJ, EU law does not preclude such a claim, regardless of whether (i) the organisation has been mandated to do so and (ii) the rights of individual consumers have actually been infringed. In order bring a claim (under Article 80(2) of the GDPR), it therefore suffices for a consumer organisation to allege that the GDPR has been breached. With this ruling, the ECJ has therefore clarified the conditions for collective redress for GDPR-violations. This is a positive development, especially considering the increasing number of mass claims in the Netherlands (see, for instance, here and here).
On a final note
ACM is increasingly presenting itself as the guardian angel for consumers. The number of completed consumer protection investigations by ACM has more than doubled in recent years. ACM is also increasingly deploying enforcement tools (such as a fine or an order subject to an penalty) against companies acting in breach of consumer law.
Companies should continue to expect an active regulator, especially in the focus areas. ACM is expected to conduct more frequent dawn raids on the grounds of breaches of consumer rules. The large amount of new legislation at both a national and a European level also offers new enforcement tools that will be deployed against companies engaging in misleading business practices. So businesses be warned!
More information on consumer rules and our other blogs can be found at www.consumentenrecht.info
Information on dawn raids by ACM and the European Commission can be found at www.invalacm.nl
