Following in the UK’s footsteps? Towards a Digital Fairness Act in the EU

Earlier this month, the European Commission published its long-awaited report on its Digital Fairness ‘Fitness Check’, where it evaluated three key EU consumer law Directives to establish whether they remain fit for purpose in the digital age. 

The Fitness Check, which the Commission initiated in May 2022, covered the core Directives that form the backbone of the EU consumer protection framework: the Unfair Commercial Practices Directive (UCPD), the Consumer Rights Directive (CRD), and the Unfair Contract Terms Directive (UCTD).[1]  

What are the report’s key findings on consumer protection in the online world, and how will this impact the work of the new Commission taking office later this year? Will the EU follow in the footsteps of the UK, where sweeping consumer law reforms will come into force next year under the Digital Markets, Competition and Consumers Act (DMCC Act)? The report provides a clear sign of more to come in this area.    

What are the Commission’s key findings? 

According to the Commission, the three Directives have established a level of regulatory clarity and consumer confidence that supported the development of digital markets, while ensuring a high level of consumer protection. However, the Commission has found that consumers behave differently in an online environment than they do offline. In particular, the report highlights that consumers often feel they lack complete control over their online experiences due to practices including:

• dark patterns in online interfaces; 
• the “addictive design” of digital services; 
• personalised targeting, including targeting that takes advantage of specific consumers' vulnerable characteristics;
• difficulties when managing and cancelling digital subscriptions;  and
• the “problematic commercial practices” of social media influencers. 

The Commission estimates that these online practices cost EU consumers at least €7.9 billion annually, while the burden on businesses to comply with EU consumer law is currently “much lower, not exceeding €737 million per year”. In this regard, the Commission concludes that the effectiveness of EU consumer protection laws is compromised by several factors including inadequate enforcement, legal ambiguity, a lack of incentives for businesses to achieve the highest standards of protection, and the growing risk of regulatory fragmentation among Member States.

Many of these findings echo similar policy concerns in the UK, which the previous UK Government has sought to address in a package of consumer law reforms in the DMCC Act. In a bid to better protect consumers from deceptive practices, the reforms – which are now expected to come into force from Spring next year – will significantly bolster the UK consumer law enforcement regime and create novel substantive areas of consumer rights. This will include, for example, rules on online practices such as so-called ‘subscription traps’, ‘drip pricing’ practices and fake reviews.  For more details, see our previous client briefing on the DMCC Act reforms. 

What does this mean for the new Commission, which is due to take office later this year?  

In 2020, the Commission announced in the ‘New Consumer Agenda’ that it will analyse whether additional legislation or other action is needed in the medium-term in order to ensure equal fairness online and offline. Four years later, the Commission appears to have concluded that such further action is needed to make the digital environment fairer for consumers.  

The Commission has stated that the issues highlighted in the report will be “on the Commission's agenda in the upcoming mandate”. While the Fitness Check report is not a legislative proposal, the evaluation of the state of play it contains is expected to inform the work of the new Commission. In her mission letter addressed to the Commissioner-designate for Democracy, Justice and the Rule of Law, President von der Leyen has specifically referred to the need to develop an EU Digital Fairness Act which would tackle “unethical techniques and problematic practices” online and address current gaps in EU consumer laws.  

If the new Commission did decide to embark on this path, this would see the EU following in the footsteps of the UK in adopting reforms to strengthen enforcement and better protect consumers in the digital sphere. Consumer-facing businesses will therefore need to watch out for any emerging regulatory divergence in this area. Another key area to watch will be the interplay of any new EU legislation with the existing Digital Services Act and the Digital Markets Act, which have been key priorities for the current Commission and whose enforcement continues at full speed. 

[1] Unfair Commercial Practices Directive 2005/29/EC; Consumer Rights Directive 2011/83/EU; and Unfair Contract Terms Directive 93/13/EEC.