The IMRG has warned that the current draft of Europe’s Consumer Rights Directive could undermine protection for users of digital services.
The European Parliament voted on Thursday to enter into negotiations with the European Commission and European Council on a final text of the law.
IMRG estimates that the draft amendments to the Consumer Rights Directive voted through last week will cost online retailers an additional €10 billion per year in delivery charges, which amounts to a staggering 4% of the estimated worth of the e-commerce industry in 2012, threatening to completely derail growth and prevent the development of the digital economy.
The cost of EU returns to e-retailers without the new EU legislation is around €5.7 billion, based on the prevailing rate of 90% domestic and 10% cross-border returns. With the new EU legislation in place that cost is expected to soar to an unsustainable €15.7 billion. This huge hike in operating costs will force many smaller retailers out of business.
James Roper, CEO at IMRG, commented on the findings:
“These new amendments from the EU are some of the most disastrous for the online industry yet. As well as being unnecessary they would inevitably lead to significant price increases being forced onto already hard-pressed consumers, pushing up prices across all retail channels, and disadvantaging SMEs to the point where many would be forced to cease trading online altogether.
“The internet has introduced levels of choice and price competitiveness that have greatly benefited consumers around Europe and the world, but this will be eroded if these damaging proposals go through, as the efficiency and transparency of the internet will largely be lost.
“SMEs are the lifeblood of Europe’s economy, innovating and generating wealth and jobs. Today, when anyone decides to set up a new business, the first thing they do is buy a URL and build a website – the internet is the route to business. This proposed legislation will bring risk, complexity and cost to trading online that will remove the option to do so for many start-ups, preventing smaller businesses from being able to get established in the market.
“e-Commerce is now a fundamental part of Europe’s economy, so it is critical that EU politicians carry out in-depth research and consult with those who actually operate the industry before making decisions that can seriously disrupt its development. In this instance they have tried to cut too many corners and these ill-judged amendments are the result. Without redrafting these extremely damaging legislative changes, the negative impact will not just affect the online shopping industry, but the entire economic recovery as a whole.”
Notes on the CRD
There are several amendments to the directive that we believe will be very damaging to the growth of e-commerce and the recovery of the global economy in general. The four amendments that IMRG takes particular issue with are:
• Article 17, right of withdrawal: at present a consumer buying at distance has seven days in which to change their mind, at which point the retailer must reimburse the consumer for the cost of the returned product and cost of shipping it to the consumer. This amendment will require the retailer to also cover the return costs for order values of more than €40. We believe this will have serious consequences for businesses, as it will encourage some consumers to order without intending to purchase and place an overwhelming financial burden on SMEs selling online.
• Article 16, right of withdrawal: this will require the retailer to refund a consumer withdrawing an order within 14 days. At present the period is 30 days and the revised timeframe will be too tight for some retailers to check the returned stock before reimbursing the consumer, especially for cross-border transactions.
• Article 12, right of withdrawal: establishes a 14 days’ period allowing the consumer to inform the trader of his intention to return a good against reimbursement. In about half of the EU Member States, this period exceeds by far or even doubles the present period fixed in accordance with the 1997 Distance Selling Directive. We have received no reason for the necessity of this change.
• Article 22a, freedom of contract: this amendment enables a consumer to require a retailer in any other Member State to sell to them. We believe that retailers should not be forced into trading into all Member States, but must remain free to decide which markets are appropriate for their business model.
Source: http://www.imrg.org/
