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CALL FOR EVIDENCE FOR AN EVALUATION AND IMPACT ASSESSMENT RUN IN PARALLEL This document aim s to inform the public and stakeholders on the Commission's future legislative work so they can provide feedback on the Commission's understanding of the problem and possible solutions , and give us any relevant information that they may have, including on possible impacts of the different options. Title of the initiative Strengthening consumer law enforcement in the Union through an advanced Alternative Dispute Resolution (ADR) for consumers under the ADR Directive (Directive 2013//EU) Lead DG (responsible unit) DG JUST, E3 Likely t ype of initiative Legislative proposal to a mend a Directive and repeal a Regulation Indicative t imetable Q2 2023 Additional i nformation https://ec.europa.eu/info/live-work-travel-eu/consumer-rights-and-complaints/resolve-your-consumer-complaint/alternative-disjust$pute-resolution-consumers_en#resolving-complaints-out-of-court This document is for information purposes only. I t does not prejudge the final decision of the Commission on whether this initiative will be pursued or on its final content. All elements of the initiative described, including its timing, are subject to change. A. Political c ontext , p roblem definition and s ubsidiarity c heck Political c ontext Ensuring that consumers can easily solve their dispute with traders across border s in the E U is a pre-requisite for a well- functioning Single Market. As consumer disputes are generally of low value, neither consumers nor traders are inclined to use courts, instead they seek to reach amicable settlements. To facilitate such settlements in the single Market, through the intervention of a neutral 3 rd party, the EU promotes alternative, out - of - court , dispute settlements. Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution (hereafter the “ADR directive”) provides common quality and fairness criteria for out-of-court dispute mechanisms in the EU and requires Member States to ensure access to ADR entities meeting such criteria in all retail economic sectors. Digital markets however are posing new challenges and this is why action 7 of the Commission’s New Consumer Agenda adopted in 2020 aims to “to analyse whether additional legislation or other actions are needed in the medium-term in order to ensure the same level of fairness online and offline” .The present call for evidence is part of this activity and concerns the fitness of the ADR Directive in relation to breaches to consumer rights occurring in Digital markets. For example, recent behavioural research on dark patterns show that EU consumers are being exposed to more and more online unfair practices (dark patterns, hidden advertising, etc.) The first application report about the ADR Directive adopted by the Commission in 2019 outlined that it ha d achieved its objective (full coverage of ADR for consumer disputes stemming from contractual relations between consumers and traders in the EU/EEA area). However, due to a number of factors that vary across Member States and economic sectors (such as whether ADR is compulsory or not, how much it costs for traders or consumers, how complex the procedure is, etc.) the report concluded that, the use of ADR procedures remained limited. Article 26 of the ADR directive requires a second application report to be adopted by the Commission in 2023 which may be accompanied by a legislative proposal. Our initial insights (such as the ADR assembly that took place in September 2021 and other targeted discussions with competent authorities, ADR practitioners, traders’ associations, academics and other consumer protection stakeholders) concluded that there are enough reasons for studying how to modernise the ADR directive. Despite high visiting rate (over 2 million since 2016), the Commission’s Online Dispute Resolution (ODR) platform is underused. Sweeps carried out by consumer authorities keep finding that the majority of EU online traders do not comply with the requirement to include the link to the ODR platform on their website, and for some, if they include the link on their website, they do not intend to use it. This Call for E vidence also intends to assess the relevance of the ODR Regulation for an efficient ADR landscape in the EU . Evaluation [max 15 lines] The Commission is currently carrying out an evaluation analysing quantitative and qualitative data and evidence from the various relevant actors including : a) the Member States’ respo n ses to a standardised questionnaire elaborating on national ADR procedures and architecture, activities of ADR entities (case-handling statistics) and best practices, shortcomings and recommendations , b) targeted interviews, c) case studies, d) stakeholders’ position papers and e ) the results of a backward-looking open public consultation which was open until 27 June 2022. T he evaluation, in line with the Better Regulation Guidelines will analyse the progress in ADR/ODR across all EU Member States (and EEA ) since the transposition of the ADR directive and the direct applicatio n of the ODR regulation in 2015 , shortcomings in view of external trends e.g. increase in online shopping including from third countries, the impact of COVID-19, the rapid developments in the digital markets and the costings to implement ADR/ODR for all the concerned actors . It will also analyse the relevance for current and future needs; and the coherence with wider EU policy objectives stipulated in the recently agreed Digital Services Act (DSA) and Digital Markets Act ( DMA) which introduce d ground-breaking new rules for digital markets and other legislations with a strong consumer angle. Problem the initiative aims to tackle [max 20 lines] Current market trends show that consumers are increasingly influenced by digital markets. E-commerce represents up to 25% of consumers’ expenditure and 50% of annual publicity spending by businesses is taking place online. According to the Consumer Conditions Survey 2021 , up to 77% of consumers declare having been exposed to at least one unfair commercial practice online, while consumer authorities working under the Consumer Protection Cooperation (CPC) Regulation regularly find a high prevalence of unfair practices when screening websites in a coordinated manner (e.g. 2022 sweep about consumer reviews ). Furthermore, the complexity of disputes has evolved - online markets are characterised by the growing importance of intermediaries and traders from third countries or by how consumers access pre-contractual information. As a result: consumers are increasingly exposed to unfair practices performed by online intermediaries that hinder an efficient out-of-court enforcement of their rights, notably in relation to pre-contractual marketing practices; consumers are buying more from traders who are established and operational outside EU making dispute handling more complex ; unfair commercial practices can spread extremely rapidly across entire online markets due to the high business concentration (with few large platforms in oligopolistic positions), rapidly increasing the number of consumers in need of redress across the EU. consumers largely use the redress systems put in place by large platforms or other operators but these may not follow the same clear fairness criteria as those established in the ADR directive. On the other hand vulnerable consumers are increasingly obliged to use digitalised dispute resolution proposed by traders and may need specific assistance. resources available to fund ADR systems are unlikely to increase in the future and therefore costs of such systems have to be adapted to the low value of digital disputes (as the average order value online is 110 euros). With the rate of development of online markets, it is likely that these problems will continue to increase leading consumers and traders to increasingly use digitalised dispute resolution systems or have problems that fall outside of the scope of the ADR Directive, de facto hindering access to fair dispute resolution in the Single Market for consumer goods and services. In addition, a s the current ODR platform is underused and not cost - efficient , the Commission intends to discontinue it and integrate its successful elements into the ADR Directive in order to improve signposting to quality ADR entities. Basis for EU action (legal basis and s ubsidiarity check ) [max 10 lines] Legal basis Article 114 of the Treaty on the Functioning of the European Union ( TFEU ) . Practical n eed for EU action Online markets are cross - border by nature hence common criteria for dispute resolution adapted to such markets are needed to ensure that consumers and trader s can access fair mechanisms , including in a cross-border context and/or when a trader from a third country or an online intermediary is involved . The 2019 Commission report drew attention to the significant fragmentation of the national/sectoral ADR landscapes due to the minimum harmonisation approach of the ADR Directive. Only an EU legislation can offer updated common quality principles and procedures necessary for an efficient Single Digital Market for consumer . B. Objectives and p olicy options [max 20 lines] The Commission is currently looking into options to modernise the current ADR legislation by taking into account the evolution of digital markets, extending its scope while reducing its complexity and providing for self-certification options. In particular the following ideas are considered: Widening the scope or providing clarifications regarding pre-contractual law requirements (e.g. from the Consumer rights directive) from the moment a contract was concluded, role of intermediaries acting on behalf of traders or consumers in pee r-to-peer trade, access for non-EU traders; Incentivising online platforms to offer quality self-certified dispute resolution systems and mechanisms, for trade associations to provide cross - border ADR structures, and for ADR entities to develop efficient cross-border and collective procedures ; Reducing costs by simplifying some reporting obligations and reducing eligibility barriers for ADR entities ; C larifying rules on the links with judiciary procedures (e.g. enforceability of ADR outcome; suspension of limitation periods; application of EU statutory rights); Repealing the ODR Regulation, which is extremely rarely used leading to about only 1 00- 2 00 new cases processed by ADR entities per year EU wide. Instead , the Commission could provide online tools improving the awareness of consumers on redress solutions and especially ADR systems and ; Providing customised support to consumers not able to use digitalised procedures. These options are notably proposing to extend the use of quality criteria to systems provided by online businesses on a voluntary basis, also benefiting third-party traders which are notably SMEs. Furthermore, information obligations for traders would be simplified, while the repeal of the ODR directive would supress the obligation for all traders, whatever their size, to offer a link to the ODR platform, even if they do not intend to use it. C . Likely i mpacts [max 10 lines] Simplification and scope enlargement should not require M ember States to change their current ADR landscape. More use of ADR should enable economies of scale for ADR entities and cost reduction for business users. Setting up online dispute resolution systems in line with ADR quality criteria should remain a limited investment for platforms beneficial to boost their reputation, increase consumer trust and reduce the costs linked to handling complaints by unsatisfied customers . Member States would also not need to enact specific legislation on such matters and thus this would reduce the risk of fragmentation of the digital market by national laws. The repeal of the ODR regulation will pro vid e substantial cost reduction for SME s and for the Commission , which run s the ODR platform . Strengthening and simplifying the ADR mechanism for cross-border disputes and providing useful online tools would be more beneficial than continuing to invest in modernising an underused platform. No significant environmental or f undamental rights and equality or social impacts are foreseen , while the level of consumer protection in the EU is expected to be higher . T he proposal aims at simpl if ying and reducing the cost s of the existing ADR landscape in the Member States and making better use of digital possibilities while protecting vulnerable consumers . D. Better r egulation i nstruments Impact assessment [max 10 lines] A n impact assessment will be carried out to analyse the problems and impacts of the proposed policy options, including the types of direct (compliance and enforcement) and indirect regulatory costs to be incurred . It will be supported, among others, by the findings of three ongoing studies aiming to gather information on the current functioning and costs of ADR systems in the EU . Consultation strategy [max 10 lines] The Commission has already consulted with stakeholders in particular : A virtual ADR assembly in September 2021 attended by over 300 ADR practitioners, ADR competent authorities, consumer and trader organisations, academics, etc. Targeted ADR discussions with the Consumer Policy Network and Consumer Policy Advisory Group in December 2021; A workshop on the use of digital tools supporting consumers to enforce their rights at the Consumer Summit 2022; A cross-border ADR roundtable co-organised with the European Consumer Centres network in June 2022 attended by ADR practitioners, consumer and trader organisations (i.e. BEUC and Ecommerce Europe) , ECCs and academics [to provide link to the outcome report once finalised] ; A backward-looking approach open public consultation (April – June 2022) on the CPC regulation and the ADR directive. Further targ et ed consultation actions are planned with ADR entities handling energy-related cases (September 2022) and travel cases (October 2022) , with ADR competent authorities (August 2022) and a citizens ’ panel . A forward-looking public consultation will be launched in Q3 2022. The questionnaire will be available in all official EU languages which can also be used for replies. The consultation will remain open for a period of 12 weeks. The consultation will be promoted via the communication channels put in place by the Commission for exchanges across the ADR entities, ADR competent authorities and others (e.g. European Consumer Centres) and social media. After closing the public consultation, the Commission will publish a factual summary report on Have Your Say . In addition, a synopsis report covering all consultation activities will be annexed to the Impact Assessment. Why we are consulting? The consultation aims at collecting the views of various interested organisations and businesses on how to improve consumer redress in the EU, how to ensure a level playing field among all traders operating in this market from big-scale platforms to SMEs, and how to ensure that consumers enjoy the same level of fairness online and offline. Target audience Contributions are welcome from anyone with a direct interest in the enforcement of consumer rights in the EU by consumers themselves but also business views on how to ensure that the Single market functions smoothly, minimising the number and burden of disputes, ensuring a high level of compliance to consumer legislation , a level playing field for all concerned businesses and increasing the trust from consumers. Saatja: <[email protected]> Saadetud: 22.08.2022 15:09 Koopia: <[email protected]>; BENASSI Marie-Paule <Marie- [email protected]>; DARMANIN Stephanie <[email protected]>; LE BRETON Lucile <Lucile.LE- [email protected]>; TUCH Margarita <[email protected]> Teema: Invitation for the online ADR Competent Authorities meeting - 29 August 2022 - 10:00-12:00 CET Dear Colleagues, We would like to invite you for the next online meeting for the ADR Competent Authorities which is taking place on Monday 29 August, 10:00- 12:00 CET via Webex. Connection details: Meeting number: 2740 221 0777, Password: zyRQvUV@867 (99778881 from phones) Join by video system: Dial , You can also dial 62.109.219.4 and enter your meeting number. Join by phone: &#43;32-262-00867 Belgium Toll, &#43;352-2730-0072 Luxembourg Toll, Access code: 274 022 10777 The Commission Work Programme 2023 - to be adopted in September - is expected to include a Consumer Enforcement Package which aims at strengthening and modernising the ADR Directive and the CPC regulation to make them better fit to digital markets. The meeting of next week aims at kick-starting discussions with ADR competent authorities on the areas which the Commission is considering to update in the ADR Directive. These considerations are based on several consultation activities the Commission has organised in the last months; including the ADR Assembly 2021, the Consumer Summit 2022 and the Cross-Border ADR expert roundtable of last June, the analysis of national ADR reports and interviews carried out by the external contractor. In view of the evaluate first principle outlined in the EU Better Regulation Toolbox, the Commission is undergoing a back-to-back fully- fledged evaluation of the current ADR framework and an impact assessment assessing different revision options. The Commission intends to publish the ADR Directive application/evaluation report next year in line with its Article 26 and eventually the impact assessment and a legislative proposal to amend it. Attached you find the draft of the Call for Evidence and public consultation questionnaire which the Commission will publish on the Have your Say website in all EU languages in September. The Call for evidence describes the shortcomings to be tackled and objectives to be met, explains why EU action would be needed to ensure that ADR is robust and fit for the digital markets, outlines policy options and describes the main features of the consultation strategy. These documents are also saved on the ADR WIKI: During the meeting, we will kindly ask that you express general remarks about the options presented in the Call for Evidence. Written comments/suggestions can be sent to us by Friday 2nd September on so that we can update these documents before sending them for translation. Should you have further questions, please do not hesitate to get back to us. Regards, ADR team European Commission Directorate-General Justice and Consumers Directorate E Consumers Unit E3 Consumer enforcement and redress Public Consultation Questionnaire Strengthening consumer law enforcement in the Union through public action from national authorities and the Commission and through advanced Alternative Dispute Resolution for consumers Introduction The New Consumer Agenda adopted by the European Commission in November 2020 underlines that EU consumer rights can only be a reality for consumers if they are properly enforced. Businesses have to know and respect those rights, national authorities have to sanction wrongdoings and consumers fight for their rights in case of disputes. The Agenda particularly focuses on the challenges posed by digital markets to ensure that they are as fair as offline markets. Indeed, on such markets, unfair practices can spread very rapidly and cross-border as they know no borders. All parties including consumers, traders, organisations representing their interests and public authorities have therefore to play a crucial role in ensuring that consumer law is enforced in an effective manner across the EU. In particular, when there are systematic issues of compliance by a given trader, public authorities should use state-of-the-art enforcement and investigative tools to detect and stop wrongful online practices. When something goes wrong, individual consumers should be able to find an appropriate redress solution taking into account the characteristics of digital markets. Enforcement of consumer law is also a top priority for the European Commission because it strengthens consumer trust and ensures a level playing field for traders in the single market. As EU consumer law is largely harmonised, the same law applies in all EU/EEA countries. In order to facilitate equal enforcement of these laws by public authorities, the Consumer Protection Cooperation (CPC) Regulation (EU) 2017/2394 establishes a framework to allow national authorities to cooperate with each other within the EU/EEA. The EU also provides a common framework to assist consumers and traders solve their disputes out-of-court, since such disputes are usually of a low value that would not be economical to solve in court. The EU le gal framework spelt out in the Alternative Dispute Re s olution (ADR) Directive 2013/11 requires Member States to put in place ADR systems covering national and cross-border disputes in all consumer markets . Furthermore , the Commission is providing an Online Dispute Resolution (ODR) platform in accordance with the provisions of the ODR Regulation (EU) No 524/2013 which enables e-shoppers to seek the agreement of traders to use and resolve their disputes using an ADR procedure. The Commission is planning to adopt a “Consumer Enforcement Package” under the Commission Work Programme 2023 [ link ] to modernise these laws through targeted amendments Earlier on in 2022, the Commission already carried out a backward-looking public consultation . This time round, the public consultation has a forward-looking approach and aims to gather views from the general public and relevant stakeholders to feed into the impact assessments of a n umber of possible amendments. Questionnaire Respondent ident it y It is commonly accepted that having a dispute with a trader or consumer based in another country is a difficult process. In your view, what could encourage consumers and traders to call on a neutral third party to resolve a cross-border dispute? The case is carried out entirely online The case is handled in English There are clear quality criteria which are the same wherever the consumer and the trader are located. There is assurance that the ADR entity is independent of specific traders or consumers interests The ADR entity is subjected to transparency requirements The ADR entity is subjected to regular independent auditing requirements There should be a system to ensure that the trader complies with outcomes Other (please specify) Would you accept to participate in a dispute filed by more than one consumer through an out-of-court entity? Yes, this should help solve systemic problems Yes, but clear rules should be established for example on right of defence, cost of procedure, etc... No, this is going to be too complicated and/or lengthy I don’t know How relevant do you think it is for EU legislation to make out-of-court dispute resolution available in the following scenarios in order to improve their fitness to digital markets? Very relevant Relevant Not Relevant I don’t know Disputes against non-EU traders Disputes related to pre-contractual information e.g. misleading marketing, no information on customs and VAT Disputes arising in transactions between consumers on platforms (e.g. second-hand markets, peer-to-peer transactions) Disputes arising with intermediary services paid by traders Disputes filed by businesses against consumers Many major platforms and multinational traders are designing their own private tools and impose traders and consumers to use them in case of a complaint. Would you feel confident using them? [select 3 options] : Yes such systems are normally faster and cheaper Yes but I want to be sure that I can appeal if I don’t agree with the outcome Yes but only if the system has good reputation based on transparent consumer reviews Yes but case-handling has to be in a language I am familiar with No, such systems are usually not independent No because the process is too difficult to understand and if there is a disagreement it will be impossible to understand where it comes from Other (please specify) The Commission manages an EU digital system to encourage traders to agree to solve a dispute against consumers within one month through an ADR system. However, despite improvements, this system is only leading to sending less than 200 cases per year to ADR entities in the whole EU. In view of its lack of cost efficiency, t he Commission is considering discontinuing it. It can stay as it is I did not know it existed It is worth modernising it It is better to stop it I don’t know In your view, what are the major challenges that national consumer authorities face in digital markets No specific challenge as generally they effectively tackle illegal commercial practices committed by online traders They have limited means to stop illegal practices of traders not established in the EU (legal and/or jurisdictional) They take a lot of time to change illegal practices of large online traders as these traders have important resources to defend themselves Certain problems are the same in all EU countries and they should be more effectively addressed at the EU-level I don’t know Do you think that the European Commission should have a stronger role in investigating multinational traders in the EU on breaches of consumer law? Yes No I don’t know Should the European Commission have the power to impose fines on large multinational traders in case of breaches of consumer law? Yes No I don’t know 9. Do you have other comments/suggestions on consumer protection at national or EU level? [free text]