This article was published at www. maverick-law.com
We expect the trend of more frequent and higher fines being imposed in consumer law cases to continue in 2019. 2018 was a turbulent year in terms of consumer law enforcement. The Netherlands Authority for Consumers and Markets (“ACM”) instituted a record number of legal proceedings. High fines were also imposed.
That spells trouble for the future. ACM has not yet applied the ACM Increase of Maximum Fines Act in consumer law cases. That tougher fining regime allows ACM to impose a maximum fine of €900,000 per violation, provided that the violation took place after 1 July 2016. The European Commission furthermore presented a proposal this past year aimed at allowing ACM to impose even higher fines in the case of cross-border violations of consumer law. The main developments in this field are addressed below.
As we reported in an earlier blog, the debt collection sector is currently the focus of ACM’s attention. This past year, ACM imposed a €375,000 fine on Credit Invest and a €40,000 fine on its managing director. Credit Investput pressure on consumers to pay invoices for invalid agreements. This fining decision was partly reversed on appeal, however. The Rotterdam district Court found that ACM had not correctly determined the duration of one of the violations. ACM furthermore warned consumers that the Pay Care debt collection agency was guilty of aggressive debt collection practices. Intrum Justitia offered commitments to ACM to avoid infringement proceedings. Investigations by ACM into other debt collection agencies are apparently also pending.
ACM is also still devoting attention to the travel sector (see our trend for 2018). Early last year, Belvilla was fined for misleading pricing and ACM warned about the sales practices of De Reisplanner. Later last year fines were imposed on VoetbalOnTour for failure to offer the insolvency protection required by law and an administrative enforcement order was imposed on Vakantiegarant on the grounds of misleading telephone recruitment.
It is also worth mentioning that ACM frequently checked in 2018 whether companies stated prices correctly. Seats and Sofas was fined for advertising misleading price markdowns and for failure to comply with the Prices Act. Together with other European supervisory authorities, ACM furthermore demanded clearer prices and fairer conditions of Airbnb. ACM also successfully called to account sellers of second-hand cars and car tyres, regarding the manner in which they stated their prices. Bo-Rent promised ACM that it would change the prices on its website so that they included VAT in future. An investigation into companies that operate dating sites is pending. More clarity is expected in the course of this year.
Successful appeals and objections
It is worthwhile litigating against fines imposed by ACM. In response to one objection, ACM reverted its decision to impose a €600,000 fine on a company that allegedly violated the spam prohibition. The reason for this was that ACM had not kept accurate records of how it had handled its investigation dataset. Those documents therefore could not serve as evidence of the violation. On the other hand, Volkswagen’s objection to the fine imposed on it by ACM on the grounds of the dieselgate was unsuccessful.
Companies are also frequently successful on appeal. The Rotterdam district Court, for instance, halved the fines imposed by ACM on the CoolCat, because its webshop did not comply with the statutory information and repayment obligation. ACM had violated the principle of equality by warning other companies before fining them. CoolCat had not been given such a warning and was therefore denied the opportunity to change its behaviour.
In turn, the Trade and Industry Appeals Tribunal ("CBb") annulled the fines that ACM imposed on the managing directors of Daisycon for being de facto in charge of a violation of the spam prohibition. ACM had insufficiently substantiated its decision to fine those managing directors. The fine imposed on Daisycon was reduced because the proceedings were not completed within a reasonable period.
In the appeal proceedings instituted by the TOM webstore, the CBb did not uphold the arrangement of joint and several liability for the fine opted for by ACM. In the CBb’s opinion, the General Administrative Law Actdoes not allow ACM to hold infringers jointly and severally liable for a fine. That was cold comfort for the three offenders: the Tribunal itself determined the (individual) fines.
But ACM was not always unsuccessful before the Rotterdam District Court and the CBb. The fines that it imposed on Cash Converters, Calatus and Corendon were upheld.
New European legislation
Developments are also ongoing in the field of European consumer law. The entry into force of the Geoblocking Regulation on 3 December 2018 has long been awaited. The Geoblocking Regulation obligates sellers to treat end customers from the EU equally, regardless of their nationality or location. For Internet traders this means, for instance, that they may no longer automatically reroute customers or block them from accessing their website on the basis of their IP addresses. Our earlier blogs on geoblocking can be found here, here and here.
ACM will monitor the enforcement of the geoblocking prohibition. On 5 February 2019, the Upper House of Dutch Parliament approved the bill that grants ACM the competence to do so. For violations, ACM may impose a maximum fine of €900,000.
Also relevant to e-tailers is the entry into force of the new Regulation on cross-border parcel delivery. National supervisory authorities will be given greater powers to take action against high parcel prices. The Regulation furthermore provides for a special website on which companies and consumers can compare cross-border parcel delivery prices.
In an earlier blog we discussed the evaluation of the main European directives in the field of consumer protection. The outcome of that fitness check was reason for the European Commission to propose two new directives. The first part of this New Deal for Consumers concerns a Directive on representative actions for the protection of the collective interests of consumers. The objective of the Directive is to allow consumers to take collective action against companies that violate consumer law. The proposed Directive serves to replace the Injunctions Directive.
The second Directive is an amendment to the Directive concerning unfair business-to-consumer commercial practices, the Council Directive on unfair terms in consumer contracts, the Directive on consumer protection in the indication of the prices offered to consumers and the Directive on consumer rights. It is worth mentioning that national consumer watchdogs must be able to impose higher fines in the Commission’s opinion. The Commission believes that in the event of cross-border violations of consumer law the fine must be at least 4% of the turnover generated by the offender in the Member States in question. The Commission furthermore believes that new rules should be introduced for online marketplaces. Those new rules must clarify in what cases payment has been made for a higher position in the search results. It is often still too difficult for consumers to distinguish advertisements from “real” search results.
In sum, there are many developments in both the Netherlands and Europe. ACM has stated that in 2019 it will focus on sales via social media and on unlawful charges by rental agencies. Particularly if the European Commission’s proposals are accepted, the chances of being caught and the fines increase. Compliance with consumer law is therefore more important than ever.
See this blog for the main tips for companies that offer products or services to consumers.
All information on dawn raids by ACM and the European Commission can be found at invalacm.nl.