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EU Floats ‘Most Significant’ Consumer Law Upgrade With Digital Fairness Act
https://www.siliconrepublic.com/enterprise/eu-floats-most-significant-consumer-law-upgrade-with-digital-fairness-act [siliconrepublic.com]
The proposed DFA aims to tackle hard-to-cancel subscriptions and misleading social media marketing practices.
The European Commission, in its “most significant” upgrade to consumer protection laws in more than two decades, has proposed its new Digital Fairness Act (DFA) that aims to provide consumers with added security against common tactics employed by businesses online, including addictive designs and practices that encourage overspending.
The bloc has repeatedly targeted companies such as TikTok [siliconrepublic.com], Meta [siliconrepublic.com], Temu [siliconrepublic.com] and Shein [siliconrepublic.com] over the years, over concerns that the platforms were using such tactics to pressure consumers from making informed decisions.
“A clear example is manipulative design practices, so-called ‘dark patterns’,” explained EU executive vice-president for tech sovereignty, security and democracy Henna Virkkunen.
“When shopping online, we have all experienced fake urgency tactics, such as claims that ‘only 5 items remain’.”
The new law is designed to complement the bloc’s existing mechanisms to regulate online businesses and services, including the Digital Services Act (DSA) and the Digital Markets Act (DMA). Collectively, these laws have been used to fine big businesses in the bloc to the tune of €2bn.
The EU also utilises its AI Act [siliconrepublic.com] – a first of its kind legislation – and its comprehensive data protection law, GDPR, to add further protection to consumers online.
The upcoming DFA proposes to tackle a wide range of issues consumers face, including unfair personalisation that targets their vulnerabilities, “obscure” dynamic pricing and misleading pricing practices.
Meanwhile, obstacles with managing online contracts, including difficulties with cancellation, automatic renewals of subscriptions, unwanted conversion of free trials into paid versions, and the inability to reach a human operator will also be targeted.
The new law also aims to introduce more transparency in how social media influencers conduct their marketing and personalised commercial practices. Children, meanwhile, will not be exposed to practices such as gambling-simulating loot boxes or mechanisms that pressure them to pay to progress in video games, the EU said.
In addition, proposed changes to the bloc’s consumer protection cooperation regulation seek to give the Commission direct investigation and sanctioning powers in very large-scale cases. This includes the ability to impose fines of up to 6pc of a trader’s worldwide annual turnover.
New amendments to the consumer rights directive would include streamlining upfront information for repeat in-app purchases and clarifying how consumers can cancel subscriptions.
The proposed changes are part of the Commission’s consumer package, which aims to not just expand, but simplify consumer laws in the bloc as part of a major effort to cut unnecessary red tape across its regulations [siliconrepublic.com].
The bloc announced a proposed EU Kids Act [siliconrepublic.com] earlier this September that aims to ban social media for children under 13.
“Europe already has a strong digital foundation. With the new Digital Fairness Act and the revised Consumer Protection Cooperation Regulation, we update our safety net consumer rules for the digital age,” said Virkkunen.
The not-for-profit group, Computer & Communications Industry Association (CCIA), however, said that the new proposed law could risk further regulatory inflation.
“The Digital Fairness Act creates an enforcement maze. Having multiple national and EU authorities oversee very similar practices under different EU laws is a recipe for inconsistent enforcement and unnecessary compliance costs,” said CCIA’s Europe’s policy manager Albane Vannier.
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