Consumer rights

Introduction

Consumer protection under EU law covers a wide range of areas designed to ensure fair, transparent and safe transactions between businesses and consumers. Through its case-law, the Court has clarified how EU consumer law should be understood, implemented and applied consistently across all Member States. Some of the key questions include:

• How does the EU ensure that product labelling provides consumers with accurate and non-misleading information?
• What types of commercial practices are prohibited under EU law to protect consumers from misleading or aggressive behaviour?
• How does EU law protect consumers when products are defective or “not in conformity” with the sales contract?
• In what way does EU law protect consumers from unfair contract terms, particularly in cases involving foreign currency loans and exchange rate risks?

Labelling requirements

Clear and accurate labelling of products is a cornerstone of consumer protection in the EU. Consumers should be adequately informed about the ingredients in the food and drink that they purchase so they can make informed decisions about their diet.

In 2014, a German court asked the Court of Justice whether food labelling could be misleading if it creates a false impression, even when the list of ingredients is accurate. Teekanne sold a fruit tea featuring pictures of raspberries and vanilla flowers on its packaging, along with descriptions such as “natural flavourings” and a “raspberry-vanilla taste”. In reality, the tea contained no actual raspberry or vanilla ingredients. The Court ruled that the labelling of a product could be misleading if it suggests the presence of ingredients that are not actually included in the product – even if the list of ingredients is correct and comprehensive. Consumers are entitled to correct, neutral and objective information that is not misleading (C-195/14 Teekanne).

That same year, a French court sought guidance from the Court of Justice in a case concerning the sodium content of bottled mineral water. In 2009, French authorities ordered Neptune Distribution – seller of the sparkling mineral waters Saint-Yorre and Vichy Célestins – to remove claims that the waters were low in salt or sodium, such as statements that the salt content was “less than a litre of milk”. The French court asked the Court of Justice whether sodium content should be calculated based solely on table salt (sodium chloride) or include all forms of sodium, such as sodium bicarbonate. The Court ruled that all forms of sodium – table salt and sodium bicarbonate – must be indicated on the packaging of the bottled water. The consumer might be misled if mineral water was described as low in salt but actually had high levels of sodium bicarbonate (C-157/14 Neptune Distribution).

Aggressive and misleading commercial practices

EU law prohibits unfair, misleading and aggressive commercial practices likely to distort consumers’ economic behaviour. These practices can include false advertising, hidden fees and deceptive sales tactics, which can lead consumers to make decisions that they would not otherwise have made.

In 2011, a UK court asked the Court of Justice whether EU law allows businesses to charge consumers any fee, even a small one, to claim a prize they were told they had won. Five UK companies had been sending promotional materials, informing recipients that they had won a prize but requiring them to call premium-rate numbers and send SMS messages to claim this prize. The companies also required recipients to pay additional fees to benefit from their prize: for example, some promotions offered Mediterranean cruises, but winners also had to pay for insurance, cabin upgrades, food, drinks and port fees. The Court said that aggressive practices by traders that mislead consumers into thinking they had won a prize, while actually requiring them to pay some sort of fee in order to claim it, are forbidden. This is the case even if the fee is minimal compared to the value of the prize or if the trader does not directly benefit from it (C-428/11 Purely Creative). 

In 2015, a German court referred a case to the Court of Justice concerning the company Comtech, which used a special 0180 phone number for after-sales service. While the 0180 prefix is typically used for support services at a national rate, calls to this number were more expensive than to a standard landline or mobile number. A German consumer protection group challenged this as an unfair commercial practice. The Court ruled that the cost of calls to an after-sales number must not exceed the cost of a standard call. Charging higher rates could discourage consumers from using helplines to seek information or to assert their consumer rights, which would constitute an unfair commercial practice (C-568/15 Zentrale zur Bekämpfung unlauteren Wettbewerbs Frankfurt am Main).

Two years later, an Italian court referred a case to the Court of Justice regarding “inertia selling”, which involves demanding payment for products or services supplied to a consumer that were not actually requested by the consumer. The case concerned Wind Tre and Vodafone Italia, which sold SIM cards with pre-loaded and pre-activated internet and voicemail services, charging users unless they expressly asked for them to be deactivated. Consumers were not adequately informed of these charges, and the internet service could even result in connections without the user’s knowledge due to “always-on” apps. The Court noted that this practice constitutes “inertia selling” and an unfair and aggressive commercial practice. Consumers cannot have “freely accepted” these services if they were not informed about their cost or the fact that they were pre-activated and pre-loaded on the SIM card (C-54/17, C-55/17 Wind Tre).

Defective products

Under EU law, all products must conform with the specifications set out in the sales contract. This means that products must meet the required description, quality, functionality and purpose. In addition, they must fit their normal use, match any sample or model shown, include all the necessary accessories, and meet reasonable consumer expectations.

In 2013, a Dutch court sought guidance from the Court of Justice on a case brought by Ms Faber. In September 2008, Ms Faber’s second-hand car caught fire and was completely destroyed four months after she had bought it. Ms Faber held the garage where she had bought the car responsible. However, the garage disputed it was liable and, as the car had already been scrapped, no investigation could be carried out. The Court held that any defect of a product that becomes apparent within six months of delivery is presumed to have existed at the time the product was delivered. While the consumer must prove that the defect existed, and that it became apparent within six months, they do not have to prove the cause of the defect or its origin (C-497/13 Froukje Faber).

Some years earlier, a German court had asked the Court of Justice whether EU law allows sellers to charge consumers compensation for the use of products that are defective before they are replaced. In this case, a German consumer returned a defective stove to Quelle, a shop selling household goods, which replaced it with a new appliance but charged her €69.97 for her use of the original appliance. The Court said that consumers are not required to pay compensation to sellers for the use of defective products before they are replaced. Sellers are responsible for the product’s defects, and so they must bear the consequences (C-404/06 Quelle).

Three years later, two German courts asked the Court of Justice whether EU law requires the sellers to cover the costs of removing defective products and installing replacements. In the first case, Mr Wittmer had bought polished tiles, but after installation, he discovered defects that required a full replacement of the tiles – costing more than four times the original price. In the second case, Ms Putz had bought a dishwasher that turned out to be faulty. She agreed with the seller that the dishwasher could be replaced, but she demanded the seller either remove the defective machine and install the replacement appliance, or bear the cost of removal and new installation of the appliance. The Court agreed with Ms Putz. However, it noted that the reimbursement of the cost of removal and new installation can be limited based on the value of the product in conformity and the extent of their lack of conformity (C-65/09 and C-87/09 Gebr. Weber and Putz).

Unfair terms in consumer contracts

EU law provides that consumers are not bound by unfair terms in contracts concluded with sellers or suppliers. This principle, set out in the Unfair Contract Terms Directive, aims to protect consumers from imbalances in rights and obligations that may arise in standard contracts that are not individually negotiated. The Court has ruled on numerous cases in this area.

In a series of cases, the Court was asked to explain whether national courts must examine, of their own initiative, whether a term in a contract might be unfair.

In one case, a Hungarian consumer, Mrs Sustikné Győrfi, was bound by a clause in her mobile phone contract designating a specific Hungarian court as responsible for hearing any dispute relating to the contract. This court was 275 km from her home, with limited public transport connections. In a subsequent case brought before it, that court wondered whether the term was unfair. The Court of Justice declared that national courts must examine, of their own motion, whether contract terms are unfair – even if the consumer does not raise the issue (C-243/08 Pannon GSM).

In a later case, the Court clarified that this obligation also applied to insolvency proceedings. That case arose when a Czech couple were asked to repay a consumer loan in full along with heavy penalties for failing to disclose a previous property seizure. The Court also stated that national courts must ensure that the information included in consumer credit agreements is provided in a clear and concise manner (C-377/14 Radlinger and Radlingerová).

In a third case, the Court further clarified this obligation to verify all terms of a contract, even when they are not challenged by the consumer. This arose in a Hungarian case where a consumer, Mrs Lintner, had challenged a clause in a loan contract that allowed the bank to change the contract unilaterally, but not other aspects that could also have been considered unfair (C-511/17 Lintner v UniCredit Bank Hungary).

However, the Court has also explained the limits to the role of national courts. A Spanish court had reduced the amount of late-payment interest in a car loan from 29% to 19%. In response to a question from a higher court hearing an appeal, the Court of Justice ruled that national courts cannot revise the content of an unfair term in a contract – they must only set the term aside (C-618/10 Banco Español de Crédito).

Examples of unfair terms

In 2022, a Polish court asked the Court of Justice whether non-interest credit costs are unfair if they are excessively high compared to the service provided. Three Polish consumers entered into credit agreements that included significant additional costs and fees, some requiring cash payments at the consumer’s home. The Court ruled that a contractual term is unfair if it creates a significant imbalance in the parties’ rights, to the detriment of the consumer – for instance, if non-interest costs are clearly disproportionate to the amount of the loan or the service provided (C-321/22 Provident Polska).

A year later, a Latvian court sought guidance on a case involving a 15-year contract between a young basketball player and a company offering career development services. The contract covered various services including training, medical support and marketing, in exchange for 10% of the player’s net income from professional sporting activities. As the player became successful, his earnings exceeded €16 million, triggering a payment of over €1.6 million to the company. The fairness of this long-term and potentially burdensome commitment was questioned under EU law. The Court ruled that such terms could be considered unfair. The national court has to assess their fairness, taking into account whether the terms are clear and intelligible. The terms must also be transparent: the consumer must be provided with sufficient information to evaluate the financial consequences of the commitment (C-365/23 Arce).

Loans in foreign currencies

The Court of Justice has also ruled upon several cases involving loans taken out in foreign currencies, examining whether the terms of these loans – especially regarding exchange rate risks – are fair and clear for consumers. The Court has heard many cases where consumers have taken out a loan in a foreign currency and, following changes in the exchange rate, the consumer was faced with much higher repayments.

The Court has found that, when granting a loan in a foreign currency, banks must provide enough information to allow consumers to make prudent and well-informed decisions. Consumers must be able to fully understand and evaluate the financial consequences of such contract terms (C-186/16 Andriciuc and Others). The Court expanded on this ruling in a further case, stating that a foreign exchange risk term must be clear to the consumer, both in its wording and its actual impact (C-51/17 OTP Bank and OTP Faktoring).

The Court has also clarified that if a consumer takes out a loan in a foreign currency and is unaware that a term in the agreement is unfair, they cannot be subject to any limitation period for repaying amounts based on that term. It also stated that the information provided by the lender about the foreign exchange risk is not transparent if it assumes that the exchange rate will remain stable throughout the loan period (C-609/19, C-776/19, C-782/19 BNP Paribas Personal Finance).

Online consumer protection

In the digital age, online shopping has become an integral part of everyday life, transforming the way consumers purchase goods and services. However, while the rise of online shopping in the digital age has revolutionised retail, it has also introduced unique challenges and risks for consumers. The Court has been faced with many disputes concerning consumers’ rights when shopping online. Key questions include:

• What are the exceptions to a consumers’ “right of withdrawal” when shopping online?
• How should order buttons be labelled to inform consumers of their “obligation to pay”?

Right of withdrawal

The “right of withdrawal” is your right as a consumer to change your mind about something you have purchased “at a distance”. Initially intended to cover purchases via catalogue and mail order, it now equally applies to buying online and is a fundamental aspect of online shopping. Under EU law, consumers have at least 14 days from the date of delivery of their purchase to exercise their right of withdrawal. Without needing to give any reason, you can return your purchase for a full refund.

Reimbursement of delivery costs

In 2008, the question was raised whether a customer was entitled to be reimbursed not only the cost of the product but also the delivery costs. The case had been brought by a German consumer association against a mail order company, Heinrich Heine. Heine charged a standard rate of €4.95 for delivery. If products were returned, this sum was not reimbursed. The Court said that this would discourage consumers from using their right of withdrawal. Therefore, the delivery costs had to be reimbursed. However, the Court said that the consumer may be asked to pay the cost of returning the product. This would allow a balanced share of the costs between the consumer and the seller (C-511/08 Heinrich Heine).

Return after a prolonged period

In 2007, a German court asked the Court of Justice whether a consumer must compensate the seller for using the items before returning them. Ms Messner bought a second-hand laptop online but decided to return it after eight months. Whilst this was outside the normal period for withdrawal, Ms Messner had not received effective notice of the starting date of that period, as required by German law. The seller argued that, in any case, Ms Messner needed to pay them compensation for the eight-month period in which she used the laptop, pointing out that it would have cost a certain amount of money to rent a similar computer for an 8 month period. The Court decided that consumers exercising their right of withdrawal are not required to pay for using items unless they have used them in an unreasonable way, such as contrary to the principle of good faith. This right allows consumers to examine and try out the products without fear of financial penalty (C-489/07 Pia Messner).

Condition of returned products

Questions have also been raised about the condition that products must be in when returned, particularly in relation to hygiene.

In 2017, a German court asked the Court of Justice in 2017 for guidance on a case involving the return of a mattress when a protective film covering the mattress had been removed by the customer before returning it. The Court ruled that removing a protective film could not prevent a consumer from exercising their right to withdraw from online purchases. It noted that the mattress could be cleaned or disinfected, similar to how clothing retailers handle returned products, so that the item could then be resold (C-681/17 slewo).

Tickets for events

There are however limitations to the right of withdrawal. EU law explicitly provides that customers cannot withdraw from ticket purchases for leisure activities tied to specific dates. This is to protect event organisers from last-minute cancellations that could make it difficult to resell tickets. In a decision in 2022, the Court of Justice confirmed that this limitation also applies to tickets sold by intermediaries, such as ticket agencies (C-96/21 CTS Eventim).

Online order buttons

Under EU law, when you buy online, you have to explicitly acknowledge that you are aware that placing your order indicates an “obligation to pay”. This acknowledgement could be, for example, pressing an “order button” on a website.

In 2021, a German court asked the Court of Justice for guidance on a dispute concerning a consumer who clicked on a button labelled “complete booking” on a hotel-booking website. The Court said that, before a consumer places an order online, the trader must inform them of any obligation to pay. While it does not have to use these exact words, the order button must be clearly labelled and indicate that the consumer will be under an obligation to pay when they click it (C-249/21 Fuhrmann-2).

Conclusion

These judgments collectively demonstrate the Court’s commitment to safeguarding the rights of consumers, both in traditional markets and the rapidly evolving world of e-commerce. From product labelling and unfair contract terms to the right of withdrawal and the regulation of online order buttons, the Court has consistently adapted its rulings to ensure that consumer protection remains robust and relevant.