European Commission Proposes Member State Purchasing Rights

Posted: Dec 25 2015, 11:47am CST | by , in News | Latest Business News


European Commission Proposes Member State Purchasing Rights
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  • Only 12% purchase from other countries.
  • Expected profit of €18 billion.
  • Plans to boost digital consumerism.

Online shopping's started to become the norm, but Europeans show hesitation in buying from member states. The European Commissions looks for solutions on complaints of cost and product value.

Consumers in Europe may find it easier to claim damages on digital and physical goods, thanks to a proposal by the European Commission. In the new changes, online consumers would have up to two years to claim damages and burden of proof would be on the seller, not the customer. It’s a big change for the commission, too.

As online shopping increases, many European nations haven’t seen an increase of intercountry purchasing. In fact, only 12% of the retailers sell in multiple countries, which counters the idea of an economic model set out by the European Union. Yet the same retailers may see online sales of 37% to their country; roughly three times as many sales missed in the current model.

One of the largest barriers is the change in differences in consumer law. While the EU works together in creating a more dynamic economic system, individual laws may restrict effective growth. By enacting a multiple-pronged approach, EU members may see an increase of €4 billion ($4.93 billion USD). For smaller businesses, opening up the market will help drive down prices while increasing the consumer pool.

Imagine selling some unique, homemade blankets with an upward following; but the items are limited to maybe one or two countries. Kitsch sells, but it’s hard to sell across borders if laws prevent reasonable response for both business and consumer. That’s why the Commission’s looking to generate sophisticated household consumerism—up to €18 billion ($19.7 billion). And the forward movement will offer between 8 and 13 million potential consumers for the 122,000 new businesses.

Pretty nice growth potential there.

Rights and Competition

According to the commission, “the rules will apply when consumers pay for their content with money or if they give their data to access the content (e.g. by registering to an online service/ social media).” A very important distinction as consumers increasingly move away from cash payment and look at digital services, which may function as banking institutions in Europe.

Products like e-books are becoming viable options to decrease boredom for people using public transportation to get to work every morning, stay-at-home parents, and retirees. Upping audience through a common framework of consumer rights means repeat business. Repeat business will help energize that €18 billion.

Consumers will be able to complain to giants like Amazon and Google without having to prove that the book is missing two chapters or skipping six minutes into a purchased movie, too. While the bigger companies may easily afford a replacement, smaller ones may not. As digital products become more common place, the value of reputation grows for smaller startups.

In February, Estonian Commissioner Andrus Ansip noted a potential employment growth up to 4.6 million jobs with a forecasted €6.7 billion revenue by the end of 2018. Ending any potential problems before the increase will drive tech sector innovation and audience quickly.

He pointed that by “cutting red tape for entrepreneurs and smaller companies when they are trying to innovate, with easier set-up, registration and cross-border business rules,” the European market would transition into a more global, digital market. And as the Vice President for the Digital Single Market, the politician’s observations faces implementation.

Plus not only will consumer-based purchases like goods find sales increases, but data privacy businesses will see an increase as businesses must follow a new set of legal standards.

Digital Data Rights

But it’s not just the increase in money. It’s also the increase consumer protection. If a customer buys an e-book that doesn’t work, the current model holds a company liable but with limitations. In the proposal, the justice department will demand new regulations. In the case of defective digital goods, “it will not be up to the consumer to prove that the defect existed at the time of supply, but rather for the supplier to prove that this is not the case.”

That’s a huge victory if purchasing a song or e-book from another Member State. An action that is somewhat in line with the commonly touted capitalist theory of the customers is always right. After all, a simple resolution with a correct product may lead to repeat business. Two years applies to physical purchases, like a camera, but currently “the time period during which the seller has this burden of proof varies by Member State.”

Mandating a system of protection allows for customer knowledge before reading the fine print.

Nor will sellers face a potential opportunity for refund if no notification to seller by a certain date. A date that is again dependent on individual Member States. Second-hand purchases off sites like eBay will find a two-year guarantee as well. Online businesses are growing as consumers look at the ease of internet purchases versus in store purchasing.

Given holiday peak season, the proposal launch in December makes a lot of sense from a distribution standpoint. Unhappy customers will be flooding nation state consumer departments for resolution. Changes will definitely be required in the next several years since freelancing is on the rise as well. Recent numbers by Fast Company indicate as many as 40% of the global economy may be fueled by freelance workers. With nations pushing for more tech companies, buying power must change.

For those purchasing digitally, the right to end a contract will be direct and easier to accomplish. Additionally, the business must delete all information related to the ended contract. Personal information security is a widely-held demand of the Commission. Placing the directive in new law would help solidify common terminology for consumer and seller.

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