Recently the European Parliament approved new EU rules that strengthen the position of consumers, when buying ‘digital’ products online. And yes, this has implications for you too.

The point of these rules is to promote the ‘Digital Single Market Strategy’. Within the EU, there is already the single market with the four principle freedoms. This single market idea is not yet completely implemented for the digital market. These rules are meant to create the same rights for every European in each European Union country.

These rules are basically to set a European standard of consumer protection. Many countries already have a better standard than these new rules provide. We will get into that later. The situation may change for some companies and consumers.

A fictional example of the old situation and the new situation:

Old situation: A consumer in Hungary buys an online software package, but some of its functions are defective. However the Hungarian company doesn’t reimburse, because the Hungarian consumer law doesn’t obligate companies to reimburse in case of defects (again, this is fictional).
Logic: the software was functional, there were only some restrictions. But the consumer could still use the software, so he has to pay.

If a consumer has the same problem in Germany, the German company has to reimburse the payment, because the German law does obligate companies to reimburse in case of defects.
Logic: the software didn’t function the way the consumer could expect and thus he should be reimbursed.

However, if the same situation occurs in Belgium, the consumer has no right for reimbursement, but instead receives a price reduction for the defective functions in the software.
Logic: the consumer could use the software, but it was restricted, thus he should only pay equal to what he could use.

So basically, the consumer rights in all three countries are different. Imagine the complexity when a German buys defective Hungarian software online.

New situation: A European consumer buys  European software which has defects. The European consumer has the right to reimbursement. (This is a lot less complex).

So what are the new rules?

New EU Rules

Apps and Smart Products

The new rules are seperated in two sets of rules. There is a set of EU rules on ‘defective digital content’ and a set of EU rules on ‘faulty goods’.

I think it’s pretty obvious what is meant by digital content. These are games, apps, music, videos, online software, etc. For example, if you use an online CRM software, you’re playing Fortnite or you’re using an ecommerce platform like Lightspeed or Magento, your rights are improved.

Smart products are, contrary to digital content, covered by the new EU rules on faulty goods. Smart products depend on the software that’s in them. If the software is defect, this means that the product is defect and thus it’s a faulty product.

Rules against Defective Digital Content

Yes, you just read that right. If you use an ecommerce platform to run your webshop, you technically purchased an online software. Although you’re not technically a consumer, you’re rights might also be reinforced.

If you sell software, you’re on the other end of these EU rules (together with us, so welcome to this side). You may have to reimburse sooner than you had to under your national law.

For now, here is a simple rule to know these new rules apply to you: Every time you accept a terms & conditions online, these new rules apply to you as a consumer. Every time someone accepts your terms & conditions online, these new rules apply to you as a provider. (Note that this also happens every time someone purchases something on your website).

What are the consequences of these new EU rules? In case of defective digital content:

  • If you can’t fix the defect within a ‘reasonable time’, the consumer has the right to either ask for a price reduction or a full reimbursement. The customer has 14 days to ask for it, but it’s not yet clear when the ‘reasonable time’ has ended. This probably differs per type of digital content or defect;
  • If the defect shows up within a year after delivery, the defect is presumed to have existed at the time of delivery. The consumer doesn’t need to prove that the defect existed at that time. The burden of proof is reversed to the supplier, he needs to prove the defect did not exist at that time;
  • In case of one-off supplies, the guarantee period is at least two years. In case of continuous supplies, the guarantee period is as long as the contract is;
  • In case of online software with a subscription per unit of time, the supplier is allowed to modify the content, but only if the contract allows it and the consumer is notified in advance. The consumer is also allowed to terminate within thirty days.
EU Rules

Rules on faulty goods

The rules on faulty goods are a lot like the rules against defective content. The changes are a little less radical though. Most countries already have a pretty good consumer protection.

The ‘new’ rules are:

  • Consumers have a free choice of redress. They choose to either let the product repair or to receive a replacement. If the repair or replacement isn’t satisfactory, the consumer has the right to a price reduction or a reimbursement. These rules are actually less protective than the Dutch law (where we are based). So don’t just follow these new EU rules, because your national legislation might be more strict. Whenever a national law provides more protection than a European law, the national standard of protection takes precedence;
  • If the defect shows up within a year after delivery, the defect is presumed to have existed at the time of delivery or purchase. The consumer doesn’t need to prove that the defect existed at that time. The burden of proof is reversed to the supplier, he needs to prove the defect did not exist at that time;

Conclusion

Although these new rules seem like a big issue, they’re really not that big of a thing. Most European Union member states have a much better standard of protection already. Whenever a national law provides better protection for consumers, that law takes precedence over the European standard. This means there are still differences among national standards.

However, for those countries that did not have this standard of protection, these new rules do change the playing field. If you’re located in those member states, you’re rights just improved, congratulations.

WARNING: I do want to warn you. Do not blindly trust these new rules. Like I said, if a national standard provides better protection to consumers, that national standard takes precedence. You should be aware of the rules that apply in your country.

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