Transparency, a key element in protecting consumer rights. What should economic operators observe?

Economic operators should pay particular attention to the transparency requirements contained in consumer protection legislation from the moment contracts between professionals and consumers are drawn up and concluded, according to an analysis by the law firm PeliPartners.

PeliPartners specialists draw attention to the fact that the lack of an applied assessment of consumer protection legislation in relation to the specific activity of an economic operator may lead to possible limitations of their rights.

“At the European level, Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts provides as a general rule that, in case of contracts where all or certain terms are offered to the consumer in writing, these terms must always be drafted in plain, intelligible language. At a national level, the Directive is transposed by Law no 193 of 2000 on unfair terms in consumer contracts between professionals and consumers, which sets out the requirements to which economic operators must pay attention when they intend to conclude contracts with consumers. Under it, contracts will contain clear, unambiguous terms that do not require specialist knowledge to understand,” explained Cătălina Burcă-Andonie, Associate PeliPartners.

Transparency requirements can be better understood by analysing the guidelines issued by the European Commission on this subject, as well as the recommendations of consumer protection authorities in other European states.

European Commission guidelines on transparency requirements

The European Commission assists economic operators by pointing out in the Guidance on the interpretation and application of the Directive on unfair terms in consumer contracts the factors which might be relevant to determine whether a given contract term is clear and understandable and thus complies with transparency requirements:

(a) the consumer’s real opportunity of becoming acquainted with a contract term prior to the conclusion of the contract; this requirement would also include the question of whether the consumer had access to the contract term(s) and had the opportunity to read it/them, this including any additional documents or annexes;

(b) the comprehensibility of the individual terms, based on the clarity of their wording and the specificity of the terminology used and, where appropriate, in conjunction with other contract terms; in this respect, economic operators should take into account the position or perspective of the consumers to whom the relevant terms are addressed; this would also include whether the consumers to whom the relevant terms are addressed are sufficiently familiar with the language in which the terms are drafted;

c) the way in which contract terms are presented; this might include aspects such as:

• the clarity of the visual presentation, including font size;

• the fact of whether a contract is structured in a logical way and whether important stipulations are given the prominence they deserve and are not hidden amongst other provisions;

• whether terms are contained in a contract or context where they can reasonably be expected, including in conjunction with other related contract terms etc.

“The Court of Justice of the European Union has at the same time consistently clarified in its practice that, for a contractual term to be transparent, it is not sufficient for it to be formally and grammatically intelligible, but consumers must be able to assess the economic consequences of the term or contract in question”, explained Cătălina Burcă-Andonie.

This broad interpretation of transparency implies that economic operators must provide consumers with clear information on contractual terms and their implications/consequences prior to the conclusion of the contract, a test which can prove burdensome without expert legal advice.

Recommendations from European consumer protection authorities

The UK’s consumer protection authority has published a list of tips and key points considered essential for businesses dealing directly with consumers, recommending them to:

• respect consumers’ interests; not use terms and conditions that the company itself would not accept;

• deal openly and fairly in terms and conditions with consumers; do not hide important wording and do not use small print that might surprise or mislead consumers; wording that has a significant impact on consumers should be of particular concern to them;

• legal language or jargon should be avoided; it is important to use plain language that any ordinary person can understand;

• written and clearly defined contracts should be used for complex transactions;

• allow consumers time to read and understand the terms before entering into the contract; this may include explaining important wording that may be difficult to understand;

• pay particular attention to wording which, for example, limits the extent of the economic operator’s liability, transfers risks beyond the consumer’s control to the consumer, allows the economic operator to modify the contract, imposes financial sanctions – for example by charging cancellation fees – or allows for the retention of advance payments or automatic contract renewal.

Similar recommendations for transparency have been issued by the Dutch consumer protection authority.

The authority has developed and published a guide adapted to the developments in the market following the evolution of online commerce, focusing on the limits that economic operators must observe in the process when persuading consumers.

With regard to transparency requirements, namely when assessing whether essential information has been omitted or concealed, the authority considers the actual context and the limitations of the medium used. From the perspective of the authority, on a website, an economic operator is almost always able to provide essential information.

The authority argues that it would be beneficial for consumers if this information were presented in several layers: the essential information should be clearly visible in the offer, with the possibility to access additional information via a different link. In this context, the analysis of PeliPartners shows that significant penalties that could be applied to the consumer by the provider should be clearly reflected in the offer, so that the consumer can tailor their behaviour or compare offers that include such penalties.

At the same time, if an economic operator also uses an app, a layered presentation of information could overcome the limitations of a smaller screen, which is why different media may require different approaches to inform consumers correctly.

Why is it important to comply with the transparency requirement?

Lack of transparency does not automatically lead to the unfairness of a given contract term. This means that, once it has been established that a contractual term is not in plain and intelligible language, its unfairness normally still has to be assessed according to whether it is likely to cause a significant imbalance between the rights and obligations of the parties arising under the contract, to the detriment of the consumer. Conversely, contractual terms which are perfectly transparent may be unfair because of their unbalanced content.

However, to the extent that contract terms are not clear and intelligible, namely where sellers and suppliers do not comply with transparency requirements, this circumstance may contribute to a finding of unfairness of a contract term, or may even indicate its unfairness. For online transactions, we believe that the risks to which the supplier of the good or service, namely the distributor/agent/provider of the platform on which these goods or services are traded, may be exposed, should be analysed. Thus, the service provider could remain liable for the unfairness of a contractual term and lack of transparency if the service was contracted through an online aggregator/platform that did not visibly display the relevant conditions to the consumer.

In order to avoid any misinterpretation to the detriment of economic operators as regards the transparency of the contractual clauses used, it is advisable that they constantly check both the terms and conditions used in the relationship with consumers and those establishing the intermediation relationship, in order to reconfirm that the clauses fall within the requirements and standards in the field.

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