sou · H5B326 · 2017-04-03 00:00:00 — Determine whether the existing legislation is fit for purpose or whether there may be a need to make constitutional changes, both nationally and within the EU, specifically in matters relating to property law, the consumer rights sections of market law, pro- duct safety, inspection and dispute settlement as well as Determine whether there is a need for other measures designed to promote positive developments, for instance as regards infor- mation or cooperation between various players in society. This assignment is subject to certain restrictions. The enquiry should not consider the need for constitutional changes in the regulations pertaining to employment law. Neither should it present constitu- tional proposals or propose the formation of a new public authority. Summary: Sharing economy – on the terms of the users The sharing economy has been the object of great media interest in recent years. It has given rise to considerable debate and many questions. Several new enquiries and reports deal directly or in- directly with this type of economy. In simple terms, the sharing economy refers to that part of the economy in which private indi- viduals, often via websites and mobile apps, can hire, hire out, ex- change or loan resources from each other, such as , tools, vehicles, accommodation and labour. The number of platforms within the sharing economy has grown quickly. There are several predictions pointing to that this economy will grow considerably, not least in quantitative financial terms. However, the sharing economy is not a new phenomenon. Neigh- bours, friends and acquaintances have always lent each other tools, machinery and agricultural implements or helped each other out with services and favours of various kinds. The new factor is that websites and mobile apps now permit a more systematic sharing with a much wider circle of users than before. The enquiry uses the term sharing economy to designate that part of the economy in which private individuals grant each other access to under-used resources, property as well as services, both free of charge and in return for payment. This can be done with the aid of digital platforms or via analogue forums, but their common feature is that resources can be shared with users beyond one’s own circle of acquaintances. Examples of such platforms, whereby private individuals can come in contact with each other, include Airbnb and Couchsurfing, which mediate short-term accommodation be- tween private individuals in many countries via their websites. The main model of the sharing economy typically comprises a tripartite structure whereby the users, i.e. those who offer and pro- vide or request and use a service, enter into an agreement with each other. The service and contact between users is mediated by a plat- form which may be digital or take analogue form. The new factor, and the background to this assignment, is the growth of digital plat- forms which are adapted specifically to transactions in the sharing economy. As a rule, therefore, the model involves three different agreements. Each of the two users enters into an individual user agreement with Summary: Sharing economy – on the terms of the users the mediating platform. The third agreement is concluded between the users and may, for instance, relate to the hire or loan of objects, accommodation or services, i.e. various kinds of work input. The development of the sharing economy evokes many questions from a user perspective. A first question concerns the status of the user on the basis of consumer law. Laws such as the Consumer Pro- tection Act and the Act apply when traders sell goods or services to individual consumers. Both these acts protect consumers and supersede any contractual conditions which provide less effective consumer protection. The starting point is that the weaker party, namely the consumer, typically needs to be protected. However, consumer rights do not apply to transactions within the sharing economy as long as the supplying party does not act as a trader: the assumption is then that both parties are equally strong. When private individuals enter into an agreement with each other, it can in many cases be unclear as to which of them really is the stronger or weaker party. It may even be unclear in which situations a party is a private individual or whether he/she should instead be treated as a professional trader. In the sharing economy, the medi- ating platform is added to the equation. In many cases this lack of clarity can extend to the responsibility of the platform vis-à-vis the users as well as to the relationship between them. If a dispute arises between users who are private individuals, the litigation options are more limited than in an agreement between a consumer and a trader. Thus () does not examine disputes between private indivi- duals. Product safety and product responsibility can also become unclear when private individuals loan or hire objects from each other, are passengers in each other’s cars or hire accommodation from each other. In this way, the sharing economy challenges several of the basic assumptions of our current economy and society, such as established business structures, regulatory frameworks and relation- ships. The enquiry should thus be seen against this background. In its introductory survey of sharing economy platforms, the enquiry applies a broad perspective. The survey covers platforms in a wide sense, such as web-based platforms and apps adapted to transactions in the sharing economy, other types of web-based plat- forms used to mediate sharing economy transactions, such as Summary: Sharing economy – on the terms of the users Facebook, as well as analogue platforms, such as swop markets, bicycle kitchens, clothing and tool banks. In a later phase of the enquiry, which deals with the roles of the users and platforms, their legal status and the need for legislation and inspection, the enquiry applies a narrower perspective. It then focuses principally on web-based commercial platforms whose market activities are regulated by market law. In this context, it also covers the rules which apply when private individuals enter into mutual agreements, irrespective of the type of platform used, and how such rules can be applied in the sharing economy. Models of sharing economy transactions In its survey of sharing economy models, the enquiry has collected information from online searches and social media. These searches have resulted in a large number of recent reports, newspaper articles, overviews, fact books and other documentation which describe the sharing economy and its various players. This information has been collated and resulted in a directory of platforms within the sharing economy. The directory covers some sixty platforms or platform types. They represent an extensive range of types of activity, geographical reach as well as the dimension of non-profit versus commercial acti- vities. The various types of goods, services and other utilities shared via these platforms represent widely disparate sectors, such as short- term accommodation, as well as movable property of many diffe- rent types such as tools, machinery, clothing, toys and leisure equip- ment. Furthermore, there are platforms for sharing transport and a wide variety of other types of service such as childcare, garden work, cleaning, computer support, transport services, etc. The directory gives a picture of the offer side of the sharing economy in in autumn , but only in qualitative terms. It provides no basis for quantifying how widespread the various types of platforms are as regards the utilities which are offered, the distribution between web-based and analogue platforms or distri- bution between commercial and non-profit platforms. There are, for example, a large number of local Facebook groups and analogue Summary: Sharing economy – on the terms of the users local marketplaces which could not be mapped and quantified within the scope of the enquiry. From a geographical perspective, the survey shows that the plat- forms of the sharing economy can be divided up into the following main groups: 1.International platforms that address users in many countries, whereby the sharing of resources can take place at international level (Airbnb, etc.). 2.International platforms that address users in many countries but where the sharing of resources takes place locally (Streetbank, , etc.). 3.National platforms that address users in and where the sharing of resources takes place locally (Rentl, Yepstr, etc.). 4.Local platforms, practically exclusively analogue ones, where re- sources are shared locally (swop shops, clothing banks, etc.). 5.Groups on Facebook and other social media not adapted specifi- cally to sharing economy transactions and which share resources locally. By far the most common payment model for the services of com- mercial platforms is that of payment by commission, but payment via the purchase of “premium or gold membership” is also seen. A basic level of service may be free of charge, but paid membership offers additional functions and is considered to increase the users’ chances of finding a counterparty and completing a transaction. As a rule, both users pay in one way or another for the service. Those who are looking for a service can, for example, pay a service charge. It is also common for both users, according to the conditions of use, to pass their personal data on to the platform. That too is a form of payment. Payment between users can take place in many different ways. This is sometimes regulated in greater or lesser detail in the condi- tions of use. In certain cases it is prohibited for users to accept payment from each other. In other cases, an interval or various guidelines are stipulated for calculating the compensation between the users. Pricing can also be completely free and be left up to users to agree among themselves. Summary: Sharing economy – on the terms of the users The platforms of the sharing economy offer various functions designed to create security and trust between the users and be- tween them and the platform. One such method is to provide some form of review system, i.e. more or less sophisticated systems allowing users to rate each other and submit reviews. Identification via , for example, to confirm the identity of users is another example of a function designed to create security among users. This can also be done by logging on to the platform via a Facebook account. Users can then obtain information about the counterparty via his/her Facebook profile. Especially in the hiring of short-term accommodation, various types of financial guarantees are found which are designed to cover the costs of any damage caused by the counterparty. These guaran- tees may be issued by the mediating platform or take the form of a deposit that is handled by the platform and is paid before the trans- action takes place, e.g. before hired accommodation is entered. In some cases there is also a manned customer service, although this is relatively uncommon. In many cases, the platforms can be contacted only via an electronic contact form. functions are also found, which in some cases resemble a customer service. An overall impression of the survey is that the platforms often emphasize how easy it is to use their service, and often illustrate this by short animations or images. At the same time, the infor- mation on the platforms is often deficient in addressing issues that the enquiry deems to be of importance to the users. This refers, for example, to the preconditions for any tax liability and the criteria for deciding when a supplying user is to be considered as a trader. The latter is important for the type of legislation to be applied be- tween the users in the event of a dispute. Furthermore, the enquiry, in most cases, found a lack of easily available information about the cost of using the platforms, as well as contact information to the platform. Another general impression is that commercial platforms sometimes portray themselves as non-profit operations. Summary: Sharing economy – on the terms of the users Users in the sharing economy The enquiry has a distinct user perspective. Its main task is to examine the existing legal rules in order to determine the extent to which they are fit for the purpose of safeguarding the interests of the users and, if that is not the case, to indicate the need for constitutional changes or other measures designed to strengthen and clarify the position of the users, both among themselves and in relation to the platforms. Against this background, the enquiry commissioned the market research company Novus to carry out a broad-based user survey which comprised a pilot study of focus groups, a quantitative survey as well as in-depth interviews with “super-users”, i.e. people who have extensive user-experience of the sharing economy. The aim of the user-survey was to map the experiences of the Swedish popula- tion of the sharing economy in both qualitative and quantitative terms. A primary concern was to understand the occurrence and types of problems which may have occurred in user relationships or with respect to the mediating platform. The results show that less than about ten per cent of the popula- tion have used sharing economy services at some time during the last two years. Most of them used these services only occasionally. A clear majority, namely 80 per cent, of those who have partici- pated in the sharing economy state that their experiences have been primarily positive. Three per cent stated that their experiences of transactions within the sharing economy have been primarily negative. Almost seven out of ten respondents (68 per cent) who have used sharing economy services state that they did not experience any problems with another private individual in such transactions. On the other hand, a quarter state that they did run into problems. The most common was single problems. The most widely reported problems concerned unfriendly treatment, delays or non-appearance as well as problems with payment. Between six and 18 per cent of the group which experienced problems describe situations to which consumer legislation would be applied, if it had been applicable to the relationship in question. This means that, generalised across the population as a whole, approximately 0.3 per cent have experienced problems in the sharing economy of a type which, in contrast to Summary: Sharing economy – on the terms of the users aspects such as unfriendly treatment, can be countered or remedied by civil legislation. The respondents reported that some sharing economy services felt safer to use than others. The result is essentially the same irrespec- tive of whether it concerns the provision or use of a service. Hire of short-term accommodation and small services are considered to be the most secure. The greatest insecurity is found in connection with boat and car hire and when a is made available as a work- place. The respondents were also asked to state what would be needed for them to start using sharing economy service, or to use them more than at present. The most selected alternative, namely 37 per cent, related to laws that would protect users more effectively in sharing economy transactions. An official quality labelling or certi- fication of the type “Safe e-commerce” is another measure sup- ported by the respondents. A third of them stated this alternative. In third place comes access to a simple and inexpensive form of dispute settlement, which was selected by 28 per cent of respondents. The survey showed that the main reason for not using sharing economy services is simply that the respondents were unaware of their existence. Those who were aware of the availability of these services stated in the first place (83 per cent) that they did not need such services as the reason for not using them. Just under a fifth stated insecurity in relationships with private individuals and that they preferred professional counterparties as the reason for avoiding the sharing economy. The roles and legal status of users and platforms Against the background of the existing rules in civil and market law, the enquiry analysed the possible roles and legal status of users and platforms in sharing economy transactions. No unequivocal answer was forthcoming, especially as the relevant laws cannot be enforced unless a user is treated as a trader. The legal circumstances can be regulated in an agreement be- tween the parties, and where such an agreement exists, its contents offer a starting point. However, the enquiry departs from a situation in which contractual rules between users are lacking, apart from Summary: Sharing economy – on the terms of the users those relating to matters such as the price, place and time of the transaction. When the users, both those who supply and those who use goods or services, are to be considered as private individuals, their mutual relationships are regulated, apart from any private agreements between them, by the general civil law expressed in contract and purchaser-protection laws. If the supplying user is to be counted as a trader in the sense of consumer rights, then the Consumer Pro- tection Act or the Act would be applicable. These give the accepting user greater protection and place greater respon- sibility on the supplying user than the general of Goods Act, for example. So the question as to whether the supplying user is to be counted as a trader is central for deciding what laws should be applied in the agreement between the parties. Thus if the Act is to be applied, the supplying user has a special responsibility to ensure that the service is pro- vided in a professional way. Furthermore, he or she has a respon- sibility to dissuade the counterparty from accepting the service if it cannot ensure him/her a reasonable advantage. Price information may not be exceeded by more than 15 per cent. The requirements on information to the counterparty are higher in consumer relation- ships than in other business relationships and the law implies that the trader shall safeguard the interests of the counterparty to a higher degree than in other cases. Another significant difference between consumer law and other types of civil law is that the former is mandatory to the benefit of the consumer, i.e. any contractual conditions that grant the consumer worse rights than those stipu- lated by law are invalid. The preliminary work for the relevant consumer legislation in- dicates that the term trader should be interpreted in a broad sense. This term covers all physical or legal persons who run an economic operation of a certain size and duration and of such a character that it may be designated as professional. The requirement for profes- sionalism aims mainly to avoid cases where a person may indeed be considered as a trader but in a particular case acts in his or her Summary: Sharing economy – on the terms of the users capacity as a private individual.1 In practice, the requirement on the size and duration of the operation plays a secondary role. As soon as more than a single transaction is carried out, this indicates that the seller, i.e. the provider, shall be considered as a trader. There is no requirement for the operation to run at a profit or that there be a profit motive. Even an operation which is classified as a hobby activity in fiscal law may be considered as a business activity in the sense of the consumer law. This leads to the situation whereby a retired painter who out occasional painting and decorating work, via a sharing economy platform, for private individuals can be considered both as a user of a sharing economy service and as a trader in the sense of consumer law with respect to the ordering party. However, his or her status must be determined on a case by case basis and involves interpre- ting a diverse set of data such as the size of the operation, the pro- fessional expertise of the service provider and the form of associa- tion that may be applied. There is rarely any special legislation which regulates the legal relationship between the users in a sharing economy transaction, when these act as private individuals. Here we ignore the purchase of objects that imply a transfer of ownership between private in- dividuals as this is not within our definition of the sharing economy. In such cases the law relating to sales transactions applies. In other cases where relevant contractual conditions are lacking, this law must be applied in an analogue , together with the Con- sumer Protection Act and the Act. This applies for example when a private individual out garden work or hires out machinery or tools to another private individual where it is assumed that the supplying party is not a trader. These contract types constitute a significant share of the transactions that take place in the sharing economy. In the business world too, for example in the hire of cars, machinery and tools between companies as well as for services, there is a lack of special legislation for hire and service agreements. In practice, however, pre-printed contractual conditions are always applied in such relationships to regulate the legal situation in the 1 /90:89, page 60 as well as , Konsumentskyddets former (Forms of consumer protection), page 28. Summary: Sharing economy – on the terms of the users absence of relevant legislation. Examples of such contractual forms are the General regularly applied in the construction sector as well as the rules applied by car hire companies, such as and Avis. When private individuals enter into mutual agreements, however, for example for small services or the hire of objects, the contractual relationship is as a rule unregulated apart from questions of the price, place and time of the transaction. Relations between users and platforms In relations between users and the platform, as a rule consumer law applies in the event of a dispute between the users and the platform company. This presupposes that the dispute concerns the service, or a part of it, that the company has provides against payment, for instance to handle the payment flows between the users. An excep- tion is when a supplying party is to be counted as a trader, where there is no consumer relationship between the user and the platform. Both are then traders. Moreover, the actions of a platform com- pany on the market in consumer relationships can be verified in accordance with the market-law rules in those parts covered by the agreement. Inspections can be carried out on aspects such as marke- ting, price information and general conditions of use. The contents and scope of the service offered by the platform to individual consumers must be determined on a case by case basis, not least from the information given on the platform and the con- tents of the general user conditions applied by the platform. This requires the application of the relevant laws and involves determining when a user does not act as a private individual with respect to the platform but as a trader. A user can address a claim against the platform with respect to the other user as long as the platform has assumed such a respon- sibility directly or indirectly in its contractual conditions. It has for instance happened that, against the background of the general con- ditions of use, a sharing economy platform was recommended by to pay compensation for the late return of a car for which the user of the car was liable. Summary: Sharing economy – on the terms of the users Observations relating to fiscal law The enquiry has not specifically investigated effects within the scope of fiscal law. However, it should be noted that tax rules can have a major impact on users of sharing economy platforms.