Number of online marketplaces reporting costs due to diverging national requirements regarding identity and legal status of third party suppliers and the applicability of consumer law

Almost 60% of consumers using online platforms are not sure who is responsible when something goes wrong

Number of consumers understanding who their contractual partner is and what their rights are when using online marketplaces

% of consumers having experienced any problem when buying or using any goods or service (where they thought they had a legitimate cause for complaint)

% of retailers thinking that differences in national consumer protection rules constitute an obstacle to the development of online sales to other EU countries

The following Table 2 provides an overview of the monitoring indicators, sources of data and targets. The date indicated for target indicators is "5 years after entry into application" to enable data processing and preparation of the evaluation 5 years after entry into application, as indicated above.

Data collection will aim to identify more precisely the extent to which changes in the indicators could be ascribed to the proposal. For example, while giving consumers the same rights throughout the EU should be expected to make them more confident in asserting their rights in cross-border transactions and thus help to reduce consumer detriment, the share of consumers who receive effective remedies will also be influenced by other factors. Such relevant factors are described above under the problem descriptions. The surveys carried out for the Consumer Scoreboards have time series on most indicators, allowing in principle (through statistical analysis) to discern the impact of a particular policy initiative from broader trends.

The costs of this monitoring should be borne by DG JUST within their operational expenditure. This data collection will also feed into Commission's reporting on the transposition and implementation. In addition, the Commission will remain in close contact with the Member States and with all relevant stakeholders to monitor the effects of the possible legislative act. To limit the additional administrative burden on Member States and the private sector due to the collection of information used for monitoring, the proposed indicators on the table below rely on existing data sources whenever possible.

Comprehensive statistics on online trade in the EU and more precisely retail online trade are available in the Eurostat database. These could be used as primary sources of data for the evaluation. This will be completed by representative surveys with consumers and retailers in the EU carried out regularly for the Consumer Scoreboards that are published bi-annually. These surveys investigate experiences and perceptions, which are both important factors influencing the behaviour of consumers and businesses in the Single Market. The monitoring will also include a public consultation and targeted surveys as indicated in the Table below with specific groups of stakeholders (consumers, qualified entities, online marketplaces, traders providing "free" digital services). Concerning specifically the business perspective, it will be covered through the retailer survey carried out regularly for the Consumer Conditions Scoreboard as well as targeted surveys to be carried out among online marketplaces and providers of 'free' digital services.

The Commission will evaluate the effectiveness, efficiency, relevance, coherence and EU added value of this intervention. In order to monitor and evaluate the progress made towards the objectives of this initiative, core progress indicators have been identified and are listed in the below Table. These indicators can serve as the basis for the evaluation that should be presented no sooner than 5 years after the entry into application, to ensure that enough data is available after full implementation in all Member States.

Besides the limited number of cost savings estimates, views from business associations and companies also suggest that traders and in particular SMEs will benefit from a reduction of the burden.

Remove some imbalances in the right of withdrawal - removal of trader's obligation to reimburse consumers before having had the possibility to inspect the returned goods

Besides the limited number of cost savings estimates, views from business associations and companies also suggest that traders and in particular SMEs will benefit from a reduction of the burden.

Remove some imbalances in the right of withdrawal – removal of trader's obligation to accept the return of the goods under the right of withdrawal even when the consumer has used such goods more than permitted

Very limited quantitative data available, however the fact that a large number of traders already offer these modern means of communication to consumers (in parallel with e-mail address) suggests that they do generate efficiency gains compared to the use of e-mail. Removal of the obligation to display fax number may have no effects on costs as currently it is mandatory information only for those – rather few – traders that might still use fax in their communication with consumers.

Modernise some B2C information requirements – removal of trader's obligation to display the fax number and enable more modern means of communication (such as web-form) instead of email address

No quantified data on efficiency gains are available. In the ID survey, 53% of all respondents considered that the introduction of Option 4b would have a positive impact on procedural efficiencies; 49% of all respondents considered that Option 4b would have a positive impact on creating a more level playing field.

No quantified data on efficiency gains are available but in the SME Panel consultation, an overwhelming majority of respondents (between 66%and 76 %) agreed that stronger rules on penalties would increase the level playing field between traders.

As concerns reducing burdens for traders, some consumer associations and Member States will be critical to changing the right of withdrawal, particularly as regards the right to return unduly used goods. Although there is a trade-off between consumer protection and reduction of burdens for traders on this point, the changes will affect only those consumers who are not diligent or even abuse the withdrawal right by not exercising the required level of care. Many consumer associations (7 of the 16 responding to a question about this in the public consultation) acknowledge that the current right of withdrawal for unduly tested goods creates disproportionate burdens for traders. This revision will also be in line with the original purpose of this consumer right, which is, as clarified in Recital 37 of the CRD, that there should be a right to withdraw from distance sales because “the consumer is not able to see the goods before concluding the contract” and from off-premises contracts because of “the potential surprise element and/or psychological pressure”. By adjusting the right to return goods that consumers have tested more than necessary, this intervention would lead to a better balance between the obligations of traders and rights of consumers.

Some business associations also claim that a right of withdrawal for contracts for “free” digital services under the CRD is not necessary, since it overlaps with EU data protection rules. However, as can be seen from the description of the interplay with the GDPR in subsection 2 of Annex 11, the extension of the CRD right of withdrawal proposed in this IA would rather complement than duplicate the rights stemming from EU data protection rules. Furthermore, not granting consumers with an EU right of withdrawal would entail the risk that barriers will increase, as it would be left to the Member States to determine whether any consumer protection should exist on this aspect. Consumers would not be as protected as they are for similar products concerning the right to change their mind and withdraw from the contract. Without EU intervention on the right of withdrawal for "free" digital services, the legal framework would become even more fragmented, with EU harmonised rules on precontractual information - identical to those applicable to similar products such as paid services and digital content and differing rules regulating only one aspect of "free" digital services.

Some business associations consider extending CRD rights to pre-contractual information and to withdraw from contracts to “free” digital services as over-regulation, since consumers do not pay for such services with money and there would be some costs for traders. However, these concerns would be outweighed by the added value of ensuring users of “free” digital services these key consumer rights, and by added legal clarity from coherent rules for digital services with or without payment and for digital content under the CRD and the future Digital Contracts Directive.

There is a risk that introducing requirements for specific sales-channels, such as online marketplaces, could be less future-proof than requirements that are completely technology neutral. In this case, this risk would be outweighed by the benefits of the proposed transparency requirements. Online marketplaces are central actors in the current economy and there is ample evidence that both consumers and traders suffer from lack of transparency when concluding contracts on such marketplaces. There is therefore a clear case for a legal intervention on this technology-specific topic.

The suggested rules for online marketplaces could possibly bring a risk of disproportionate costs for smaller platforms. Notably, changing the interfaces to enable third party traders to self-declare whether they act as traders or not could be relatively more costly for small marketplaces, which would not benefit from the same economies of scale as bigger companies. Similarly, small traders which sell on platforms might face relatively higher costs when complying with the new rules. These risks will be mitigated by a transition period until full application of the new requirements, during which small online marketplaces and traders can adapt their business models.

As regards online marketplaces, stakeholders such as consumer associations and some public authorities have argued that there is a need to go beyond the suggested new rules on transparency and also introduce rules on liability for online marketplaces for the performance of contracts concluded by consumers with third party suppliers. However, such liability is not considered in this IA, as it could be incompatible with the approach laid down in Article 15(1) of the e-Commerce Directive.

Some stakeholders have raised concerns that strengthened mechanisms for individual and collective consumer redress could lead to increased costs for Member States due to more consumers taking their cases to court. However, such costs are likely to be mitigated by fewer infringements following the increased deterrent effect of the Preferred Option in the area of better compliance, which would improve enforcement and individual and collective consumer redress. The proposed procedural mechanisms would also lead to judicial and administrative efficiency, by ensuring a single procedure for measures to stop infringements and eliminate their continuing effects.

It has also been argued that the envisaged wide scope of the revised ID could involve a risk of decreased legal certainty for traders, as it could be unclear how to identify which provisions of EU law could be enforced through the revised injunctions procedure and strengthened mechanisms for collective redress. However, this risk is mitigated by the fact that the ID would not create any substantive rights or obligations. It would only provide procedural mechanisms for the protection of the collective interests of consumers. It would only be possible to bring representative actions for redress under the ID where EU or national law provides for such substantive rights. As a consequence, the revised ID would not decrease legal certainty when it comes to which obligations traders need to respect vis-à-vis consumers or which infringements could trigger litigation.

As concerns the suggested new rules for collective consumer redress, some stakeholders have argued that strengthened mechanisms for private redress could lead to increased costs for traders because of abusive litigation (frivolous claims). The 2017 Study on collective redress found that stakeholders’ views were split when it came to possible risks of abusive litigation associated with collective redress, with 51% of respondents agreeing and 49% disagreeing that there are such risks. However, when asked about the actual materialisation of such risks, 77% of all respondents reported that they had never experienced any instance of abusive litigation. This suggests that these concerns are rather hypothetical. The Fitness Check did also not find evidence to suggest that qualified entities have displayed any form of frivolous action in the context of the ID or that they would risk their status as qualified entities to bring such claims. Any such risks under the suggested new rules would also be mitigated by proposed safeguards against abusive litigation, notably specific criteria for the designation of qualified entities and requirements for qualified entities to be transparent about the origin of the funds used to support litigation. In redress cases, the court/authority would also scrutinize the merits and extent of the mass harm alleged by the qualified entity.

Some stakeholders have also expressed concerns that approximating rules on penalties could take some flexibility away from competent national authorities and make it more difficult for them to apply the most adequate penalty. These concerns are addressed by requiring the existence of fines and harmonising their level only for the most important cross-border infringements of EU consumer rules, which are subject to coordinated action by national authorities through the CPC network. Even in these cases, Member States may go beyond the proposed minimum rules if they consider that even stronger penalties are appropriate. For all other infringements, the preferred option only envisages common criteria for the imposition of penalties, stressing the cross-border aspect, without, however, harmonising the level or type of penalties.

There is also a risk that the potential of this preferred Option may not be fully reached if Member States fail to allocate enough resources to ensure their adequate implementation. This is notably the case for the proposed new rules for penalties. If Member States do not ensure that the competent authorities have sufficient capacity to deal with infringements, the deterrent effect of stronger penalties will not be achieved.

As described in Section 2.5, these proposed interventions aim at aspects of the problem that many traders do not comply with EU law that cannot be adequately addressed through non-legislative interventions. This preferred Option is intended to complement other actions that are or have been taken to meet the needs identified in the Fitness Check, CRD Evaluation and Collective Redress Report to ensure better knowledge about EU consumer law, strengthened enforcement and easier possibilities for consumer redress. Accordingly, there could be a risk that this preferred Option will not achieve its full potential if other interventions that form part of the same puzzle, such as awareness raising activities and stepped-up enforcement through common actions by national enforcers under the revised CPC Regulation, are not ensured. However, as described in Sections 2.1 and 2.2, a number of measures have been undertaken to ensure that these initiatives will deliver successfully.

There are also strong synergies between rights to UCPD remedies and collective injunctions and redress. Since consumers are generally reluctant to initiate individual redress actions, more consumers would be likely to use new rights to remedies under the UCPD if they also have access to a mechanism where a qualified entity can handle their case on their behalf.

A multivariate analysis has been conducted on data from the Consumer Conditions Scoreboard 2017 regarding UCPD remedies. It suggests that the effect of remedies is positively correlated with the effectiveness of public monitoring (enforcement). For countries showing the highest level of public monitoring, the estimated effect of linking remedies to breaches of the UCPD corresponds to a reduction of 21.4 percentage points in the probability of experiencing an unfair commercial practice, i.e. more than five-fold the estimated unconditional effect of remedies. Equally, the effect of remedies linked to UCPD breaches on the likelihood to have experienced an unfair practice is strongly amplified in countries imposing a high level of sanctions for such breaches. This indicates that when combined with effective enforcement and/or dissuasive sanctions, redress can be a powerful driver for better compliance with the UCPD.

Strengthened penalties and more effective redress opportunities for consumers would also be essential for enforcement co-operation in cross-border cases under the revised CPC Regulation. Specifically, the implementation of all the measures contained in the preferred package of Options that relate to improving compliance would increase deterrence for traders that could otherwise breach consumer law in several Member States. With this package, they would get incentives to offer voluntary commitments to settle infringement cases in the context of coordinated CPC enforcement actions.

The combined package of Options would also lead to greater awareness about consumer rights, which is a major factor for their effective exercise. For instance, greater transparency when using online marketplaces would ensure that consumers are informed about the important differences between consumer rights and rights in consumer-to-consumer contracts. Stronger rules on public enforcement and consumer redress would mean that consumer rights infringements could attract more media attention With the proposed new rules on the injunction procedure, traders would be obliged to inform, at their expense, the affected consumers about the breach as established by a definitive injunction order, the legal consequences of the breach and redress opportunities under the collective redress order or approved collective settlement. Such publicity would likewise improve consumer redress and contribute to greater awareness among consumers and traders about their rights and obligations.

To illustrate the synergies of this combined package, both the suggested new rules on transparency for contract conclusion on online marketplaces and for "free" digital services would introduce new specific requirements for online traders to provide information to consumers. The suggested new rules on enforcement and redress would give traders strong new incentives to avoid breaching these information requirements. Firstly, in case of a widespread infringement, the trader would be subject to deterrent and proportionate turnover-based fines for breaches of the new information rules. Secondly, in addition to breaching the specific new information requirements the trader could omit "material" information required by the UCPD (Article 7(5) UCPD). With the suggested new rights to UCPD remedies, consumers could then take individual action against the trader to ensure effective redress. Thirdly, if several consumers have been affected by the breach of the new information requirements, the revision of the ID would create an effective tool to enforce their rights collectively by stopping breaches and ensuring redress for the victims.

In addition, the combined package of preferred Options in both areas of better compliance and modernisation/burden reduction are expected to lead to strong synergies.

In the area of modernising consumer protection rules and eliminating unnecessary costs for compliant traders, the package of preferred options should lead to better consumer protection when using online marketplaces and free digital services. For traders, it will eliminate costs related to diverging requirements but also raise some implementation costs in area of online marketplaces and "free" digital services. The modernisation and simplification of information requirements will provide some savings for businesses without reducing the level of consumer protection in practice. The intervention regarding the right of withdrawal is important to alleviate the unjustified burden on businesses, in particular SMEs. It entails a formal reduction in the level of protection but its impacts are limited and it also has some positive effects such as reduction of disputes. In general this reform is needed to instil more balance in the right of withdrawal now that the levels of eCommerce have significantly increased and consumers are more aware about their withdrawal rights. Some legal changes will required in national laws but these should result in better legal coherence both among the consumer law instruments at stake and with other relevant EU law.

In the area ensuring better compliance with consumer legislation the preferred Option 3 should lead to a reduction of consumer detriment and greater consumer trust. There should also be a positive impact on the protection of vulnerable consumers and on the environment. As regards traders, it will promote fairer competition to the benefit of compliant traders. Certain costs are expected for both traders and authorities to familiarise with the new rules and to implement them. Legal changes will be required in national laws but these should result in better legal coherence both among the consumer law instruments at stake and with other relevant EU law.

A package including all the relevant interventions (providing specific transparency requirements for contract conclusion on online marketplaces, extending the CRD to cover "free" digital services, modernising outdated and overlapping B2C information requirements and removing specific obligations for traders related to the right of withdrawal in the CRD).

35% of online companies report significant problems due to specific obligations for traders related to the right of withdrawal. A majority of business associations confirmed that traders face disproportionate/unnecessary burden resulting from these obligations. In the SME panel, close to half of self-employed, micro, small companies selling to consumers online reported disproportionate burdens. However, the majority of consumer associations, MS authorities and citizens do not support removing these trader obligations. SMEs report annual losses on average of EUR 2 223 caused by the legal obligation to accept the return of "unduly tested goods". Four SMEs estimated on average losses of EUR 1 212 due to the "early reimbursement" obligation. Losses estimated by the two responding large enterprises were EUR 1 000 and EUR 500 000 respectively for the return of unduly tested goods" and EUR 1 000 due to the "early reimbursement" obligation.

Business associations support the deletion of overlapping B2C information requirements from the UCPD. Consumer associations are against this proposed intervention. Most of the public authorities consider that information about the trader's address is important also at the advertising stage and should therefore be kept in the UCPD, but that information about complaint handling is not important at that stage. Stakeholders largely support replacing the current requirement for e-mail address with a technologically neutral reference to means of online communication and removing the requirement to provide a fax number. No costs are foreseeable for traders. Most business associations agree that the removal of the requirement to inform consumer already at the advertising stage about complaint handling procedures would give savings for companies. However, very few replies quantified the estimated savings.

Most stakeholders support extending the CRD to cover "free" digital services. Traders support introducing information requirements, but are divided on the right of withdrawal. Business associations do not support the introduction of a right of withdrawal. SMEs estimated annual costs for new rules on "free" digital services at EUR 33 (median) for pre-contractual information and EUR 50 (median) for the right of withdrawal, yearly savings on average of EUR 622 for pre-contractual information requirements and EUR 396 for rules on the right of withdrawal. SMEs indicate that potential future costs related to rules on "free" digital services would have no impact on their decision to enter other EU markets. Business associations estimated future implementation costs as unreasonable.

Many stakeholders support new transparency requirements for contract conclusion on online marketplaces. Consumer associations and public authorities, citizens and the vast majority of companies and business associations agree that consumers buying on online marketplaces should be informed about the identity and status of the supplier. They also agree that platform transparency would increase consumer trust. Also a vast majority of SMEs is in favour of informing about the identity and legal status of the contractual partner. There is also support for platform transparency from business associations. Some major online marketplaces report that the suggested new rules would bring some cost reduction, whilst others do not know. SMEs anticipated one-off savings of EUR 214 on average, while annual savings reported would amount on average to EUR 391. Of the four online marketplaces responding to a question on costs, two found that the costs for complying with new information requirements (one-off and running costs) were reasonable, one did not find them reasonable and one did not know. SMEs reported one-off costs of EUR 50 (median), and annual regular/running costs of EUR 0 (median).

This package would also simplify EU consumer rules and thereby reduce unnecessary costs for compliant traders. The proposed interventions for online marketplaces and "free" digital services would ensure greater legal clarity in B2C relations and reduce costs for traders stemming from legal differences between Member States. Eliminating overlapping and outdated information requirements and removing specific obligations related to the right of withdrawal would reduce costs for traders due to current imbalanced rules.

Although some of these changes constitute a formal reduction of the level of consumer protection, the removal of the right for consumers to return unduly tested goods would have the positive effect of eliminating disputes regarding the diminished value of the goods. The removal of the "right to early reimbursement" is only relevant for those consumers who would take the extra trouble of separately sending to the trader the proof that they have sent the returned goods back. Among these consumers, the removal of this right will only affect those that notify the trader of their withdrawal early in the 14-day right of withdrawal period but then delay the sending of the good and proof of dispatch to the trader.

This package would contribute to a high level of consumer protection. It would strengthen consumer protection in B2C transactions on online marketplaces and in contracts for "free" digital services. It would also remove one specific information requirement that most consumers do not consider relevant before the pre-contractual stage of the transaction and would enable traders to use more efficient means of online communication with consumers. It would also remove obligations on traders to accept the return of unduly tested goods and to reimburse the consumer on the basis of a mere proof of sending the returned goods (early reimbursement).

As a consequence, if the aim is to modernise consumer protection rules and eliminate unnecessary costs for compliant traders to the greatest extent possible, the best approach would be a package including all the relevant options, i.e.:

Each of these options addresses problem drivers that other options do not address. They are therefore not mutually substitutable. The options could nevertheless be combined in different ways, such as for example by acting only on problem driver 2 and 4 or only on driver 3. However, acting only on some of the drivers would fail to address the other drivers, which would lead to keeping ineffective consumer protection rules and/or unnecessary costs for compliant traders. As an example, extending the CRD to cover "free" digital services will not help increase transparency on online marketplaces. It will also not, for example, remove imbalances in the right of withdrawal.

For the two other problem drivers (lack of transparency and legal certainty for B2C transactions on online marketplaces, lack of transparency, consumer protection and legal certainty for "free" digital services) there are two alternative options, of which one is promoting self- and co-regulation. Self- and co-regulation is not likely to achieve the objectives of modernising consumer protection rules and eliminating unnecessary costs for compliant traders. Options involving regulatory intervention are more likely to achieve these objectives.

Four problem drivers have been identified in this area. For two drivers (overlapping or obsolete information requirements and imbalances in the right of withdrawal) only single options have been identified and analysed.

Our consultations show that most business associations do not support any of the proposed measures, and hence do not support any of the options. In contrast, consumer associations and public authorities are generally supportive of all the options. Many SMEs support the measures on which they were expressly consulted, i.e. turnover-based penalties and individual remedies, which are both included in options 2 and 3 (no SME panel consultation was performed for the revision of the ID).

The comparison shows that option 3 scores best in terms of effectiveness. This applies to both the specific and general objectives. Consequently, if the objective is to improve compliance with EU consumer law, option 3 should be the preferred option. This package has the highest costs, but these are likely to be off-set by savings. Overall, costs are not likely to be significant. However, option 3 would require the highest level of legal change in the Member States and will probably raise most political sensitivity.

In the ID survey, national authorities (88.6%) and consumer organisations (93.8%) strongly supported the addition of collective redress to the ID, whereas business associations were less supportive (15.8%).

In the public consultation for this IA, a large majority of responding public authorities, consumer associations and consumers indicated that an EU-wide right to UCPD remedies should be introduced to ensure that traders comply better with consumer protection rules. On the other hand, support was low among business associations (35%) and individual companies (31%). In the SME panel consultation, 87% of respondents supported introducing an EU-wide right to UCPD remedies.

In the public consultation for the Fitness Check, most consumer associations, consumers and public authorities agreed that the ID should be made more effective. 45% of businesses agreed, compared to 12% of business associations.

The measures included in the different options also enjoy different levels of support from stakeholders. The public consultation showed that many consumer associations and public authorities support expressing the maximum level of fines as a percentage of the trader's turnover, whereas only a few business associations agreed. In contrast, in the SME panel, no less than 80% of the respondents considered that the most proportionate, effective and dissuasive way of setting the maximum level of fines is by expressing it as a percentage of the trader's turnover, possibly combined with an absolute amount, whichever is higher.

As concerns proportionality and subsidiarity, all three options would require legal changes in Member States. Under option 1, a majority of Member States will need to change their legislation to introduce turnover-based penalties or to remove absolute caps where they exist, and to change their legislation transposing the ID to introduce improved procedural features for injunctive relief. This could be sensitive in some of these Member States. Options 2 and 3 would require all Member States to adjust their legislation. Firstly, requiring Member States to ensure that the specific remedies of contract termination and refund, as well as compensation for damages are available for breaches of the UCPD (options 2 and 3) would require amendments of national law in all Member States. Secondly, strengthening collective redress (option 3) would also require a degree of legal change in certain Member States, particularly in the nine Member States that do not have any collective redress mechanisms. These EU interventions are likely to be sensitive in some Member States. Under option 2, legal changes to ensure collective redress mechanisms will not be required. EU action can therefore be expected to be less sensitive than with option 3, although the introduction of UCPD remedies could still raise concerns in some Member States.

Given that option 3 is the broadest, it also entails more costs than the other options. On the other hand, under all options there would be savings for traders when trading cross-border due to increased harmonisation of the rules. In particular, there would be increased clarity on the possible consequences for traders in case of non-compliance, which would lead to lower and more accurate risk-assessment costs. These savings would be bigger under option 3, as it has a wider scope than the other options. Costs for public enforcement authorities and courts under all options would include a possible increase in the number of enforcement and court cases. However, these costs are likely to be off-set by an overall reduction of breaches of EU consumer law and by the streamlining effects and procedural efficiencies introduced by all options. Such savings would be higher under option 3 due to its broader scope and greater deterrent effect.

As concerns efficiency, all 3 options could lead to initial familiarisation costs, but also to savings for compliant traders. Data on costs and savings were gathered via the consultations for this IA. Overall, relatively few respondents provided quantitative estimates. For option 1, most respondents said that strengthening penalties will have no impact on their costs or could not reply to this question. Most business associations considered that the revision of the injunctions procedure (option 1) could increase the insurance premiums for coverage against claims in mass harm situations and could lead to increased use of the ID. Option 2 includes the costs of option 1 and in addition those related to new rules on individual UCPD remedies. The median of the one-off costs, such as costs for legal advice assumed by SMEs for such remedies is EUR 638. The median of the annual running costs estimates is EUR 655. 9 of 15 MS authorities think the costs of administrative and judicial enforcement would increase to some extent. Option 3 includes the costs of options 1 and 2, and also costs related to collective redress. National authorities were divided in their assessment of the implementation and running costs for courts and administrative authorities, but did not consider such costs significant. Qualified entities held mixed views, similar shares predicted increased and decreased costs. For compliant traders, the costs of introducing Option 3 would be insignificant and lowered for traders engaging in cross-border trade due to further harmonisation among the national procedures.

Other positive effects can also be expected from option 3. This option would ensure more effective mechanisms for consumers to get redress when their rights under the UCPD have been infringed, both through individual and collective actions. This would be specifically helpful to vulnerable consumers and to deter misleading environmental claims, which would encourage sustainable consumption patterns in line with the Circular Economy Action Plan. Option 2 would also include positive impacts of UCPD remedies, but to a lesser extent since it does not include a strengthened mechanism for collective redress.

As concerns the general objective of promoting the smooth functioning of the internal market, all three options would contribute to fairer competition by not creating an unfair advantage for non-compliant traders versus compliant ones. However, the best overall results for compliant traders would be achieved by option 3, since the introduction of strengthened mechanisms for collective redress would further contribute to fair competition to the benefit of compliant traders.

The same reasoning applies if the aim is to reach the general objectives of protecting the economic interests of consumers and ensuring a high level of consumer protection. They would be best met by option 3, since this option would have the strongest impact in terms of improving compliance with EU consumer law. Stronger penalties, more effective injunctions procedures and better individual and collective redress possibilities are all ingredients for improving compliance with consumer law. For example, as the current situation shows, the existence of strong penalties alone does not guarantee better consumer conditions. Acting in all these areas is most likely to improve compliance and hence the overall level of consumer protection.

Option 3 builds on options 1 and 2. In addition, it includes strengthened mechanisms for collective redress. It would therefore provide stronger incentives for traders to comply with EU consumer law than options 1 and 2. The deterrent effect of remedies for victims of unfair commercial practices will be stronger with option 3 than with option 2: The 2017 Consumer Conditions Scoreboard confirmed that consumers would be more likely to use UCPD remedies if they are also given access to a practical collective mechanism for a qualified entity to handle their case on their behalf.

Option 2 builds on option 1 and would ensure the synergetic effects of combining dissuasive penalties with UCPD remedies. Data shows that in Member States with higher penalties for UCPD infringements, introducing UCPD remedies make it roughly 3 times less likely to become a victim of unfair commercial practice than in countries with medium or low penalties.

As option 1 only addresses some of the drivers behind the problem of lack of compliance it cannot provide a full solution to this problem. It would contribute to improving compliance by strengthening enforcement, but it would not facilitate neither individual nor collective consumer redress, which could be another important incentive for traders to comply with consumer law.

Option 2 would address the same problem drivers as package 1. In addition, it would also partially address problem driver 2 (ineffective mechanisms to ensure that consumers get redress for the harm suffered).

As regards overlapping and outdated information requirements, there was no SME panel consultation on these issues. In the public consultation, 9 of 15 SMEs agreed that information about the geographical address is necessary already at advertising stage but only 2 found so for the information about the complaint handling. However, the proposed removal of the obligation for traders to display the fax number will remove an obsolete EU rule that is unlikely to change the situation on the ground. By contrast, introducing the possibility for traders to use more modern communication tools, such as web-forms instead of e-mail address, should enable traders to make efficiency gains in their communication with consumers. However, no estimates of these gains are available.

When it comes to the possible simplification of the rules on the right to withdraw, SMEs reported annual losses on average of EUR 2 223 (median: EUR 100) caused by the obligation to accept the return of "unduly tested goods". Four respondents estimated their losses to be on average EUR 1 212 (median: 0) due to the "early reimbursement" obligation. 50% of SMEs selling to consumers online (46 out of the 92 respondents) stated that they face disproportionate burdens at least 'sometimes' or 'rarely' due to their obligations related "unduly tested goods" and 40% (36 out of 90 respondents) stated that they face disproportionate burdens at least 'sometimes' or 'rarely' due to their obligation related to the "early reimbursement". This means that the possible removal of such imbalances would lead to corresponding yearly savings.

In relation to "free" digital services, between 40% and 60% of SMEs replying to the SME panel said that the possible extension of the CRD rules to such services would have no impact on their decision to enter other EU markets, with between 8% and 13% stating that such harmonised rules would encourage them to enter other EU markets, whilst between 6% and 33% stated that this new regime would actually discourage them from doing so. Regarding yearly costs stemming from the possible extension of the CRD to free digital services, data show that the average of the estimates provided by the SMEs is EUR 8 367 for pre-contractual information and EUR 9 119 for the right of withdrawal, with the median of such estimates being EUR 33 (pre-contractual information) and EUR 50 (right of withdrawal) Regarding the yearly savings, the averages are EUR 622 (pre-contractual information) and EUR 396 (right of withdrawal), with the median of such estimated savings being EUR 0 in both cases. Such quantitative data, to be interpreted cautiously in light of their significant variance, nonetheless point to a reasonable cost-benefit balance emerging from the possible extension of CRD rights to the provision of free digital services too.

A majority of SMEs replying to the SME panel agrees that consumers should be informed about the identity (82% in favour) and legal status (81% in favour) of their contractual partner when buying on online marketplaces. 84% agree that consumers buying on online marketplaces should be informed about whether EU consumer rights apply to their transaction. 35% of SMEs stated that introducing transparency requirements for online market places would encourage them to enter other EU markets, while 40% did not expect any significant impact on that decision and 22% did not know. Regarding yearly costs stemming from the possible introduction of such new transparency requirements, data show that the average and the median of estimates provided by the SMEs is, respectively, EUR 3 887 and EUR 0. Regarding the yearly savings, the average is EUR 391, with the median of such estimated savings being zero.

Whilst no SME panel consultation has been conducted to specifically assess the impacts of strengthened injunctions for stopping breaches of EU consumer law, it is reasonable to assume that this measure would not lead to increased costs for compliant traders.

No less than 86% of (216) SMEs support introducing EU-wide rights to remedies under the UCPD. 25% stated that the introduction of such EU-wide rights would encourage them to enter other EU markets, as it would eliminate current national regulatory fragmentation. Indeed, when asked to assess the level of savings they could benefit of, if a new EU-wide rule would be introduced, Yearly savings of zero up to EUR 10 000, up to 40% in terms of turnover, are expected. When asked to quantify costs linked to the resources they would need SMEs estimated on average yearly running costs, such as costs for legal advice, of EUR 8 484 (median: EUR 655) on average.,

Based on the findings of the SME Panel, between 65% and 76%of (208) SMEs agree that stronger rules on penalties would contribute to a more level playing field.

Companies (almost all SMEs from 18 Member States) responding to the SME panel consultations showed support for stronger penalties and UCPD remedies. This is often in contrast to the critical views expressed by business associations in the public consultation and in general. It is also noteworthy that the views expressed by individual companies (from 15 Member States, most of which are SMEs and around 23% are large companies) responding to the public consultation were sometimes different from those expressed by business associations, with individual companies (around 23% of which are large companies) being usually less sceptical than business associations, although the difference is less striking there. A similar discrepancy had already been observed when assessing the replies from business associations and individual companies to the 2016 public consultation for the Fitness Check. Furthermore, SME panel's support for stronger penalties does not seem surprising in light of the finding of this IA that the current penalty systems, which are in most cases based on absolute maximum amounts, treat large and small companies in a highly disproportionate manner, to the disadvantage of the smaller ones. This is also confirmed by the results of the SME panel indicating that only 20% to 25% of the SMEs considered the current level of fines as proportionate (p. 16, Chapter 2.3.3) and that around 80% of the SMEs support a turnover-based system (and only 16% prefer the maximum fine as a lump sum). It is also important to note some differences in the process of the consultations (public and SME panel): while public consultations are, in principle, purely self-selective, in the SME panel, Enterprise Europe Network partner organisations select the relevant companies that are best suited to respond to a given consultation from their region, based on the subject of the consultation. EEN partner's understanding of the topic of consultation, the ability to establish the relevance of the consultation for individual companies and the ability to convince those companies to respond are essential drivers for collecting replies. See further details on the SME panel process in Annex 2 point 4.3, and information on the respondents (profile, geographical coverage, size of companies) to consultations (OPC and SME panel) in Annex 2. points 4.2 and 4.3 respectively.

The removal of the right to return unduly tested goods could contribute to more sustainable consumption patterns and reduce waste, since in many cases the unduly tested goods cannot be re-sold and have to be disposed of.

The removal of the right to return unduly tested goods would increase legal clarity for consumers who currently may only discover their liability for the diminished value after exercising the right of withdrawal and returning the unduly tested goods (liability that may go up to 100% of the good's value).

All Member States will have to change their national law by removing the two relevant obligations on traders.

Costs for dispute resolution bodies and public authorities are likely to diminish, since there will not be disputes about the calculation of the diminished value of returned goods.

Although the exact amount of costs savings cannot be estimated, the potential cost reduction for traders could lead to price reductions and increase of consumer sales, including cross-border. The CRD evaluation concluded that, if consumers at a large scale exercise their right of withdrawal even after having used a good more than allowed, this affects the competitiveness of companies and leads to higher prices for consumers.

The removal of the right to return such goods would not affect the burden of proof as to whether the good has been unduly tested. This aspect is not regulated in the CRD. Under current rules, the burden of proof is relevant in: 1) deciding whether the good has been unduly used and 2) assessing the "diminished value" due to such a use. The removal of the consumer's right to return unduly tested good (in exchange for the obligation to pay for the diminished value) would eliminate disputes as to the diminished value, but would not affect the application of the burden of proof as to whether the good has been unduly used. As is the case already now, in the event of a dispute on this issue, consumers will have all the available redress opportunities (e.g. ADR, ODR, small claims procedure).

Repeal of the obligation to accept the return of unduly tested goods would also have the positive effect of eliminating disputes regarding the diminished value of the good and the resulting consumer's liability, which can go up to 100% of the value where the good cannot be resold.

The removal of the “right to early reimbursement” is only relevant for consumers who would take the extra trouble of separately sending to the trader the proof that they have sent the returned goods back to the trader (rather than simply sending the goods back and waiting for the trader to receive them). Among these consumers, the removal of this right will only affect those that notify the trader of their withdrawal early in the 14-day withdrawal period, but then delay the sending of the good and of the proof of dispatch to the trader (according to the CRD, the consumer has to send the good back to the trader within 14 days from notifying the withdrawal). Only in these cases, since the CRD requires traders to reimburse the consumer within 14 days from the notification of the consumer's withdrawal, the trader may currently need to reimburse the consumer before actually receiving the returned goods. All other categories of consumers that exercise the right of withdrawal will not be affected by this proposed change.

However, this reduction of the protection would reduce the burden experienced by the SMEs, which was also recognised by a significant number of respondents from consumer associations and public authorities (see results of the SMS panel and public consultation in Chapter 2.4.5.).

The proposed changes would formally represent a reduction of consumer protection. In the public consultation, most consumer associations (14 of 15 respondents) and Member State authorities (12 of 16 respondents) considered the right of withdrawal for "unduly tested goods" and the right to early reimbursement as ”rather” or “very important”.

Whilst it is not possible to quantify the exact amount of costs savings, repeal of these obligations would reduce costs for traders.

This burden is likely to increase due to growing ecommerce and increasing consumer awareness about their withdrawal rights, as attested by the Consumer Conditions Scoreboard 2017.

Losses due to the CRD obligations (Article 14(2)) for traders to accept the return of goods that have been used during the right of withdrawal period more than authorised by the CRD ("unduly tested goods") and to reimburse consumers before having had the possibility to inspect the returned goods (Article 13) ("early reimbursement"), were investigated in the SME panel. SMEs reported annual losses on average of EUR 2 223 (median: EUR 100) caused by the obligation to accept the return of "unduly tested goods". Four respondents estimated their losses to be on average EUR 1 212 (median: 0) due to the "early reimbursement" obligation. The losses reported by the two responding large enterprises were EUR 1 000 and EUR 500 000 for the return of "unduly tested goods" and EUR 1 000 due to the "early reimbursement" obligation (1 response).

No significant effects are foreseen in areas such as employment, health and safety, income distribution and good governance and administration or for vulnerable consumers particularly.

The reduction of overlapping information requirements will enhance the consistency between the UCPD and CRD. Changing CRD rules on means of communication will be technology neutral and therefore future-proof, as reference will be made to other means of online communication that enables the consumer to retain the content of the communication rather than to specific technology.

Since the relevant requirements are laid out in UCPD and CRD, all Member States will have to make minor adjustments in their national laws.

No costs for traders; potential savings due to efficiency gains in communication with the consumers and due to fewer information requirements (no estimates available).

Although the exact amount of cost savings cannot be estimated, the potential cost reduction for traders following these simplification measures could lead to price reductions and increase of consumer sales, including cross-border.

The consumers should also not suffer any detriment from removing e-mail as a mandatory means of online communication, since this change would be accompanied with a requirement for traders to ensure, for any online means of communication, that the consumers retain the same functionalities that when using e-mail, namely to keep record of the communication on a durable medium.

The suggested removal of the requirement to indicate fax number would not lead to any practical changes, since this means of communication is already largely outdated and rarely used.

This minimal reduction of the current level of consumer protection would not lead to noticeable negative consequences. It is reasonable to assume that, when seeing product advertising, the consumer's attention is focused on other, more material elements and that information about dispute resolution procedures will only become relevant in case of a subsequent problem. In that case it is likely that the consumer will not remember the advertisement, but rather look for this information in the contract confirmation or check other sources, such as the trader's website.

Business stakeholders and most national authorities considered that information about complaint handling procedures is not needed at the advertising stage. In contrast, consumer associations were almost unanimous (15 out of 16) in considering that such information should still be included in the advertisement even if repeated as pre-contractual information. This contrasts with the opinion of consumers responding to the Fitness Check behavioural experiment and consumer survey, where a majority of respondents did not consider this information relevant at the advertising stage.

In contrast, enabling traders to use more modern online communication tools, such as web-forms or chat as alternative to e-mail, should enable traders to make efficiency gains. The fact that a large number of traders already offer these alternative means of online communication to consumers (in parallel with e-mail address) suggests that they do generate efficiency gains compared to the use of e-mail and that the obligation to maintain a parallel e-mail communication channel may constitute some burden. However, no estimates of these gains are available. Under the proposed amendment, business will be able to provide their e-mail address and e-mail is likely to remain an important means of online communication with consumers. However, business will be able to use either e-mail or any other, more technically advanced and efficient means of online communication with consumers – provided they ensure the same functionality for consumers, i.e. allow them to keep a record of the communication.

Removing the obligation to display a fax number is primarily a "house-cleaning" measure to remove an obsolete EU rule that will not change the situation on the ground for a vast majority of traders. This is because the obligation to display the fax number applies, according to the CRD, "where available", i.e., it is mandatory only for those traders that still use fax in communication with consumers.

For overlapping information requirements in advertising (qualifying as "invitation to purchase") and pre-contractual stages of transactions, most business associations (30 of 48) agreed in the public consultation that the removal of the requirement to inform consumers at the advertising stage about complaint handling procedures would give some or significant savings for companies. Very few replies quantified estimated savings.

Due to the digital nature of the services, the extension of the CRD to "free" digital services would not produce significant environmental impacts related to the increase in cross-border trade, such as increased use of transport and energy.

No significant effects are foreseen in areas such as employment, health and safety, income distribution and good governance and administration. Enhancing consumer protection in the digital area might be more effective for vulnerable consumers that are more likely to experience problems when using "free" digital services.

In the public consultation, when asked about the key reasons for introducing pre-contractual information obligations for "free" digital services, 83% of individuals, all responding consumer organisations and 65% of national authorities highlighted better synergies between EU consumer law and EU data protection rules. 78.5% of individuals, all responding consumer organisations and 69% of national authorities stressed this benefit from introducing the right of withdrawal. 28% of traders and 17% of business associations highlighted such synergies as key reasons for introducing pre-contractual information requirements, and 28% of traders and 17% of business associations considered the same benefit for introducing the right of withdrawal.

This option would extend the scope of the CRD to "free" digital services, ensuring a coherent regulatory framework for digital content and digital services in line with the DCD. The introduction of a general right to terminate contracts for “free” digital services within 14 days would complement and increase the protection already provided under EU data protection rules, ensuring, together with the DCD proposal, a consistent legal framework and EU-wide enhanced protection for consumers (see subsection 2 on the interplay of the CRD with the GDPR in Annex 11).

There would be initial familiarisation costs for public enforcement authorities and courts. Such costs would not be significant, since the extension of the CRD involves existing rules, with which the enforcers are already familiar and that already apply to the similar category of contracts for "free" digital content. Enforcement costs and costs for complaint handling would go down with the introduction of clearer and more consistent rules.

In the SME panel, SMEs gave estimates regarding current one-off cost of on average EUR 2 485 (median: zero) for both suggested new rights. The average estimate for annual regular/running costs due to diverging national requirements was EUR 1 392 (median: zero). SMEs also indicated that both current and potential future costs related to rules on "free" digital services have no impact on their decision to enter other EU markets. However, whilst current costs are likely to increase over time if more MS decide to regulate "free" digital services, future implementation costs would decrease due to familiarisation with the new rules and would be at least partially offset by the benefits of greater legal certainty and harmonised rules.

In the public consultation, 7 of 10 business associations considered current costs due to diverging national requirements unreasonable. These costs are likely to increase over time if more Member States decide to regulate "free" digital services individually. 9 of 12 business associations also estimated future implementation costs as unreasonable.

There would be savings for cross-border traders, due to more legal certainty and harmonised rules. In the SME panel, SMEs expected yearly savings of EUR 622 and EUR 396 on average, for pre-contractual information and right of withdrawal respectively.

The extension of the CRD to "free" digital services represents a legislative clarification that would entail moderate costs on companies due to adjustments of their website/online interface. Regarding potential yearly costs, in the SME panel, SMEs estimated on average EUR 8 367 (median: EUR 33) for new pre-contractual information requirements and EUR 9 119 (median EUR 50) for right of withdrawal.

Amending the existing framework in the CRD would ensure consumers in all Member States the same consumer protection in contracts for "free" digital services, as they already do in contracts for "free" digital content. As a consequence, there will be increased legal clarity for users and providers of such services.

Introducing a consistent legal framework for "free" digital services would contribute to fairer competition for businesses. Whilst this is not measurable in quantitative terms, the increase in consumer protection is likely to enhance consumer trust in "free" services, which may lead to more digital transactions.

Providing EU-wide consumer protection for "free" digital services would have a positive impact on the fulfilment of the right to a high level of consumer protection, enshrined in Article 38 of the Charter, Article 169 of the Treaty on the Functioning of the EU and Article 1 CRD, particularly as it would raise the level of consumer protection in most Member States, where such rights are currently lacking.

Furthermore, barriers to cross-border ecommerce require action due to the strong growth potential of "free" digital services. Taking no action at EU level entails the risk that legal fragmentation and barriers will increase, as three Member States have already regulated "free" digital services in national law, others are in the process of doing so and yet others are expected to follow if no EU action is taken. Addressing new market developments, regulatory gaps and inconsistencies in EU consumer law in an uncoordinated manner is likely to generate further fragmentation and exacerbate the problems.

In the public consultation, 85.2% of individuals, 52.9% of traders, and all responding national authorities and consumer organisations highlighted the level playing field between paid and "free" digital products as a key reason to introduce pre-contractual information obligations. Similarly, 82.2% of individuals, 47.1% of traders, 31% of business associations, 75.1% of national authorities and all responding consumer organisations considered the same benefit for introducing the right of withdrawal. Business associations were less supportive, with 38.1% and 31% considering the level playing field between paid and "free" digital products as a key reason respectively for the introduction of pre-contractual information obligations and the right of withdrawal.

This option would also ensure fairer competition between traders that compete in the market for similar services, for instance between traders offering "free" digital content and "free" digital services, and between traders that offer paid digital services and "free" digital services. This was highlighted in the context of the DCD proposal: "In the digital economy, digital content is often supplied without the payment of a price and suppliers use the consumer's personal data they have access to in the context of the supply of the digital content or digital service. Those specific business models apply in different forms in a considerable part of the market. A level playing field should be ensured".

By providing a clearer legal framework for "free" digital services across the EU, traders would face reduced costs related to diverging or uncertain information requirements and incoherent rules for digital content products. It would particularly help alleviate the perceived barriers to online cross-border trade, which include differences in national contract law (38.1%) and national consumer protection law (37.4%). It would reduce unnecessary costs of compliant traders of checking and complying with possible national rules on precontractual information and right of withdrawal for "free" digital services. Existing costs were considered unreasonable by 7 of 10 business associations in the public consultation.

Increasing consumer protection for "free" digital services and the resulting reduction of detriment is likely to increase consumer trust in those services. As a consequence, the use of "free" digital services is likely to further increase, supporting the completion of the DSM.

In its response to the targeted consultation, one large provider of "free" digital services highlighted possible complications for consumers as a result of these new rules. It mentioned a risk of "over-notification and a bad user experience" if consumers are prompted to provide their consent or acknowledgement. Yet, as indicated by the strong support from other stakeholders, the possible consumer benefits are likely to outweigh this concern. Furthermore, these rules already apply to "free" digital content, and no such concerns were identified in the CRD evaluation.

When asked about the key reasons for introducing pre-contractual information obligations and a right of withdrawal for "free" digital services, a strong majority of individuals, consumer organisations and MS authorities highlighted improved protection of consumers of digital services with similar functionalities. 38.9% of traders, 26.9% of business associations highlighted such reason for precontractual information requirements, and 35.3% of traders and 19.65 of business associations stressed this for the right of withdrawal.

Extending the CRD to "free" digital services would address current realities of digital transactions for consumers through content neutral and future-proof rules. Filling this gap in consumer protection would reduce consumer detriment by ensuring clearer rules, which would complement EU data protection rules, particularly in the Member States where such rights do not yet exist.

Not applicable due to the digital nature of the services, e.g. no increased use of transport and energy.

The non-legislative option would fail to address incoherencies with the upcoming DCD, as only a legislative intervention would ensure that the objectives of the intervention are met.

At least in three Member States "free" digital services are regulated and discussions are ongoing in other Member States about introducing new rules. Self and co-regulation cannot remove this legal fragmentation.

Since it is unlikely that the industry would extend the CRD scope to "free" digital services, or at least the right of withdrawal, on a voluntary basis, this option will not be likely to improve the overall level of consumer protection.

Replies to the targeted consultations indicate that traders already face unnecessary costs linked to the need to check and comply with possible national rules on precontractual information and right of withdrawal for "free" digital services. At least in three Member States "free" digital services are regulated and discussions are ongoing in other Member States about introducing new rules. Self and coregulation will not be able to remove this legal fragmentation and reduce related costs.

The existing voluntary initiatives in the online area, such as the principles developed by the multistakeholder group on comparison tools, show the difficulty of bringing together major online traders. It is also difficult to ensure that voluntary initiatives are adequately representative in highly dynamic markets like the online one, where many new enterprises are not organised in industry associations.

However, for "free" digital services it would first be necessary to establish a clear and coherent legal framework to increase consumer protection. In the public consultation, business associations expressed resistance to extending protections, particularly as regards the right of withdrawal. Such reluctance suggests that industry will also find it difficult to agree and implement such improvements on a self- or co-regulatory basis. The likely lack of participation of major providers of "free" digital services in a voluntary initiative would significantly impair its effectiveness, since representativeness is one of the key factors in order for "soft" policy instruments to be successful.

Self and c-regulation can be effective as complements to binding legislation, facilitating enforcement and contributing to achieve its objectives. This was the case for the initiative to prevent the sale of counterfeits online. The "Memorandum of Understanding on the Sale of Counterfeit Goods via the Internet" significantly contributed to preventing offers of counterfeit goods from appearing on online marketplaces. It demonstrated that, together with legislation, voluntary cooperation can contribute to prevent online counterfeiting.

Selfregulatory initiatives by "free" digital service providers could alleviate consumer detriment, but only to the extent that providers decide to abide by selfregulatory principles.

The introduction of transparency obligations could have some environmental impacts due to a likely increase in transport and the use of energy for the purposes of delivering tangible goods, which would result from the expected increase in cross-border trade. Increased transparency could also make sellers and online marketplaces more aware of their responsibilities in case of selling faulty products, thus serving as an incentive to increase the number of goods that will not be returned, and ultimately reducing the overall transport of goods.

No significant effects are foreseen in areas such as employment, health and safety, income distribution and good governance and administration. Consumers acting as suppliers on online marketplaces will be confronted with fewer complaints related to consumer law (not applicable to their transactions), thus facilitating their activity on the marketplaces.

The proposed obligation for online marketplaces to ensure that third party traders self-declare their status is supported by the UCPD prohibition (No. 22 of Annex I) for traders to falsely claim not to be acting as traders. This prohibition will be the legal tool for enforcement authorities to handle situations where traders do not truthfully report their legal status to online marketplaces. The envisaged transparency requirements would also be complementary to the recently published Commission Guidance to facilitate the effective removal of illegal content, increased transparency and the protection of fundamental rights online.

Like the CRD Evaluation, studies for the P2B initiative identified a case for enhancing the transparency of ranking criteria for offers on online marketplaces. The two initiatives both address this issue and are complementary, with this IA assessing what could be done to ensure transparency in the presentation of search results in B2C settings and the P2B initiative approaching the topic from a B2B angle.

However, contrary to the B2B area, EU consumer law applies to all traders, including on-line platforms which qualify as traders, and protects consumers who use these platforms. Therefore, this IA deals only with specific problems identified within this otherwise well-functioning body of EU law. The first is that consumers often do not know who their contractual partner is and what their rights are when they shop through online marketplaces. The suggested new transparency rules would only apply to "online marketplaces", which are already defined and subject to specific consumer information requirements in EU law.

Transparency requirements for online marketplaces would be complementary to the Commission Platform-to-Business (P2B) initiative, which aims to fight unfair trading practices. The two initiatives pursue the same overarching goals of enhanced transparency and fairness of transactions on online platforms.

To the extent that Member States do not already require the relevant information (see Table 1 in Annex 10), they would have to add an additional provision in their laws transposing the CRD.

There could be a reduction of enforcement costs, as there would be more clarity about the identity and legal status of contractual partners, which is currently often difficult to establish. Given that consumers will find it easier to address their contractual partners directly, they would probably turn to authorities for help less frequently. In cases where consumer law does not apply, because the third party supplier is a consumer, information about this fact will increase awareness. This can reduce the number of unsubstantiated claims to consumer authorities.

Some major online marketplaces replying to the targeted consultations took the view that fully harmonised information obligations would bring some cost reduction. Others did not know. SMEs in the SME panel consultation anticipated one-off savings of EUR 214 on average, while annual savings reported would amount to EUR 391 on average. In terms of turnover, one-off savings would represent up to 32 %, annual savings up to 38% for micro enterprises.

Consequences for online marketplaces of not making it sufficiently clear to consumers that they enter into a contract with a third party supplier vary between Member States (see Table 2 in Annex 10). Uniform transparency obligations would provide clarity on who the contractual partner is and thus eliminate risks of online marketplaces being held liable for the performance of contracts. Transparency requirements should also reduce costs for online marketplaces due to the need to clarify the situation to consumers when problems arise. When consumers know who their contractual partner is and that they need to contact him/her in case of a problem, there should be fewer queries to be handled by online marketplaces.

Only few respondents to the targeted and public consultations provided quantitative cost estimates. Of the four online marketplaces responding to the question on costs, two found that costs for complying with new information requirements (one-off and running costs) would be reasonable, one did not find them reasonable and one did not know. In the SME panel, SMEs estimated one-off costs of EUR 2 179 on average (median: EUR 50) and annual regular/running costs of EUR 3 887 (median: zero).

There would be initial familiarisation costs. However, these are likely not to be significant since the transparency obligations concern basic information about the contracting parties and, depending on what a third party supplier has declared, standard information about whether consumer rights apply. The online marketplace would not be required to monitor information provided by suppliers. Major running costs for online marketplaces are therefore not likely.

35% of respondents in the SME panel consultation agreed that platform transparency would encourage them to enter other EU markets, while 39% did not expect any significant impact on that decision and 22% did not know.

The probability of consumers making a transaction is 2.15 times higher (115%) if they are informed that the ranking of search results is based on a well-known criterion, such as popularity. Ensuring such information for consumers could be expected to lead to growth in transactions on online marketplaces, as a result of increased consumer confidence and trust.

The number of consumers using online marketplaces and the volume of trade on online marketplaces is likely to continue increasing. Whilst the exact impacts of the transparency measures in this option are not easily measurable, initial evidence indicates that transparency should increase consumer trust, and thus have a positive impact on the internal market by increasing the number of consumers using online marketplaces and the volume of trade.

Specific EU wide transparency requirements for online marketplaces would ensure fairer competition. On the one hand, it would ensure clearer rules to support better enforcement and, on the other, it would prevent some traders from having unfair competitive advantages.

Transparency about ranking criteria is also important for consumer trust and confidence in the online environment. It increases the likelihood of consumers making purchases on online marketplaces. In a survey, 70% of 4800 internet users that correctly remembered information about selection criteria agreed that this information was important in their decision to make a purchase. 69.9% of those who correctly recalled this information agreed that it made them more confident and trusting.

Knowing whom to address in case of problems is a first condition for consumers to seek redress. If they seek redress, it is likely that their detriment decreases. More transparency on online marketplaces would therefore increase consumer protection by reducing consumer detriment. In the public consultation, all consumer associations and public authorities, as well as almost all citizens agreed that this would bring benefits for the consumers. On the business side, roughly two thirds of responding business associations (around 35 of 45) and large companies (around 6 of 9), together with more than two thirds of SMEs (around 9 of 16), agreed too.

81% of respondents to the behavioural experiment agreed that information about who is selling the product would make users more confident and trusting in online marketplaces and that this would translate in a better service for users (79%) (see Figure 5 in Annex 10).

Full information about the identity of the supplier and related consumer rights also increases the probability of consumers making a purchase. Compared to a situation where no information about the contractual partner is included (baseline scenario), the probability of a consumer purchase increases by 47%. Information that the contract is concluded with a third party supplier and that consumer rights apply (or do not apply) allows consumers to make an informed choice and increases their trust. Making the implications of choosing a specific contractual partner more prominent on the online marketplace is likely to engage consumers better in this process. In the same vein, if consumers are informed that the ranking of search results is based on a well-known criterion, such as popularity, the probability that they will make a purchase increases 2.15 times (115%).

A behavioural experiment showed that introducing information about the name of the third party supplier on online marketplaces lead 74% of respondents to remember who was selling the product. 72% of these respondents remembered it accurately (see Figure 3 in Annex 10). This is a clear improvement compared to the finding that currently 60% of consumers entering into transactions on platform markets are unsure about who is responsible for the contract. Around 70% of respondents to the behavioural experiment believed that knowing who the seller was made them more confident and trustful towards the online marketplace. Around 68% stated that such information was important in their decision making (see Figure 4 in Annex 10). Oher data suggests that 85% of consumers consider it important that online marketplaces are clear and transparent about who is responsible when something goes wrong and about their rights in case of a problem with price and quality of products and services.

Member States have different information requirements for online marketplaces. Co- and self-regulation does not seem sufficient to address such divergent rules and reduce related costs. Several businesses associations take the view that the fragmented nature of the EU market for (digital) goods, content and services is a stumbling block for consumers and businesses. Self and coregulation alone cannot address this fragmentation.

Since it is unlikely that the online marketplace industry would introduce relevant transparency measures on a voluntary basis, this option would not improve the overall level of consumer protection. Online marketplaces, like other traders, are likely to be attached to their business models. The non-binding character of the UCPD guidance and the principles for online comparison tools seems to lack deterrent effect to persuade them to change their behaviour.

Furthermore, it is difficult to ensure that voluntary initiatives are adequately representative in highly dynamic markets like the online one, where many new enterprises are not organised in professional associations.

The reluctance by online traders to implement recommendations on platform transparency from the UCPD Guidance and to engage in the multi-stakeholder group on comparison tools suggest that it is unlikely that further co- or self-regulatory initiatives in this area would be successful to ensure increased transparency for consumers.

Experience from a multistakeholder group on online comparison tools, set up in 2012 by the European Commission, confirms this lack of engagement by online businesses. It brought together industry representatives, operators of comparison tools, NGOs and national authorities to develop principles to help comparison tool operators comply with the UCPD. The principles developed by the group later fed into the UCPD Guidance. However, several leading online platform operators did not take part in the initiative. This was a significant impediment to the possibilities for the agreed principles to create impact on business practices to the benefit of consumers. Moreover, following their adoption, improvements seem to have been limited. Whilst important objectives such as raising awareness among traders and building a common understanding were achieved throughout this initiative, there was limited change on the market regarding. This was confirmed by preliminary results of a 2017 sweep on comparison websites in the travel sector, which identified several irregularities on websites.

Although online marketplaces generally did not object to the transparency recommendations in the UCPD guidance, analyses on national level indicate that they have done little to follow-up on the recommendations in practice. Consumer organisations confirm that there has been no improvement of transparency in B2C transactions on online marketplaces and that the application of EU consumer law when online marketplaces enable the conclusion of contracts is still unclear, leading to a low legal standard for ensuring the correctness and validity of information provided.

The Commission has already encouraged businesses, and online marketplaces in particular, to ensure greater transparency for consumers. This was notably done through issuing Commission guidance on the UCPD in May 2016, which calls for transparency on online marketplaces through purposeful application of the general transparency and professional diligence requirements under the UCPD.

Self and co-regulation can be effective as a complement to legislation. For instance, the initiative to prevent the sale of counterfeits online is a successful example of complementarity between regulatory and non-regulatory interventions. The "Memorandum of Understanding on the Sale of Counterfeit Goods via the Internet" enhanced cooperation among stakeholders and significantly contributed to preventing offers of counterfeit goods from appearing on online marketplaces. It demonstrated that, together with legislation, voluntary cooperation can contribute to prevent online counterfeiting, meaning that it can improve the enforcement of existing legislation.

Improving collective redress possibilities in mass harm situations would have positive environmental impacts that would come on top of the environmental impacts of options 1 and 2. The combination of effective and deterrent penalties, improved injunctions procedures and strengthened mechanisms for individual and collective redress will ensure powerful tools to address unfair commercial practices, such as misleading environmental claims and planned (built-in) obsolescence of products.

Improving collective redress possibilities in mass harm situations could have positive social impacts, particularly concerning protection of vulnerable consumers. As under options 1 and 2, the deterrent effects of option 3, leading to fewer infringements, would also be particularly beneficial for consumers who would otherwise have lacked the means to seek legal redress if their consumer rights have been violated.

Overall, costs under option 3 would be insignificant for compliant traders. Costs for cross-border traders would go down due to further harmonisation of national procedures.

Improvements of the effectiveness of the injunctions procedure and strengthened mechanisms for collective redress could lead to increased use of the ID, possibly, but not likely, including an increase in frivolous claims. See Section 8.3.1 for an assessment of risks related to frivolous claims.

Option 3 would produce no costs for compliant traders, other than regular costs to ensure that business practices are within the law. Business associations responding to the ID survey considered that insurance premiums for coverage against claims in mass harm situations would increase (91% predicted a significant increase, 9% predicted no impact). The expected insurance figures are higher under option 3 than option 1, due to the possibility of receiving redress claims.

Qualified entities would benefit from increased possibilities to represent the interests of victims with due fairness safeguards. This was reflected in the 2017 Study on collective redress, where 63% of respondents agreed that collective redress enhances access to justice and 60% considered such actions to be capable of ensuring the fairness of proceedings.

Under this option, qualified entities would experience procedural efficiencies from the possibility of assessing injunctive and redress claims in a single procedure, which would enable them to bear the costs of preparing a single action. In the hypothetical mass harm case study, the qualified entities responding to the ID survey held mixed views about the impact of this option on their legal advice costs (28.5% predicted a reduction of costs, 33% predicted an increase) and litigation costs (23% predicted reduction, 28.5% predicted increase). The precise impact on such costs would depend on the financial and legal capacities of the qualified entity in question, as well as the circumstances of the mass harm case.

National authorities responding to the ID survey were divided when assessing implementation costs of for courts (41% predicted a moderate increase) and administrative authorities (43% predicted a moderate increase), but did not consider these costs significant. They did also not consider running costs for courts (41% predicted a moderate increase) and administrative authorities (43% predicted a moderate increase) significant. Expected costs may be slightly higher under option 3 than option 1, due to the additional procedural redress elements. However, national authorities responding to the ID survey considered that, when taking into account the possible benefits for consumers, these costs are reasonable (40% agreed, 10% disagreed).

In most Member States, courts/authorities would benefit from procedural efficiencies if both injunctive relief and redress claims could be assessed within a single procedure. In the ID survey, 53% of all respondents agreed that introducing redress mechanisms within the injunctions procedure would have a positive impact on procedural efficiencies due to the collective resolution of mass claims. 10% predicted a negative impact and 9% no impact. Most Member State authorities (86.8%) predicted a positive impact.

This option would enable economies of scale in the preparation and litigation of cases and may reduce coordination and transaction costs of bringing consumers together for redress purposes.

The introduction of redress mechanisms, which may include compensatory relief, would require changes in at least 9 Member States. According to the Study on the 2013 Recommendation on Collective Redress, 19 Member States provide for some form of compensatory collective redress (AT, BE, BG, DE, DK, FI, FR, EL, HU, IT, LT, MT, NL, PL, PT, RO, ES, SE, UK). In AT, there is no specific legal framework but an extension of traditional multiparty litigation devices to mass claims developed in case law. In NL, the available mechanism provides only for an out-of-court settlement approved by the court, but there is no specific judicial compensatory collective redress mechanism. In DE, the existing mechanism is limited to investor claims. Among the different models of compensatory collective redress, representative action models are available in 12 Member States (BE, BG, EL, FI, FR, LT, IT, HU, PL, RO, ES, SE).

Introducing a single procedure for injunctions and redress would require changes in at least 19 Member States. According to the Study supporting the Fitness Check, 9 Member States (AT, BG, CZ, DK, HU, LT, PT, ES, UK) have the possibility to provide decisions on injunctions and redress in a single procedure. However, this is often a theoretical possibility governed by general procedural rules and not by specific legislation.

This option would require legal changes in all Member States. The extent of these changes would depend on whether Member States choose to integrate the proposed mechanism into existing national schemes or establish it as a separate alternative scheme.

This option would contribute to a better functioning internal market. In the ID survey, 49% of all respondents considered that the addition of collective redress mechanisms would have a positive impact on fair competition between compliant and non-compliant traders. 7% predicted a negative impact and 13% no impact. Most Member State authorities (83.7%) and consumer organisations (90.9%) shared this view, while business associations (9.1%) did not. In the 2017 Study on collective redress, 57.69% of business respondents did not consider collective redress procedures to have any negative impact on their businesses' competitiveness.

56% of all respondents agreed that the possibility of redress would have positive impacts on reducing consumer detriment. 2% predicted a negative impact and 13% no impact. Most Member State authorities (89.5%) and all consumer organisations shared this view, while business associations did not (9.1%). Furthermore, a majority of consumer organisations considered that added redress mechanisms would significantly reduce consumer costs for seeking redress. In addition, the possibility for out-of-court negotiations for redress, together with the other procedural amendments that would increase the deterrent effect of the ID under options 1 and 3, would lead to increased likelihood of achieving amicable redress outcomes.

In the ID survey, 50% of all respondents considered that the addition of a collective redress mechanism would have positive impacts on consumer awareness and empowerment, due to publicity requirements for traders. 1% predicted negative impacts and 20% no impact. Most Member State authorities (81.6%) and consumer organisations (91.7%) agreed, while business associations did not (9.1%).

A key reason for representative collective redress mechanisms is that consumers may rationally decide to forego individual legal action due to its expected negative balance of costs and benefits. By adding a mechanism for collective redress to the injunctions procedure, obstacles to individual consumer redress would be significantly reduced.

Strengthened mechanisms for collective redress would ensure a higher level of consumer protection in mass harm situations. The Study supporting the Fitness Check suggested that Member States that have introduced redress orders have experienced an increase in the effectiveness of injunction procedures and reduced consumer detriment. The possibility to bring action for damages or redress within the injunctions procedure was viewed by qualified entities responding to the Fitness Check survey as the most beneficial procedural element to be added to the ID.

The strengthened mechanisms for collective redress under this option would further improve compliance, in particular concerning businesses that are sensitive to reputational damage. As highlighted in the Study supporting the Collective Redress Report, the possibility of a collective redress claim would incite businesses to comply with the law. In the ID survey, 53% of all respondents considered that collective redress possibilities would increase deterrence of non-compliance, whereas only 4% predicted a negative impact and 14% no impact. Most Member States authorities (81.6%) and all consumer organisations shared this view, while business associations did not (9.1%).

The positive impacts of option 1 would be strengthened by option 2. Individual remedies for breaches of the UCPD would empower consumers to take legal action against traders that engage in unfair commercial practices such as misleading environmental claims and planned (built-in) obsolescence of products. This would increase the deterrence of the UCPD and have positive impact on the environment. In case of non-compliance, consumers would be able to receive redress, which would remove a share of the illegally obtained profits from the infringing traders and encourage sustainable consumption patterns in line with the Circular Economy Package.

The UCPD (Article 5(3)) aims at ensuring vulnerable consumers, defined as "a clearly identifiable group of consumers who are particularly vulnerable to the practice (…) because of their mental or physical infirmity, age or credulity", a higher level of protection from unfair commercial practices. While the Consumer Conditions Scoreboard 2017 reported a slight decrease in unfair commercial practices, there was an increase in vulnerable consumers that were exposed to such practices. By ensuring a more effective mechanism for consumers to get redress when their rights under the UCPD have been infringed, this measure would empower all consumers to protect themselves better. However, given that the number of vulnerable consumers that become victims of unfair commercial practices is increasing, this could have particularly positive impacts on them. As for option 1, the deterrent effects of option 2, leading to fewer infringements, will be particularly beneficial for consumers who would otherwise have lacked the means to seek legal redress if their consumer rights had been violated.

Introducing remedies for breaches of the UCPD would not constitute a novelty within the broader framework of EU consumer law. Civil remedies exist in several instruments, such as the Package Travel Directive 2015/2302/EU, the CSGD and in the Commission Proposals (amending and replacing the CSGD) for a Directive on certain aspects concerning contracts for the sales of goods and for a Directive on Digital Content. These Directives harmonise the exact remedies that Member States must ensure.

Requiring Member States to ensure that the specific remedies of contract termination and compensation for damages are available for breaches of the UCPD would require amendments of national law in all Member States. Among the 14 Member States that have ensured links between breaches of the UCPD and remedies, only the UK has ensured that the link includes contract termination and damages. However, these remedies are not provided for misleading omissions in the UK. Different degrees of legislative changes would be required in the remaining 13 Member States that have ensured such links, depending on which remedies are currently covered. The 14 Member States that have no links between breaches of the UCPD and remedies would need to amend their legislation both to ensure such links and that the links cover the required remedies. Requiring Member States to ensure that victims of unfair commercial practices have access to non-contractual remedies will require legal change in some Member States. Access to damages is the most practical non-contractual remedy and a reasonable indicator for the degree of legal change required in the different Member States. 10 of the 14 Member States that have remedies linked to breaches of the UCPD have ensured that consumers have the right to seek damages. The remaining 4, as well as the 14 Member States that do not have links to remedies, would probably need to amend their legislation to ensure access to damages and thus to non-contractual remedies.

Costs for public enforcement authorities and courts would include a possible increase in the number of enforcement and court cases. However, these costs are likely to be offset by an overall reduction in breaches of the UCPD due to the deterrent effect of the UCPD remedies. The existence of UCPD remedies could be sufficient to deter wrongdoing or to trigger voluntary redress from traders, without any need to approach courts or enforcement authorities. According to the Consumer Market Study for the Fitness Check, traders are currently unlikely (16%) to voluntarily offer remedies if they have engaged in a misleading commercial practice. Strong civil remedies and the possibility of escalating the complaint to courts and authorities could incentivise traders to settle more complaints on a voluntary basis.

The average one-off costs, such as costs for legal advice, assumed by SMEs is EUR 12 293(median: EUR 638). Average annual running cost estimates for these businesses is EUR 8 484 (median: EUR 655). The three responding large companies expect one-off costs between zero and EUR 5 000 (median: EUR 1 703) and annual running costs of zero to EUR 15 000. This IA only addresses compliance costs for compliant traders, including possible ex ante risk-assessment costs in case of non-compliance. It does not address costs for non-compliant traders, such as likely amounts of compensation provided to consumers through UCPD remedies.

There would be initial familiarisation costs for traders. However, these costs are difficult to quantify. Only two traders responded to a question about this in the public consultation. In the same vein, very few stakeholders provided estimates of running costs.

Beside the positive effect on cross-border trade, the introduction of individual UCPD remedies would also lower costs for complaint handling due to a simpler and more uniform legal framework. In addition, there would be increased clarity on possible consequences for non-compliant traders, which would lead to lower and more accurate risk-assessment costs. In the SME panel consultation, SMEs indicated one-off savings of EUR 1 405 on average (median: zero) and annual savings of up to EUR 10 000 (average: EUR 704, median: zero). The four responding large companies estimated one-off savings of maximum EUR 1 682 (average EUR 250), with no annual regular savings. In terms of turnover, expected savings tend to decrease by company size, e.g. one-off savings ranging between zero and 5.9% for micro-enterprises to close to zero for large companies.

This option would reduce costs for traders because national rules on individual remedies would become less divergent. 25% of the (205) respondent SMEs stated that introducing an EU-wide right to remedies under the UCPD would encourage their enterprise to enter other EU markets. Empowering consumers to take action against traders that infringe their rights under the UCPD is also likely to increase consumer trust. This could lead to more cross-border purchases. In the public consultation, all consumer associations, most Member State authorities and most citiz