E-Commerce: When Purchasing Online, Look Out For Unfair Terms

Just in time for the holidays and gifts shopping season, the European Commission Thursday published the results of an EU wide screening of websites selling games, books, videos and music which can be downloaded to a computer or mobile device.

The check shows that over 75% of these websites do not appear to comply with consumer protection rules. This is all the more worrying when vulnerable consumers, i.e. children, are targeted. Users have to click their way through a maze of contract terms, to find out how much they will eventually have to pay and children are frequently lured into purchasing items related to supposedly free games.

In case of a problem, reaching the after-sales service is often difficult as contact information is missing in more than one third of the websites. National enforcement authorities will now contact the companies concerned to enable them to clarify their position or correct their website.

Commissioner in charge of Health & Consumer Policy, Tonio Borg, said, “Children are increasingly at ease with technology; from an early age, they know how to download games. However once they are addicted to playing with a certain product, it is difficult to stop them. Parents beware, half of these downloadable games are advertised free to play, but you may soon end up with rocketing bills covering virtual items needed to progress. In general, the EU sweep published today shows that a majority of checked websites do not provide easy access to key contractual terms. In the coming months, national authorities will be working to get these websites on the right track.”

National authorities from 26 Member States plus Norway and Iceland checked a total of 333 websites, including 159 selling online games. They flagged 76 % of all websites (254 sites) for further investigation as they had doubts about the websites’ conformity with EU laws protecting consumers, especially rules governing advertising and key information about costs and characteristics of digital content which enable consumers to make informed decisions. Of the 55 sites selling games for children aged below 14 checked, 71% (39) seemed non-compliant with EU laws.

The main problems were:

1. Unfair terms: contract terms must be clearly indicated and fair. A total of 230 websites (69%) contained terms considered unfair, e.g. i) excluding the trader’s liability in case a download damages the consumer’s equipment, ii) excluding or preventing consumers from exercising their right to seek legal or other redress or making it difficult to do so, or iii) depriving consumers of the right to receive a new product or to claim reimbursement when the downloaded product fails to work;
2. The right of withdrawal: due to the nature of downloads, the consumer loses his right of withdrawal from the contract when downloading has begun with the consumer’s agreement (in other words, the downloaded product cannot be returned); however traders are required to inform consumers prior to the purchase about this fact. 141 websites (42% of websites checked) did not provide this information;
3. Missing information on the trader’s identity and address: traders are obliged to indicate their identity, geographical and email address on their website to enable consumers to contact them, if necessary. 121 websites (36%) did not display such essential information.

In addition to the sweep, the Commission contracted a complementary study that revealed the following:

1. No information about geographical restrictions: consumers may not be able to use downloaded digital content in a country other than their place of residence and traders should inform them about this. 73% of all checked websites remain silent on this information. When this information is given, it is often presented only in the general terms and conditions and is therefore difficult to find.
2. Games advertised as “free” often involve some payment at a later stage: Nearly 9 out of 10 websites failed to inform users upfront about add-ons or in-game purchases requiring payment; although this information is often mentioned in the contract terms, it bears no clear indication about prices.