Position Paper e-Regulation Ecommerce Europe†s Proposal for Sustainable Growth of E-commerce in Europe www. ecommerce-europe. eu POSITION PAPER 3 Table of contents 1 Introduction 4 2 General e-commerce regulation 5 2. 1 The position of Ecommerce Europe 5 2. 1. 1 Stimulating trust in e-commerce 5 2. 1. 2 Country of origin vs Country of Destination 5 2. 1. 3 Tax obligations 5 2. 1. 4 Knowledge of legal obligations 6 2. 1. 5 Relevant areas outside the scope of the E-commerce Directive 6 3 Online contracts and consumer protection 6 3. 1 Position of Ecommerce Europe 6 3. 1. 1 Harmonisation 6 3. 1. 2 Information requirements 7 3. 1. 3 Right to withdrawal 7 3. 1. 4 Common European Sales Law 7 3. 2 Ecommerce Europe†s additional proposals 7 3. 1. 5 Education and knowledge dissemination 7 3. 1. 6 Self-regulation 7 4 Alternative and online dispute resolution 7 4. 1 The position of Ecommerce Europe 8 4. 1. 1 (Self-)Regulation 8 4. 1. 2 Checks and balances 8 4. 1. 3 Voluntary by default 8 4. 1. 4 ODR 8 4. 2 Ecommerce Europe†s additional proposals 8 4. 2. 1 Knowledge and Education 8 4. 2. 2 Stimulate education accessibility 8 4. 2. 3 Self-regulation 8 5 Data protection and e-privacy 8 5. 1 The position of Ecommerce Europe 9 5. 1. 1 General 9 5. 1. 2 Personal data and consent 9 5. 1. 3 Marketing, profiling and targeting 9 5. 1. 4 Harmonisation and international consistency 9 5. 1. 5 Accountability, administrative burdens and sanctions 10 5. 1. 6 Data subject rights and consent 10 5. 1. 7 Regulation and enforcement 10 5. 2 Ecommerce Europe†s additional proposals 10 5. 2. 1 Knowledge and education 10 5. 2. 2 Self-regulation 10 6 Electronic signatures and e-identification 11 6. 1 The position of Ecommerce Europe 11 6. 1. 1 Electronic signatures and e-Identification 11 6. 1. 2 Interoperability 11 6. 2 Ecommerce Europe†s additional proposals 11 6. 2. 1 Knowledge and education 11 POSITION PAPER 4 1. Introduction E-commerce has enabled consumers to access goods and services from all over Europe. As such, e-commerce has contributed significantly to the European economy in general and the success of the European Single Digital Market in particular. But while e commerce has grown spectacularly over these past two decades, the EU has taken not yet full advantage of the benefits provided by the Single Market There are still barriers to further growth in cross-border activities. One of these barriers is the regulatory framework in Europe Europe is still a patchwork of national markets and the absence of a truly harmonised regulatory framework in Europe hinders the further development of cross-border e-commerce and undermines consumer trust. Important topics for discussion include the general rules governing e-commerce transactions consumer protection, alternative (online) dispute resolution electronic signatures, diverging VAT systems, diverging distribution systems and e-privacy The European commission launched the Digital Agenda for Europe to strengthen the internal market. In chapter 2 of the Digital Agenda, the Commission outlines its plans to create a vibrant single digital market. Furthermore, in 2012 the European commission launched its †E-commerce Action Plan†and on January 31st 2013 its †Retail Action Planâ€. Ecommerce Europe welcomes the efforts of the European commission in this area and wishes to contribute to this important effort In this position paper, Ecommerce Europe sets out its ideas on the steps that need to be taken to create an uniform, effective flexible and efficient regulatory framework that stimulates trust in (cross-border) e-commerce transactions Ecommerce Europe Seeks harmonisation and simplification of e-commerce and consumer protection law Seeks a fair balance between consumer and citizens†rights and the possibilities for online merchants to conduct business in Europe Seeks more self-regulation based on dialogue with consumer organisations and other relevant stakeholders Wants consumer rights throughout Europe to be harmonised as much as possible and at the same high level in all Member States and therefore calls for a dialogue between industry and decision-makers in order to overcome and avoid unnecessary and burdensome restrictions such as gold-plating (introducing additional rules exceeding the terms of European community directives when implementing them into national law Wants to lower the (administrative) burdens and costs of mandatory consumer information and the impact of the right of withdrawal Wants alternative dispute resolution developed in line with national †good-practice†ADRS. The goal is to achieve common European system for ADR and ODR at the same level in all Member States. The European regulation should be a legal framework with room for self-regulation on ADR in different branches Wants secure, cost-effective and user friendly e-Identification schemes that enable secure transactions. These schemes should be interoperable and mutually recognised by different Member States to stimulate cross-border e-commerce 2. General e-commerce regulation Many different laws and regulations govern the e-commerce sector. At the European level, the E-commerce Directive was the first step towards general legislation. The E-commerce Directive (2000/31/EC) deals with a range of topics Most parties agree that the E-commerce Directive has been an important and successful instrument in stimulating e-commerce in Europe. 1 There is however still a lot of room for improvement Apart from formal legislation, self-regulation has been key to the success of e-commerce both at the national and the Euro -pean level. In many cases, self-regulation is preferable to formal legislation 2. 1 The position of Ecommerce Europe The positions of Ecommerce Europe in the area of general e-commerce regulation are summarised below 2. 1. 1 Stimulating trust in e-commerce •Although Ecommerce Europe acknowledges the importance of trust between consumers and merchants in the e-commerce sector, the European commission overemphasized the†lack†thereof in its attempt to main -tain and create further growth. Ecommerce Europe notes that the two most important challenges to cross border e-commerce are the lack of a coherent policy towards e-privacy and e-payments (see the specific position papers on this topic for more details on our position •The lack of consumer trust in online merchants is no longer the key problem; this is demonstrated by the fact that the sector already contributes a substantial percentage to the European GDP and is still growing. 2 •Ways to further stimulate trust should not only be sought in (additional) legislation, but rather through focus on self-regulation and an equal level of implementation of rules on distant sales and services and enforcement thereof in all Member States •European decision-makers have to adopt a balanced approach to regulating e-commerce: if the decision -makers give more attention to consumers than they do to merchants, many merchants will leave the market because of unfavorable conditions and administrative burdens •The use of trustmark schemes within Member States should be expanded, and more confidence should be generated by setting EU-standards for compliance with the underlying rules of the trustmark schemes •Trustmark schemes can stimulate trust, but as of today a EU-wide trustmark is absent. Cross-border e-commerce could benefit from a EU-wide trustmark for e-commerce •Codes of Conduct provide clarity and certainty for both retailers and consumers. To stimulate the use of these self-regulatory instruments, draft codes of conduct for cross-border e-commerce transaction should be developed 2. 1. 2 Country of origin vs Country of Destination •There is still uncertainty amongst merchants on the relationship between the Country of origin principle (ar -ticle 3) in the E-commerce Directive and the rules under Rome I and II •The right of consumers to apply the law of their home country is different to the obligation for web merchants to apply all requirements in the national law of the country of destination •Merchants have the right to apply the rules of their country of establishment, while also respecting a potentially higher level of protection for consumers in the consumers†country (country of destination. This higher level of consumer protection does not mean that all rules of the country of destination apply, supervisory authorities should respect the rules deriving from the e-commerce directive as well as Rome I and II 2. 1. 3 Tax obligations •The lack of a common European VAT system is the biggest problem for online cross-border sales Ecommerce Europe therefore supports the conclusions of the European parliament report on the simplification and modernisation of the EU VAT system. 3 •Steps should be taken to ensure a more uniform and market neutral VAT treatment of e-commerce related services across the EU •The European union should move towards the establishment of what the European commission has termed acommon VAT Code POSITION PAPER 5 1 Summary of the responses to the Ecommerce directive evaluation 2 http://www. retailresearch. org/onlineretailing. php 3 European Parliament†s Committee on Internal Market and Consumer Protection, Simplifying and Modernising VAT in the Digital Single Market for E-commerce POSITION PAPER 5 •Under the current VAT system purchases of digital services and products online may end up being subjected to double taxation due to different interpretations of the character of the supply between different Member States This should be prevented •Many merchants, especially SMES, have little knowledge of the fiscal demands of extra-national and cross-border trade, limiting the potential of the single market. There should be a pan-European access/information point to deal with fiscal questions •Business start-ups and SMES in all Member States need a †One Stop Shopâ€, a central contact point for questions on European VAT, tax and legislative issues available in every state. The †One Stop Shops†could help SMES and start-ups in cross border sales 2. 1. 4 Knowledge of legal obligations •Business start-ups and SMES have no funding to research the legal position in other Member States in which they may wish to carry out electronic commerce activities with consumers. This may well lead to their refusal to engage in cross border retail e-commerce activities in other Member States, if they have not researched the legal position in other Member States or-having researched the legal position in other Member States-find that they cannot comply, or find that complying with contract and consumer rights legislation in other Member States carries a large burden •The cost of legal advice limits SMES€ ability to access the single market •There is a reasonably good level of legal expertise at a national level, but of lower quality for cross-border cases This is likely caused by the lack of legal harmonisation across the EU •Ecommerce Europe welcomes the initiative of the European commission of an †EU code of online rights†and urges the Commission to take steps to provide free, easily accessible and clear information to SMES and consumers •There should be a pan-European access/information point to deal with legal questions 2. 1. 5 Relevant areas outside the scope of the E-commerce Directive •The lack of harmonised rules on cross-border transport modes, delivery services and tracking services leads to inefficiencies and higher costs •To stimulate the (Digital) Single Market steps should be taken to ensure high quality and flexible postal services are provided at an affordable price everywhere for everyone. Ecommerce Europe supports the conclusions and recommendations of the Copenhagen Economics study into the Pricing Behaviour of postal operators. 4 •Cross border parcel-delivery should be improved, without disproportionally affecting e-commerce businesses. 5 3. Online contracts and consumer protection Given the fact that contract law is still predominantly a national affair, there is a lack of harmonisation, which hampers the further growth of cross-border e-commerce. In particular in the area of consumer protection, harmonisation has been limited Consumer protection directives leave room for national legislators to create additional rules for consumer protection gold-plating. This has led consequently to a patchwork of contract-and consumer protection law in Europe. The new Consumer Rights Directive represents a new step towards strengthening and harmonising consumer rights in the European Single Market. There is a need for a balanced approach in order to strengthen the development of consumer rights and common terms for online sales 3. 1 Position of Ecommerce Europe The key positions of Ecommerce Europe in the area of online contracts and consumer protection are summarised below 3. 1. 1 Harmonisation •Harmonisation of consumer rights is vital for a level playing field for cross-border e-commerce and consumer trust •Harmonisation is only acceptable if legislative initiatives contribute to high-quality and uniform European consumer protection. Legal initiatives should not create new unnecessary burdens for online trade on a national level 4 DG Markt (2012), Pricing behaviour of postal operators, Copenhagen Economics 5 GREEN PAPER An integrated parcel delivery market for the growth of e-commerce in the EU 6 •Ecommerce Europe supports the action of the European Commission to remove all remaining restrictions to cross-border trade on national levels. 6 3. 1. 2 Information requirements •Providing information to consumers about the merchant products and the contract is important for trust in e-commerce •Information requirements should not be excessive because they lead to †information overload†for the consumer and administrative burdens for the merchant •Information requirements should not lead to extra processing of personal data for evidence purposes •Online comparison tools should be transparent and reliable. The inclusion of cross-border offers by comparison websites is important for consumers to be able to take full advantage of the Single Market 3. 1. 3 Right to withdrawal •The extension of the right to withdrawal places an additional burden on the merchant •A better definition of the consumers†rights and obligations with regard to the right of withdrawal is necessary 3. 1. 4 Common European Sales Law •Ecommerce Europe opposes the notion of a non-binding optional Common European Sales Law. This would lead to legal uncertainty and practical complications •Ecommerce Europe seeks full harmonization of European e-commerce legislation. However, Ecommerce Europe opposes the proposal for a Common European Sales Law. Even though such a proposal could potentially be helpful in achieving the objectives of the internal market the current proposal lacks simplicity, legal clarity and the stability of contracts. It is complicated too for consumers and merchants to use and provides too few benefits over the existing legal framework •The proposal requires substantial simplification and should aim to reduce costs for enterprises •Material rules should be easy to understand and provide legal certainty •Material rules should also guarantee well-balanced rights between the parties and should provide contract stability •The complexity of the material rules and the lack of certainty bring higher costs to enterprises in terms of legal advice and litigation •Conflicts will emerge between the Sales Law and the Consumer Rights Directive. The Sales Law includes the right of pre-contractual information, the right of withdrawal and other issues, which are dealt also with in the Consumer Rights Directive •The Common European Sales Law could potentially lead to competition distortions. Foreign companies will benefit from the optional Sales Law and could distort the level playing field for local retailers, which are bound to national law only 3. 2 Ecommerce Europe†s additional proposals 3. 1. 5 Education and knowledge dissemination •Provide free, accessible and clear information for SMES and consumers on consumer rights and obligations •Provide best practices on information requirements 3. 1. 6 Self-regulation •The Consumer Rights Directive requirements could be used in a pan-European trustmark for e-commerce transactions 4. Alternative and online dispute resolution Given the nature of e-commerce transactions, access to cheap flexible and accessible mechanisms for dispute resolution are preferable to traditional litigation for both consumers and merchants. While there are over 750 alternative dispute resolution mechanisms in Europe, their use in (cross-border e-commerce transactions is limited still. To encourage faster cheaper and easier mechanisms for out-of-court settlement the European commission announced two measures: 1) a proposal for a new Directive on consumer Alternative Dispute Resolution (ADR), and, 2) a new Regulation on consumer Online Dispute Resolution (ODR. 7 The adoption of both instruments is expected in the second quarter of 2013 after the final vote in Parliament POSITION PAPER 7 6 European commission (2013), Setting up a retail action plan, Brussels, 31.1.2013 COM (2013) 36 final 7 Memo European commission, Alternative Dispute Resolution and Online Dispute Resolution for EU consumers Questions and Answers, Brussels, 18 december 2012 POSITION PAPER 8 4. 1 The position of Ecommerce Europe For Ecommerce Europe, ADR is an important part of the trust framework for e-commerce. The key positions of Ecommerce Europe in the area of ADR and ODR are summarised below 4. 1. 1 (Self-)regulation •While rules and regulations may provide more uniformity and legal certainty, they present the risk that they undermine the strengths of ADR and ODR, in terms of accessibility, flexibility, low costs and speed •Self-regulation allows businesses to develop new mechanisms that meet consumer needs •Promote self-regulation on the national level through dispute committees, instead of through legislation •Different implementations of mediation and consumer ADR schemes within Member States should be harmonised in order to establish trust and clarity for both consumers and merchants •Any ADR or ODR scheme must maintain a balance between the interests of all the stakeholders; therefore Ecommerce Europe supports a multi-stakeholder approach to ADR and ODR. 8 4. 1. 2 Checks and balances •Include the core principles for ADR in a binding instrument, but keep rules to a minimum as to ensure maximum flexibility •Regular assessment of ADR compliance with those principles 4. 1. 3 Voluntary by default •Ecommerce Europe stresses that ADR/ODR must be a voluntary alternative to court settlement, and access to a formal court procedure should always be open •The outcome of any ADR/ODR procedure should be binding, unless parties agree otherwise 4. 1. 4 ODR •ODR is particularly effective in cross-border e-commerce disputes, and should be stimulated in this area •More †ambition†in the ODR regulation is necessary to build a transnational system for ODR •ODR should be truly online, e g. application process submission of evidence and the proceedings itself 4. 2 Ecommerce Europe†s additional proposals 4. 2. 1 Knowledge and Education •Improve knowledge amongst both merchants and consumers about the possibilities of ADR/ODR 4. 2. 2 Stimulate accessibility •Access to ADR/ODR should be strengthened via com -plaints mechanisms and standardised formats for applica -tion to ADR 4. 2. 3 Self-regulation •The requirements for ADR schemes should be harmonised •ADR/ODR mechanisms could be introduced as part of European) trustmark schemes 5. Data protection and e-Privacy The responsible use of personal data is a key element for trust in e-commerce. Therefore, a comprehensive and effective data protection framework is of great importance. A coherent and comprehensive EU framework for personal data protection not only protects the privacy of European consumers; it also facilitates the cross-border flow of personal data, thereby strengthening the single digital market and cross-border e -commerce. As such, Ecommerce Europe welcomes the revision of the EU data protection framework and the proposal for a general data protection Regulation While data protection legislation may strengthen privacy and stimulate the single digital market, there are also concerns that the legal framework will be too strict and inflexible, raising the cost of business through administrative burdens and slowing down innovation. For this reason, Ecommerce Europe calls on the EU, national authorities, operators and consumers to further reflect with relevant stakeholders (i e. data controllers processors and data subjects) on the proposal in order to achieve a harmonised framework based on a balanced approach in this important legislative step 8 Del Duca, L.,Rule, C.,Loebl, Z. 2011), Facilitating Expansion of Cross-Border E-commerce-Developing a Global Online Dispute Resolution System (Lessons Derived from Existing ODR Systems †Work of the United nations Commission on International Trade Law), 1penn. St. J. L. & Int†l Aff. 59. p. 282 5. 1 The position of Ecommerce Europe For Ecommerce Europe, privacy is an integral part of a sustainable relationship with the consumer. The key positions of Ecommerce Europe in the area of data protection and e-Privacy are summarised below 5. 1. 1 General •European rules applicable to the processing of personal data must meet the dual objective of both ensuring an adequate level of protection for personal data and ensuring the free movement of data within the EU •Ecommerce Europe stresses the need for general principles applicable to all processing of data, but flexibility is needed to achieve the necessary context sensitivity •Ecommerce Europe welcomes the instrument of a Regulation for data protection as it will ensure a harmonised approach to data protection in Europe •Ecommerce Europe underlines the importance of the †legitimate interests of the data controller†as a ground for processing personal data. This ground for processing ensures a fair balancing of interests and allows for necessary flexibility in processing personal data 5. 1. 2 Personal data and consent •The broad definition of â€oepersonal data†in the new Regulation may lead to unnecessarily high compliance costs and additional administrative burdens for merchants Ecommerce Europe feels a more limited definition of personal data is necessary •Ecommerce Europe opposes the strict requirements for â€oeexplicit consent†proposed in the new Data Protection Regulation, as it places an unnecessary burden on both consumers and merchants. An approach to consent requirements based on the sensitivity of the data processing activities is preferable. Ecommerce Europe stresses that the balance between data protection and business interests †as mentioned in Directive 95/46 /EC-should be kept in place. Article 6 of the new general data protection regulation-which lays down the need for one consent from the data subject in order to process data †is vital but over-emphasised by the Commission •The draft of the new definition however, increases the formality of obtaining consent. This could introduce a significant imbalance for businesses in terms of security requirements and additional costs. It is also doubtful whether consumers welcome this excessive formalism 5. 1. 3 Marketing, profiling and targeting •Direct marketing has become an important part of European businesses. The new Data protection Regulation should aim to strike a fair balance between protecting individuals†rights to data privacy and preserving the commercial freedoms of companies to engage with consumers. 9 •Controllers use personal data and †cookies†for behavioural targeting and profiling. Ecommerce Europe emphasises the importance of profiling and states that profiling is a fundamental component of trade relations It allows web merchants to provide customers with rel -evant information •To limit the negative effects of Directive 2009/136/EC (the †Cookie Directiveâ€) on both consumers and merchants a light-touch approach towards consent should be timulated throughout Europe. Both browser-based solutions and collective opt-mechanisms such as †Your online choices†are preferable •When there is a legal obligation for merchants to check the customer†s credit status, these data should be readily available and accessible •The right balance †as laid down in Directive 95/46 /EC-between the protection of consumers†data and the merchants†innovative legitimate business interests has to be respected in order to get consent to process data 5. 1. 4 Harmonisation and international consistency •Ecommerce Europe emphasizes the need for harmonisation and a level playing field within the EU and its Member States. Article 29wp/EU DPB should focus on harmonisation throughout Europe. Too strict requirements for the EU should be avoided in order to preclude competitive distortions with third countries POSITION PAPER 9 9 DMA, Putting a price on Direct Marketing, 2012 POSITION PAPER 10 5. 1. 5 Accountability, administrative burdens and sanctions •Strict requirements for accountability, including standard EU formats may create excessive administrative burdens •The EU should limit administrative burdens and minimise the cost of compliance, in particular for SMES Significantly raising the cost of business for merchants by overemphasizing accountability will lead to a stagnation of cross-border) e-commerce •Ecommerce Europe opposes the financial penalties laid down in the Regulation. The proposed sanctions-which can run up to 2%of an enterprise†s annual worldwide turnover-are disproportionate 5. 1. 6 Data subject rights and consent •Where possible, data subjects should be in control of their personal data. It will be important to strike a balance between individual rights, consumer trust, the public interest and the right of free access to (and collection of) information •Ecommerce Europe warns that a †right to be forgotten†is technically not possible for web merchants. Besides that Ecommerce Europe would like to stress that the ability to withdraw personal information is laid already down in Directive 95/46/EC. The rule that private data may only be stored for a limited time, supplemented by the right of individuals to have deleted their data and/or withdraw their consent already forms, strictly speaking, a †right to be forgottenâ€. Therefore, creating a general †right to be forgottenâ€, as proposed in the draft regulation is neither necessary nor appropriate •Ecommerce Europe questions the usefulness of the †right to data portabilityâ€, which has been introduced in the new draft regulation. Ecommerce Europe thinks that the creation of such a right will discourage companies from implementing innovative services because client information has to be transmitted to competitors. Imposing such a right can also lead to additional costs for businesses since companies have to develop new systems for data management. For this reason Ecommerce Europe challenges the impact assessment that has been carried out by the Commission •The requirement for â€oeplain language, adapted to the data subject†when it comes to information and transparency, will lead to legal uncertainty for merchants because of its subjective nature 5. 1. 7 Regulation and Enforcement •National Data protection Authorities/Supervisory Authorities and Article 29wp/EU data protection board must focus on enforcing the law, not interpreting the law or influencing the legislative process •The use of administrative fines should be limited and must not form part of the budget of the Data protection Authorities •An independent judge must have a more prominent role in the interpretation of the data protection law •Any data protection regulation should be technology -neutral, considering the emergence of new technologies such as mobile e-commerce (m-commerce 5. 2 Ecommerce Europe†s additional proposals 5. 2. 1 Knowledge and education •Both consumers and merchants need to be educated on new) data protection requirements •Merchants must be provided with tools for compliance e g. standard PIA, privacy policies. These tools must be voluntary, simple to use and not lead to additional administrative) burdens for merchants •Rather than strengthening the rights of data subjects and thereby providing them with a false sense of security, data subjects should be educated on how they can protect their personal data 5. 2. 2 Self-regulation •Data protection requirements should be included in national) e-commerce trustmark schemes 6. Electronic signatures and e-Identification Secure, reliable, user friendly and interoperable identification and authentication measures are necessary for the further development of cross-border e-commerce. Although e-Identification and e-Authentication mechanisms are already widely used in the governmental and banking sector (for in -stance, the use of tokens for online banking), their use in other economic sectors is still in its infancy Pan-European e-identification mechanisms could provide a significant boost for user convenience, confidence and trust in e-commerce. Ecommerce Europe recognizes the need for mutual recognition and acceptance of electronic identities given by Member States to their citizens by other Member States and thus welcomes the proposed e-Identification Regulation 6. 1 The position of Ecommerce Europe The key positions of Ecommerce Europe in the area of electronic signatures and e-Identification are summarised below 6. 1. 1 Electronic signatures and e-Identification •For merchants, it is important to verify the identity of the customer. For consumers, e-Identification can help secure their online identities •Electronic signatures and e-identification mechanisms increase trust in electronic commerce •Electronic signatures are less relevant in B2c e-commerce; e-Identification is more important •E-Identification schemes based on real IDS verified by the government (or another trusted party) would help to reduce cybercrime and fraud •E-Identification-based schemes would allow effective age verification, which would be useful for age-dependent services such as online gambling or certain product markets (e g. alcohol, tobacco and medication •New e-Identification methods should not put a disproportionate burden on online merchants 6. 1. 2 Interoperability •Interoperability of electronic signatures and e-Identification schemes is necessary to achieve the required economies of scale 6. 2 Ecommerce Europe†s additional proposals 6. 2. 1 Knowledge and education •Provide an overview of (trusted) e-Identification mechanisms for merchants and consumers POSITION PAPER 11 POSITION PAPER Ecommerce Europe Rue d†Accolay 15 box 6 B-1000 Brussels-Belgium Tel:++32 (0) 2 502 31 34 Website: www. ecommerce-europe. eu Contact us at publicaffairs@ecommerce-europe. eu Twitter:@@Ecommerce eu

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