Consumer Protection Enters the Digital Age: Digital Content and Services Now Expressly Regulated
At the end of the year, we wrote about amendments to the Consumer Protection Act arising from the EU’s Sale of Goods Directive (2019/771). In addition to transposing of the Sale of Goods Directive, the Consumer Protection Act has now been also been updated for the digital age by transposing the Digital Content and Digital Services Directive (2019/770) (also called the Digital Contracts Directive). These amendments entered into force on 1 January 2022.
Digital Content and Services Now Expressly Accounted for in Consumer Protection Act
The Consumer Protection Act now includes a new Chapter 5a, which includes specific provisions concerning digital content and services. The Consumer Protection Act previously did not expressly regulate digital content and services. In the future, Chapter 5a will include provisions on, among other things, delivering digital content and services, defects in digital content and services and the consequences of such defects, as well as on modification of digital content or services.
Digital content means, for example, computer programs, digital games and electronic books. Digital services mean, for example, cloud services and services such as social media.
It is worth noting that the new Chapter 5a applies not only to the contracts by which consumers commit to pay for digital content or services, but with certain limitations also to contracts by which consumers commit to provide personal data to traders.
Here are some of the key amendments:
- The regulation of the supply of digital content and services and of their defects and the consequences of defects will from now on be very much in line with the regulation of the sale of goods. One difference to the provisions of the sale of goods is the lack of an obligation to file a complaint of defect, as it is not possible to set such an obligation within the scope of the Digital Contracts Directive.
- In order to ensure that digital content and services are non-defective, companies must in principle ensure the supply of necessary security and other updates to consumers for a set period. Consumers must be able to freely decide whether or not to install supplied updates. If a consumer decides not to install updates, this could, naturally, have an impact on the liability of the trader.
- It is worth noting that digital content or services are not considered defective even if updates are not supplied, provided that the consumer was informed of this when entering into the contract and has separately and expressly accepted it.
- Consumers are entitled to certain contractual remedies even when they have provided personal data to traders in lieu of payment. For example, when providing personal data, consumers are entitled to terminate the contract even for minor defects rather than receiving a price reduction. In contrast, when paying a purchase price, the right of termination requires that the defect cannot be considered minor, as is the case in the provisions concerning the sale of goods.
- As a rule, traders are not allowed to use digital content or services provided or created by the consumer after the contract has been terminated.
- With certain exceptions, after the contract has been terminated, the trader must, at the request of the consumer, make available to the consumer any content that was provided or created by the consumer. This must be done free of charge, within a reasonable time and in a commonly used and machine-readable format. The purpose of this provision is to prevent situations in which a consumer might not exercise their termination right if doing so would prevent them from access to digital content or services provided or created by them.
New Provisions Seek to Clarify Legal State
Like the Sale of Goods Directive, the new provisions of the Digital Contracts Directive are intended to facilitate the offering and availability of content and services in the EU between Member States. Adding express provisions concerning digital content and services to the Consumer Protection Act also helps clarify the legal state, even though the Consumer Protection Act was already analogically applied to digital content and services as appropriate.
The most significant amendments are definitely the application of the new Chapter 5a to contracts by which consumers provide or commit to provide their personal data in exchange for digital content or services. Previously, the Consumer Protection Act’s provisions on delays and defects were not even analogically applied to such contracts.