From the early days of the internet, we were convinced that it would solve market imbalances and information asymmetries between consumers and traders.
The market would become transparent, and all consumers would be able to compare prices and conditions from the comfort of their home. In addition, technology would help make products safer.
Today, we now realise that this was not the case. The market power of platforms is huge, and network effects make it larger every second.
Big data and artificial intelligence (AI) mechanisms (machine learning, data analytics, etc) reinforce this power, leaving consumers less protected. In addition, changes in retail financial products give rise to specific issues for online consumers.
Beyond sustainability and the circular economy, these are important challenges for the new European Consumer Agenda. Consumers want to enjoy innovative products, so we need to find the appropriate balance between innovation and effective consumer protection in the digital age.
When consumers enter online retailers, the latter already knows much more about the former than vice versa. Consumer data is collected from across the internet – individuals’ searches, emails and the amount of time they spend looking at pictures or videos – and is sold to the highest bidder, which then uses these data to explore biases and vulnerabilities.
“Consumers want to enjoy innovative products, so we need to find the appropriate balance between innovation and effective consumer protection in the digital age”
It´s like going to the market ‘naked’; we stop at the first vendor, and they immediately see every detail and know everything about our needs. If we are looking for a tennis shoe, they recommend us a gym, a personal trainer and perhaps even a diet programme. It’s as if they know us better than we know ourselves.
Therefore, we need to cover ourselves and regain some of our privacy. Consumer data must not be used to gain an unfair advantage over consumers.
We need to restrict the capacity to collect massive amounts of data, particularly if that data is not essential for providing the services we seek. We should also act to restrict the concentration of power that the big platforms currently hold. That would certainly benefit both consumers and competition in the EU.
The Digital Services Act, Digital Market Act and Data Act are three of the legislative files aimed at regulating these situations. Nowadays, many products depend on services. Our cars and our kitchen appliances are not the simple products they once were. Products are now dynamic, smart and autonomous. They change features during their life cycle through software updates.
Therefore, products today are more vulnerable to cyber threats and obsolescence issues. So who is responsible when my car automatically accelerates instead of braking, because of a bug in a software update? Or, when my kitchen mixer gets confused and produces a horrible paste rather than a marvellous Christmas pudding?
The New Consumer Agenda is set to promote the revision of the General Product Safety Directive (GPSD), which is almost 20 years old, specifically to accommodate this new reality of tech products. It is fundamental that the GPSD revision takes into account the need to ensure product safety by design and by default.
It should consider experimental periods and the precautionary principle for more risky innovative products; and of course develop concrete actions to ensure that unsafe products sold online do not reach EU consumers. Financial services are also undergoing a revolution, increasing in complexity while cash becomes marginalised.
This demands the revision of both the Consumer Credit and the Distance Marketing of Financial Services Directives, in order for consumers to feel safe and benefit from innovation without discrimination.
“It is fundamental that the GPSD revision takes into account the need to ensure product safety by design and by default”
There are different aspects to consider, such as responsible lending, a consumer-centric approach with a focus on preventing excessive personal debt, particularly in these COVID-19 times.
There are also the issues of access to consumer data - restricted of course to the relevant data to evaluate the financial situation, and not all information held by big platforms about our friends, our preferences and so on.
We should also ensure that cash payments do not completely disappear. In these trying times, the new Consumer Agenda should strive to make Europeans the best-protected consumers in the world.
For that to happen, we need consumer legislation to remain fit for purpose, adequately informing, empowering and protecting consumers, particularly in the context of the digital transformation.
Promoting consumer protection also means empowering surveillance authorities, taking advantage of AI to conduct data analytics and flag risky circumstances, and of blockchain for improved traceability of the products.
Finally, is important to help consumers gain digital literacy and to help the civil society organisations that represent them.
A significant number of our citizens still struggle to use an app and communicate with a chatbot, and these people must not be left behind. We must empower consumers with weapons that match those of retailers.