www.tourismlaw.pt Modernisation of information requirements for consumers on online tourism services market Tatjana Josipovic Law Faculty University of Zagreb International Journal of Tourism, Travel and Hospitality Law PRE-PRINT
prof.dr.sc. Tatjana Josipović Law Faculty University of Zagreb MODERNISATION OF INFORMATION REQUIREMENTS FOR CONSUMERS ON ONLINE TOURISM SERVICES MARKET 1. Introduction Transparent information is among the most important factors for sustainable digital transformation and development of the digital market in the European Union. In the past few years, special attention has been drawn to the establishment of the necessary level of information available to all participants on the digital single market. At the same time, it is emphasised that an ongoing development of digital tehnologies, digital society and the EU digital single market, although they undoubtedly bring about immense opportunities for further advancement of many aspects of every day life and business, they also pose various risks with long-lasting consequences for citizens, fundamental rights, democratic values and the foundation of society.1 Therefore, the European Commission emphasises that the key priority, in these more and more intensive processes of digital transformation, is “putting people in the centre of the digital transition“. It is also highlighted that “digital transformation should be shaped according to our European values and laws”.2 At the level of the European Union, a proposition is made to define a set of digital rights and principles for citizens, businesses, public administrations and policy-makers for the Digital Decade.3 These rights and principles would serve as “guidance for a sustainable, human-centric and value-based digital transformation”. 4 One of these digital rights, for the digital decade, must be “ freedom of choice” to ensure, among other things, a fair online environement for citizens and business in general. On the one hand, “everyone should be able to effectively choose which online services to use, based on objective, transparent and reliable information.” On the other hand, “everyone should have the possibility to compete fairly and innovate in the digital environment.” The aim is “to ensure a safe, secure and fair online environment where fundamental rights are protected, and responsibilities of platforms, especially large players and gatekeepers, are well defined.”5 The concept of free, responsible and informed decisions on the selection of goods and services based on transparent information is not a new topic in the law of the Union. Many years ago, various problems connected with the presentation of objective, transparent and reliable information, so as to bring free and informed decisions on entering into consumer contracts, appeared already on offline internal markets, including the tourism and travel services market. The main instrument on the offline internal market of the EU for the provision of transparent information for consumers were pre-contractual duties for traders laid down in numerous consumer directives dealing with particular consumer contracts. Depending on the type of a consumer contract and its conclusion, these directives provide for the content, form and catalogue of precontractual information and remedies for the violation of the obligations.6 The aim has always been the same – to establish the necessary level of information for consumers in the pre-contractual phase and to avoid, or at least to minimise, any information asymmetry between consumers and traders and to ensure the consumers’ freedom to contract and their private autonomy. 1 See: European Commission Communication: Establishing a European Declaration on Digital Rights and Principles for the Digital Decade, {SWD(2022) 14 final}, Brussels, 26/1/2022, COM(2022) 27 final, pp. 2, 3. 2 Taken from ibid, p. 1. 3 See: European Declaration on Digital Rights and Principles for the Digital Decade, European Commission, Brussels, 26/1/2022, COM (2022) 28 final. 4 Taken from the European Commission Communication: Establishing a European Declaration on Digital Rights and Principles for the Digital Decade, p. 4. 5 Taken from the European Declaration on Digital Rights and Principles for the Digital Decade, Chapter III: Freedom of Choice, p. 4. 6 For example, for package travel and linked travel arrangements, special rules on pre-contractual information are laid down in the Travel Package Directive (e.g. Arts 5-8).
The same concept is now extended to the online market. To establish a just digital market, numerous new rules have been developed in the Union’s law aimed at ensuring transparent information for all participants. It is always emphasised that the transparency of information on the online market is even more important than on the offline market, not only for consumers7 but also for any business users of Internet platforms.8 The aims of these new rules have remained the same. The fulfilment of transparency requirements has been the required condition for the establishment of equality and balance in contractual relations and for the avoidance of any asymetry of the level of information and the negotiating power of the participants on the digital market. Legal instruments to achieve that goal are basically also the same. However, there are some additional information duties to be fulfilled by the participants on the online market. New unfair business practices are defined and the wording of the existing rules on the responsibility of the providers of online services is proposed to be changed. Yet, significant differences in comparison with the offline internal market are reflected in two main aspects. On the one hand, the majority of the new rules on the transparency requirements involve Internet where various services are offered to consumers and business users by the providers of online marketplaces, the providers of online intermediation services, the providers of online search engines, and others. We speak here of various multisided contractual relations between different participants on the online market where consumers, traders and online platforms take up different roles. Such multisided legal relations call for specific transparent acting, particularly by the platform as the strongest and the most dominant party in such multisided contractual relationship. On the other hand, we also witness a tendency of extending the rules on information requirements from the consumers' to business relationships. These requirements also exist in the contractual relations between platforms and their business users. The aim is to protect business users as the weaker party to the contract, in any legal relationship with platforms (so-called P2B contracts).9 The importance of transparent information is particularly obvious in the context of development of the online tourism services market. Particular attention is paid to the necessity of extending the catalogue of information to be provided to consumers before they make their decisions on the selection of a particular tourism service. Statistics show that there are increasing numbers of consumers, traders and Internet platforms on the online market of tourism services. Tourism is one of the most developed sectors on the online market in the EU and the development of its tourist accomodation sector is very dynamic and fast.10 It is mostly determined by inernet platforms which, in various ways, take part in e-transactions involving tourism services. This is confirmed by the statistical data on very intensive development of e-commerce in the sector of tourism. In 2019 (the year before the COVID-19 pandemic), online purchasing of travel and holiday accommodation ranked second among the most popular categories of goods and services purchased online in the EU (after clothes and sports commodities). Travel and holiday accommodations were ordered by 54 % of all online shoppers.11 The most frequent buyers of travel and holiday accommodation were people aged between 25-54 (57 %).12 In the last few years, we have witnessed an intensive development of short stay accommodations via collaborative or sharing economy platforms. More and more frequently, short-term rentals of private residencies, apartments or houses are booked through platforms. New models of tourism services are developed where not traders but private natural persons take part (consumers, C2C). The EU rules on the protection of consumers in B2C contractual relationships cannot always apply to these new models of tourism services. In 2019, tourists spent more than 554 million nights in accommodations booked via collaborative economy platforms (15.8% more than in 2018). On an average day, around 1.4 million guests spent more than 512 million nights in beds booked via collaborative economy platforms.13 7 See: European Commission Communication: A New Deal for Consumers, Bruxelles, 11/4/2018 COM/2018/183 final, p. 5. 8 See: European Commission Communication: Online Platforms and the Digital Single Market - Opportunities and Challenges for Europe, Brussels, 25/5/2016 COM(2016) 288 final, pp. 6,10. 9 See, for example, Regulation (EU) 2019/1150 on promoting fairness and transparency for business users of online intermediation services (P2B Regulation). 10 From 2005-2019, the number of nights spent in tourist accommodation establishments in the EU grew by 44 %.The number of nights spent in tourist accommodation in the EU reached (in 2019) 2.9 billion nights. See Eurostat: Tourist Statistics – annual results for the accommodation sector, October, 2020. 11 Of the total number of EU Internet users in 2019, 71% of EU Internet users ordered goods and services online, see Digital Economy and Society Index (DESI) 2020, Use of Internet services, point 5 e-Commerce – categories of goods and services 12 See Digital Economy and Society Index (DESI) 2020, Use of Internet services, point 6 e-Commerce – categories of goods and services. 13 In 2019, the share of short-stay accommodation in the total number of nights spent in tourist accommodation in the EU amounted to 23 %. Eurostat: Tourism statistics – annual results for the accommodation sector
Image 1: Guest nights spent at short-rent accommodation (2019).14 The booking of accommodation and doing business in the tourism sector via collaborative economy platforms are shown to be favourable for citizens, micro-entrepreneurs and SMEs. Following the negative impact on tourism in the EU caused by the COVID-10 pandemic, and after many countries lifted the restrictions in 2021, we again witness a gradual recovery of tourism activities involving short-term rentals.15 14 Image taken from Eurostat: Short-stay accommodation offered via online collaborative economy platforms, December 2021. 15 Eurostat: Short-stay accommodation offered via online collaborative economy platforms - impact of the Covid-19, June 2022.
Image 2: Annual guest nights in the EU spent in short-stay accommodation (2018-2021).16 These trends are confirmed by the new data published in the Flash Eurobarometer 495 (2021) on research results regarding short-stay rentals in the EU.17 Of the total number of the interviewed (25,700) across the EU, 29% of respondents answered that they at least once had booked rooms in private residences, apartments or houses via platforms.18 The most important reason for booking short-stay rentals via platform were lower prices (63%). Another important reason (ranked fifth) was the possibility of user rating and reviews (35 %).19 Additional income for hosts and more affordable travelling for guests are highlighted as the advantages of short-stay rentals booked via platforms.20 Image 3: Short-term rental via collaborative economy platform by country. 21 16 Image taken from Eurostat: Short-stay accommodation offered via online collaborative economy platforms - impact of the Covid-19 pandemic. 17 Flash Eurobarometer 495 – Short-term rentals in the EU, Summary, September 2021. 18 See ibid p. 2. On the other hand, only 4% of respondents, at least sporadically, offered a room, an apartment or a house as a short-term rental via platform. p. 5. 19 Ibid, p. 3. 20 Ibid, p. 6. 21 Image taken from Flash Eurobarometer 495.
Image 4: Reasons for short-term rentals via collaborative economy platform.22 Empirical research shows that an increasingly intensive development of the online market for tourism services has significantly changed the consumers' behaviour when contracting these services via Internet platforms.23 Commercial practices of online travel service providers and the practice of online marketplaces, where distance tourist service contracts are entered into, have also changed. On the online market, the impact on consumers' decisions to purchase specific product or service is also different.24 Access to information on tourism services and the process of making decisions on the selection of a suitable service have also changed. In the process of deciding on a tourism service and in the course of its provision, as well as after it has already been offered, a number of different protagonists take part (users, providers, platform operators, other consumers). Platforms offering tourism services to consumers contain a whole lot of different pieces of information distributed in various ways and in different numbers. The complexity and variety of information may have numerous positive, as well as negative effects on the decision-making process involving tourism services. A large amount of useful information can make it easier for a consumer to make an informed decision on a particular tourism service. However, huge amounts of information, depending on the way they are presented, may also have misleading effects on the decision-making process and may demotivate consumers from being fully informed. Decisions on making contracts on tourism services offered via platforms are made in a much quicker, simpler and cheaper way. Although the price still remains to be the main factor for the selection of a particular service and its provider, the decision is often also based on some factors less represented on the offline market. Indeed, decisions on tourism services are often based on the results of ranking of comparable services created by automatic data processing and by algorithms provided by the platform. Consumers' reviews also play another important role in selecting a tourism service.25 26 Traditional pre-contractual information via 22 Image taken from Flash Eurobarometer 495. 23 For more see in Sánches E,B., Deegan,J., Pérez Ricardo,E.C (2022), pp.133-151. 24 See: European Commission: Behavioural study on advertising and marketing practices in travel booking websites and apps, Final report, 2020, (hereinafter: Study, 2020). On various commercial practices adopted by online travel service providers see ibid, p. 36. 25 See: European Commission: Study on online consumer reviews in the hotel sector : final report, European Commission, 2014, p. 124 (hereinafter: Study: 2014). See: European Commission: Behavioural study on the transparency of online platforms, Executive Summary, 2018, p. 5, (hereinafter: Study/Summary/2018). 26In this regard, some authors emphasise that the rating and the review systems used on online platforms are considered to be a technological solution for the ‘electronic word of mouth’. It is also pointed out that online reviews are an increasingly
online platforms does not have the same role as is the case on the offline market. A particularly important novelty, because of the development of collaborative economy, is the fact that the role of the provider of tourism services is taken on by a natural person who does not offer the services in the capacity of a trader, but in the capacity of a private person.27 In such circumstances, the model of fulfilling the transparency requirements and information duties of platform operators is extremely important. The protection of consumers, as recipients of tourism services offered by online platforms, can be efficient only if consumers are really in a position to make free and informed decisions on the selection of tourism services based on accurate, consistent, clear and comprehensible information and on a transparent ranking of services based on genuine, fair and sincere reviews. Platforms are expected to provide, in a transparent manner, a lot of information not only on the offered service but also on many other facts of importance for proper understanding of the data received from other users and posted on a platform. Behavioural studies dealing with the problem of transparency of online platforms, advertising and marketing practices in travel booking websites and online consumer reviews in the hotel sector show that, in practice, there is a whole range of problems connected with the transparency of information offered to consumers via platforms. These studies also show that the consumers using platforms, because of insufficient information, are unaware and unconcerned of the risks of unfair practices and misleading information.28 The awareness of consumers of platform practices related to search results is generally low.29 They are often unaware of identity of the party with whom they are entering into a contract. In particular, they are not even aware of whether the other contractual party is a trader or a natural person (a consumer) and how this is reflected on their rights, i.e. that they may not enjoy any consumer protection.30 Frequently, consumers believe that the contract is entered into with the platform operator in the capacity of a seller or a service provider.31 Non-transparent information may lead to the lack of confidence of consumers in the ranking and reviews of the offered tourism services. 32 This may have a negative impact on the functioning of the online tourism services market. Such undesirable effects for consumers, as well as for service providers, may be caused by numerous deficiencies when it comes to the provision of information, such as misleading and/or fake reviews, no time limits on reviews, lack of information of the scoring or rating systems, lack of information on platform practices related to search results, lack of verification of reviews and reviewers and the lack of transparency on commercial relationships between reviewers and platforms.33 Many of the problems connected with the transparency of the tourism markets have already been confirmed in practice on EU-wide screening websites (‘sweeps’34) of 2021 coordinated by the European Commission. A motive for the annual sweep were the results of the Market Monitor Survey of 2020 showing that as many as 71% of consumers consider reviews as very important when choosing their holiday accommodation. The fact that decisions are made on the basis of reviews requires special acting by platform operators when processing and posting consumer reviews. Insufficiently transparent reviews may lead to misleading practice when booking online tourism services. Within the screening process, 223 major websites from 26 EU Member States, Island and Norway were checked. The results show that at least 55% of the checked websites have potentially violated the EU rules on unfair commercal practice requiring that truthful information is presented to consumers to allow for their informed choices. For the remaining 18% of websites, the authorities also expressed serious doubts. Major irregularities were detected where platforms, by presenting the obtained reviews, had failed to carry out preliminary procedures to make sure that important source of pre-contractual information and an alternative or complement to complex terms and conditions. See Busch (2016), p. 226; Narciso, M. (2022a), pp. 350, 353-356; Sánches, E,B., Deegan, J., Pérez Ricardo, E.C. (2022) p.134. 27 See: Study, 2020, pp. 20, 21. 28 See: European Commission: Behavioural study on the transparency of online platforms, Final Report, 2018, p.5 (hereinafter: Study/Final report/2018). See Busch (2016), p. 228. 29 Ibid, p. 19. 30 Ibid, p. 28. 31 Ibid, p. 52. 32 On the reasons for the lack of reliability of ratings and reviews, see Narciso, M. (2022a), pp. 351-353. 33 See: Study, 2014, pp. 125, 126, 127; Study/Final Report/2018, pp. 45-59; Study, 2020, pp. 44-52. 34 Investigations (‘sweeps’) are carried out on the basis of Art. 29 Regulation (EU) 2017/2394 on cooperation between national authorities responsible for the enforcement of consumer protection laws. ‘Sweeps’ means concerted investigations of consumer markets through simultaneous coordinated control actions to check compliance with, or to detect infringements of, Union laws that protect consumers’ interests (Art. 3 point 16, Regulation 2017/2394).
the reviews were authentic, or they did not inform the consumers about the way the reviews had been collected in the first place, as well as how they managed to block fake reviews, or whether the reviews were paid or not.35,36 The study also suggests that consistent and transparent provision of information offered by platforms to consumers can increase consumer confidence on the online tourism services market.37 Clear and comprehensible information about the criteria for the ranking of research results, the information about the contractual identity of the other party, i.e. whether the contractual party is a trader who provides consumer protection rights, are all elements which contribute to the consumer’s trust and the probability that a product or a service will be selected. The information that the reviewers have actually used the product,38 the necessary data on the reviewer's identity, a disclosure of both positive and negative online reviews,39 and the information on the number of reviews,40 also have a positive impact on the selection of tourism services. In brief, empirical research shows that increased online transparency of platforms may result in three major effects on the development of the online tourism services market: a positive impact on making decisions, increased trust and confidence in the online environment and enhanced probability of product/service selection.41 However, in the law of the Union, there are no specific rules on information requirements for online tourism services markets and online platforms. The EU rules on information requirements apply and are valid for all providers of online marketplaces when entering into B2C distance contracts, or for the providers of online intermediate services within the framework of business relations with the users of their services. There is a whole range of various rules laid down in numerous EU acts.42 It is doubtful, however, whether the application of general information requirements, valid for all distance consumer contracts, can meet very high transparency standards on which any efficient protection of consumers on the online tourism services market strongly depends. Due to a decisive impact of rankings and reviews on the selection of tourism services, a question arises whether the rules, now generally providing for the obligation of informing about the parameters determining ranking and the responsibility of platforms for illicit content, can ensure a fair online environment and the provision of objective, transparent and reliable information in the sector of tourism. In the text, the author analyses various methods and legal instruments by which transparent information of consumers in the EU is provided via the existing platforms on the online tourism services market. Special 35 See European Commission: 2021 – sweep on online consumer reviews (hereinafter: 2021-‘sweep’ on online consumer reviews). For example, it was confirmed that almost two thirds of online shops, marketplaces, booking websites, search engines and comparison service sites analysed triggered doubts about the reliability of the reviews. In 65% of the websites (144), the authorites could not confirm that traders were doing enough to ensure that reviews are authentic, i.e. posted by consumers that actually used the product or service. In 47% of the websites (104), they did not inform consumers how reviews were collected and processed. In 53% of websites, there was no information about how fake reviews had been prevented and 79 % of websites (176) did not mention that incentivised reviews resulting from a monetary reward were prohibited by their internal policies, or, if that was not the case, how they ensured they were flagged as incentivised. Taken from the 2021- ‘sweep’ on online consumer reviews. 36 In the same way, in 2018, a ‘sweep’ on price transparency and drip pricing showed that 60% of 560 e-commerce websites offering a variety of goods, services and digital content (including travel services) contained irregularities regarding the respect of EU consumer law, predominantly in relation to how the price and special offers were presented. See: European Commission: Online Shopping: Commission and consumer protection authorities call for clear information on prices and discounts, Brussels, 22 February 2019. 37 See Study, 2014, p. 127. 38 On the impact of the price and information on whether the contractual party is a trader, and on the implications for the consumer’s rights and the probability of selecting the product, see Study/Final Report/2018, pp. 33, 34, 46. 39 Ibid pp. 16, 39, 46. 40 Study 2020, 48, 49. 41 Study 2018, 48. 42 Since service providers offering information are involved, general rules on information requirements in Directive on Electronic Commerce (e.g. Arts 5, 6, 14, 15) and on the provider’s in Services Directive (e.g. Art. 22) apply to information duties of online platforms. To the relations between online intermediation platforms and the business users’ information duties, the rules on information duties from P2B Regulation apply (e.g. Art..5.) To the relations between online marketplaces and consumers, special provisions on information duties laid down in Consumer Rights Directive/CRD (e.g. Art. 6a) and Unfair Commercial Practices Directive/UCPD (e.g. Arts 7/4a, 7/6, Annex I/p.11a, p. 23 a-c apply).
emphasis is placed on the modernisation of EU rules on the new information requirements for distance consumer contracts laid down in the Omnibus Directive43 of 2019 amending the Unfair Commercial Practice Directive (hereinafter: the UCPD)44 and the Consumer Rights Directive (hereinafter: the CRD).45 Most amendments are dealing precisely with the harmonisation of the Union consumer protection law with the continuous development of digital tools. The rules on unfair commercial practices and those on the protection of consumers entering into distance contracts have been modernised. The obligation of transparent information provided for consumers is also extended to the providers of online marketplaces through which traders and consumers are offered products on online markets.46 The Omnibus Directive defines an online marketplace as “service using software, including a website, part of a website or an application, operated by or on behalf of a trader which allows consumers to conclude distance contracts with other traders or consumers.”47 The new national measures, aligned with the Omnibus Directive, have been applied since 28 May 2022. The new rules on unfair commercial practices and additional information requirements for contracts concluded on online marketplaces have revealed many questions on consumer protection that are also crucial for the protection of consumers on the online tourism services market. The main question is whether by such general stipulation of information duties for the providers of online marketplaces, applied to all distance contracts concluded on online marketplaces, the appropriate level of information for consumers on online tourism services markets is ensured. 2. EU Enforcement Actions for more Transparency of Online Travel Intermediaries In the last few years, coordinated enforcement actions taken by the Member States' competent authorities responsible for the enforcement of EU consumer law have become an important instrument for providing more transparency on the online tourism services market. The EU enforcement actions are taken on the basis of the EU Consumer Protection Cooperation Regulation48 providing for the cooperation and coordinated actions of the national authorities in case of cross-border infringement of consumer law. National authorities have started their coordinated actions to improve the transparency of information for consumers on particular online travel intermediaries regarding the presentation of their accommodation offers in conformity with the EU consumer law. The most common problems connected with the application of EU consumer law were those involving unfair commercial practices and unfair contract terms. Within the EU enforcement actions, national authorities most frequently warned in particular about the problems regarding transparency, completeness and intelligibility of information on the total price of accommodation, identification of provider as a private or a professional person, the transparency of the ranking criterias and research results, discounts and time-limited offers, the comparison of prices, information on the number of visitors and limited availability and information on the cancellaction practices.49 In the fiInal phase, the EU enforcement actions have led to a situation where online travel intermediaries voluntarily, in a closed dialogue and in cooperation and agreement with the European Commission and the national consumer authorities, harmonised their business practices with the EU consumer law and improved the presentation and the transparency of information on the offers, discounts and prices of accommodation services.50 A coordinated cooperation between the European Commission, the national consumer authorities and the online travel intermediaries turned out to be a successful method of increasing transparency of online tourist market services. Since the taken measures were in agreement with the online travel intermediaries, there was no need for any legislative interventions at the European and/or the national level, or for imposing sanctions 43 Directive (EU) 2019/2161 as regards better enforcement and modernisation of Union consumer protection rules, (hereinafter: Omnibus Directive). 44 See Art. 3, Omnibus Directive. 45 See Art. 4, Omnibus Directive. 46 See recitals 17-28, Omnibus Directive. 47 See Art. 3/1/b, Art. 4/1/e, Omnibus Directive - the concept ‘online marketplace’ inserted in UCPD and Consumer Rights Directive/CRD. 48 Regulation (EU) 2017/2394 on cooperation between national authorities responsible for the enforcement of consumer protection laws 49 See, for example, Common position of national authorities within the CPC Network concerning the commercial practices and the terms of service of Airbnb Ireland published at https://ec.europa.eu/info/live-work-travel-eu/consumer-rights-andcomplaints/enforcement-consumer-protection/coordinated-actions/accommodation-booking_en (page visited on 7/9/2022). 50 See European Commision: Factsheet of the Commitments of Booking-com, 18 December 2020; Factsheet of the Commitments of Expendia Group, 18 December 2020; Factsheet of the Changes Implemented by Airbnb, 11 July 2019.
for the violation of the EU consumer law. However, these and similar measures encouraging agreeable and voluntary enhancement of the transparency of the online tourism services market can have positive effects only if, at the same time, there is an efficient system of public and private measures for coercive enforcement of the EU rules on information duties on the digital market. 3. New Unfair Commercial Practices Prohibition of unfair commercial practices is one of the most important legal instruments for consumer protection from unrealiable reviews, false and untruthful information, or misleading omissions of information important for consumers to make transactional decisions on the digital single market.51 Consumer protection against unfair commercial practices was accomplished by the Unfair Commercial Practice Directive/UCPD of 2005. This Directive bans unfair business practices, defines the criteria for the assessment of unfair commercial practices and it also lays down which commercial practices are considered as unfair in any circumstances. Various obligations for traders indirectly arise from all the provisions of this Directive, including the transparency requirements and information duties towards consumers that must be fulfilled by traders in B2C commercial practices in order for their activities not to be considered as unfair. On the basis of the UCPD, consumers enjoy protection against unfair business practices under all business-to-consumer contracts, in all commercial transactions and in relation to any goods and services,52 including tourism services. It is the protection of consumers against unfair commercial practices ensured before, during and after commercial transactions.53 The protection is provided at the level of the Member States obliged, in their legal orders, to ensure efficient and appropriate means to combat unfair commercial practices such as cessation or prohibition of unfair commercial practices.54 Already within the framework of the former provisions of the UCPD (before the amendments to the Omnibus Directive), it was possible, on the digital single market, including the online tourism services market, to provide some form of consumer protection against unfair business practices based on inaccurate, incomplete and nontransparent information. The provisions of the UCPD are largely the rules indirectly providing for the traders’ obligation to provide, in a transparent way, consumer information important for reaching an informed transactional decision.55 These rules can be applied to both offline and online markets. However, in order to ensure a higher level of consumer protection on the digital market, the European rules on unfair commercial practices had to be modernised and adjusted to the new business practices on the online market.56 The Omnibus Directive expressly extended the scope of application of the UCPD to include the digital market. The concept of ‘product’ was redefined to include both the digital content and digital services.57 Furthermore, the personal scope of application of the UCPD was also extended. The rules on the prohibition of unfair commercial practices applied also to providers of online marketplaces.58 The extension of the scope of application of the UCPD to providers of online marketplaces required the codification of the new unfair 51 See, for example, Arts 6, 7 UCPD, Annex I. See Busch, Ch., Mak, V (2021), p. 112; Narciso, M. (2022a) p. 359. 52 See Art. 2 (d) UCPD. 53 Art. 3 UPCD. 54 See Art. 11, UCPD. Until the amendment of 2019, the protection was primarily based only on the public enforcement of consumer protection (Art. 11, UCPD). By the Omnibus Directive, the obligation of Member States has been introduced to lay down proportionate and effective individual redress for consumers harmed by unfair commercial practice. Private enforcement of unfair commercial practices rules has thus been introduced. Member States are obliged to provide for individual remedies such as compensation for damage, price reduction or the termination of contract (Art. 11a UCPD inserted by Art. 3 (5) Omnibus Directive). See Loos (2020), pp. 409-412. See recital 16, Omnibus Directive, Art. 3 (5) Omnibus Directive by which a new Art. 11a was inserted in the UCPD. 55 See, for example, Arts 5, 6, 7/1-3, 4 (a-e) UCPD. 56 See recitals 17 -29, Omnibus Directive. 57 See Art. 3 (1) (a) Omnibus Directive replacing former Art. 2 (c) UCPD. Art. 2 (c) UCPD lays down that 'product’ means any good or service including immovable property, digital service and digital content, as well as rights and obligations. 58 See Art. 3 (1) (b) Omnibus Directive whereby a new Art. 2 (n) UCPD was added.
commercial practices specific for the services on the online marketplace.59 The catalogue of material information in cases of invitation to purchase (Article 7 UCPD) was also amended to be aligned with the providers' obligations to inform consumers on online marketplaces about the status of a third party offering a product and about the main parametars determining the ranking of products and the origin of reviews.60 The catalogue of definitions in Article 2 of the UCPD also had to be extended to include the concepts used to inform the consumers on online marketplaces, such as, for example, the definition of the concept of ‘ranking’ 61 Finally, the black list of commercial practices was extended to include also those that were in all circumstances considered as unfair (Annex I, UCPD).62 Again, these were mostly unfair business practices resulting from the violation of information duties of the providers of online marketplaces. The catalogue was extended to specifically include business practices resulting from the violation of information duties of the providers of online marketplaces. One of the main goals of the extension of the protection of consumers against unfair business practices on online marketplaces has been to enhance the level of information for consumers and increase the transparency of the online market, including the online tourism services market. In that regard, the inclusion of online marketplaces in the UCPD should, in various ways, contribute to increased transparency of the online market. All UCPD provisions on unfair business practices apply to operators of online marketplaces who, in accordance with the UCPD, are considered as traders, and their acting is considered as commercial practice under the UCPD.63 The providers of online marketplaces on which the consumers conclude distance contracts, have all the obligations arising for traders according to the UCPD, including the obligations to inform which are of particular importance for fair commercial practices. When it comes to business practices taking place on online marketplaces, consumers are offered a twofold protection which may contribute to their being better informed. On the one hand, they are protected in their relationships with the providers of online marketplaces regarding their own commercial practices when offering services on online marketplaces. This protection is provided with regard to previously regulated unfair commercial practices, as well as with regard to new business practices typical for online marketplaces. On the other hand, consumers continue to be protected against business practices of third parties who, as traders, use online marketplaces for the promotion and placement of their products and services and who, at the end of the day, enter into contracts on tourism services with consumers.64 By the extension of the scope of the UCPD to online marketplaces, the application of this Directive does not exclude traders who offer their products and services on online marketplaces. In the context of tourism services offered via online marketplaces, this means that the rules on the prohibition of unfair commercial practices, including the rules on the prohibition of false information, or misleading omission of information, apply both to the providers of online marketplaces and to commercial providers of tourist services. The UCPD rules on consumer protection against unfair business practices on online marketplaces, connected with nontransparent information on the part of the provider, apply regardless of who is the third party with whom a consumer enters into a distance contract on the online marketplace (trader or another consumer). It arises from the definition of ‘online marketplace’ referred to in Article 2 (n) UCPD that the rules on unfair business practices apply to all providers of online marketplaces regardless of whether consumers conclude 59 See Art. 3 (3) (4) Omnibus Directive amending Arts 6 and 7 UCDP, See Art. 3 (7) Omnibus Directive amending Annex I, UCDP. 60 See Art. 3 (4) Omnibus Directive amending Art. 7/4 and new paras 7/4 a and 7/6 UCPD added to Art. 7. 61 Pursuant to new Art. 2 (m) UCPD, ‘ranking’ means the relative prominence given to products, as presented, organised or communicated by the trader, irrespective of the technological means used for such presentation, organisation or communication.” New Art. 2 (m) UCPD is inserted by Art. 3 (1) (b) Omnibus Directive. The new Art. 6a CRD also refers to such a definition of ‘ranking’ CRD. It provides for additional specific information requirements for contract concluded on the online marketplace. See Art. 4 (4) Omnibus Directive by which the new Art. 6a is inserted in CRD. The concept of ‘ranking’ is additionally interpreted in recital 19, Omnibus Directive. 62 See Art. 3 (7) Omnibus Directive by which new points 11a, 23/a, 23/b, 23/c are inserted in Annex I UCPD. 63 See Duinvenvoorde, B. (2022), p.47; Narciso, M. (2022b) p. 148. 64 See Narciso, M. (2022b) p. 150. See Guidance on the interpretation and application of Directive 2005/29/EC, 2021, p. 87. Therefore, platforms should design their interfaces in the way which will enable traders, as third parties, to inform consumers in line with the UCPD requirements and other EU rules on informing consumers. See Guidance on the interpretation and application of Directive 2005/29/EC, 2021, p. 89; see ibid, p.149.
distance contracts with other traders or consumers. The provider's obligations on the online marketplace regarding business practices do not change based on the capacity in which a third person enters into a distance contract with the consumer. This rule also applies when consumers on online marketplaces enter into contracts on tourist services with a trader or with another consumer (B2C or C2C contracts). To protect a consumer from unfair business practice regarding information duties, it is sufficient that the providers of online marketplaces have the status of traders in accordance with Article 2 (b) UCDP.65 The status of the third party, who the consumer enters into a contract with, is not essential for the protection of consumers from unfair business practices of the providers of online marketplaces. Such extension of the protection of consumers from unfair business practices is of special importance for ensuring the corresponding level of information for consumers, as private persons, when entering into contracts on tourism services (e.g. short-term accommodation services). These contracts are mostly made on online marketplaces. Although the consumers then do not have the protection arising from the EU consumer contract law, they will at least be protected from unfair business practices of the providers of online marketplaces. This will ensure a certain level of information on the essential elements for making a decision on entering into a short-term contract with another consumer on the online marketplace. If other prerequisites referred to in Article 7 of the UCPD are met, the nontransparent presentation of particular information important for the selection of an offer for accommodation (e.g. general information on the main parameters determining the ranking) will be considered as misleading omission or prohibited unfair commercial practice.66 The transparency of the online market and the level of information with the consumers are enhanced by the extention of the catalogue of the so-called material information67 whose omission in the communication between the provider of the online marketplace and the consumer can be considered as unfair business practice (misleading omission, Article 7 UCPD).68 The rules laying down which active obligations to inform the consumers rest on the provider of the online marketplace indirectly ensue from the UCPD rule on when misleading omissions are considered as being unfair commercial practice. 69 The largest amount of the new material information referred to in Article 7 UCPD inserted by the Omnibus Directive are those which, according to empirical research, are considered as essential for the selection of tourism services on the online market.70 From among the new material information, the following are of particular importance for the consumers on the online tourism services market: o Information whether the third party offering the product (e.g. short-term accommodation service) is a trader or not.71,72 This is considered to be material information within an invitation to purchase (Article 7/4/f UCPD).73 Information on the status of a third party is given to the consumer on the basis of that third party's declaration submitted to the provider of the online marketplace. The provider of the online marketplace is not required to establish alone, to explore and verify the legal status of the third-party.74 65 UPCD in Art. 2 (b) defines ‘trader’ as any natural or legal person who, in commercial practices covered by this Directive, is acting for purposes relating to his trade, business, craft or profession and anyone acting in the name of or on behalf of a trader. A list of the criteria for the assessment whether a person may be considered as a trader pursuant to Art. 2 (b) UCPD is published in Guidance on the interpretation and application of Directive 2005/29/EC, 2021, p. 27. 66 See Art. 7/4a UCPD added by Art. 3 (4) (b) Omnibus Directive. 67 “Material information”, in accordance with Art. 7/1 UCPD, is considered as “information that the average consumer needs, according to the context, to take an informed transactional decision and thereby causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise.” 68 See Loos (2020), p. 415; Cauffman,C., Goanta, C. (2021), pp. 762, 763; Duinvenvoorde, B. (2022), pp. 48, 49. 69 See Narciso, M. (2022a) p. 360. 70 For more see under 1. 71 See Art. 7/4 (f) UCDP inserted by Art. 3 (4) (a) Omnibus Directive. 72 The same obligation, with some additional information, is envisaged in the new Art. 6a/1/b CDR for the provider of online marketplaces. 73 ‘Invitation to purchase’ means a commercial communication which indicates characteristics of the product and the price in a way appropriate to the means of the commercial communication used and thereby enables the consumer to make a purchase (Art. 2 (i) UCPD). 74 See recital 28, Omnibus Directive. Directive on electronic commerce applies to the acting of the provider of the online marketplace because information society services and intermediary service providers are involved. It arises from the provisions of this Directive that hosting service provider is not liable for the information transmitted, i.e. for the hosted content. Hosting service providers have no general obligation to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating illegal activity. See Arts 12-15, Directive on Electronic Commerce. See Schulze, R.,
The provider it only obliged to supply to the consumer information on the third party status by passing to the consumer the third party's declaration.75 The prerequisites, and the way in which the provider obtains a declaration from the third party, are not provided for in the UCDP. Legal relations between the provider of the online marketplace and the third party regarding the provision of the declaration are determined by their mutual contractual relationship and the law applicable to it.76 Information on the legal status of the third party offering a product or a service is of extreme importance for the consumers for two reasons. By specifying the data on the legal status of the third party, the consumer's misapprehension that the contract is entered into directly with the platform is removed.77 In addition, the consumer is indirectly informed about whether he is entitled to protection under the EU rules on consumer protection. If the third party is not a trader78, the EU material and procedural rules on the protection of consumers in consumer contracts do not apply. The EU conflict of laws rules on jurisdiction and enforcement in cross-border cases protecting the consumers do not apply either. In the context of online tourist services marketplaces, this information is particularly important because of an increasingly intensive development of collaborative economy in the sector of tourism. Short-stay accommodation rentals via platform are most frequently offered exactly by persons not having the status of traders; Staudenmayer, D., pp 458-494; Busch (2016), pp. 237, 238; . Loos (2020), p. 416; Cauffman, C., Goanta, C. (2021), p. 764; Duinvenvoorde, B. (2022), pp. 44-46; Narciso, M. (2019) pp. 568-571. On the one hand, such an interpretation is also in line with the court practice of the CJEU on the application of exemption for liability for the stored information if the service provider had not played active role and provided the intermediary services neutrally by merely technical and automatic processing of the information provided by a third party. On the other hand, it is established in every concrete case whether only intermediary service is involved, or whether such service is actually an integral part of another service such as accommodation or transportation service. Exemption of liability is possible only if intermediary service is really involved, not forming an integral part of services offered via platforms whose main component is an offline service. In addition, it will also depend on this distinction whether Directive on Electronic Commerce applies to the service offered via online marketplace or other rules on the provision of a particular type of services (e.g. Services Directive). See, for example, the judgment of 20 December 2017, Asociación Professional Elite Taxi, C-434/17, ECLI:EU:C:2017:981; judgment of 10 April 2018, Uber France, C-320/16, ECLI:EU:C:2018:221; judgment of 19 December 2019, Airbnb Ireland, C-390/18, ECLI:EU:C:2019:1112; judgment of 22 September 2020, Cali Apartment, C-724/18, ECLI:EU:C:2020:743, See Busch, Ch., Mak, V. (2021, p. 110; Duinvenvoorde, B. (2022), pp. 49,50; 75 In this regard also recital 28, Omnibus Directive. 76 However, another question is how to treat the acting of the provider of an online marketplace who did not do anything in terms of engaging in checking the statement of a third party (e.g. if the third party is really a trader), particularly in the cases of reasonable doubt in the accuracy of the third party's statement or any knowledge of its inaccuracy. Whether the provider's acting may be considered as unfair commercial practice because of being contrary to the requirements of professional diligence can then be assessed on the basis of general rule on unfair commercial practices referred to in Art. 5/2 UCPD. In such cases, general rules of the national tort law on duty to care could also be applied. See Loos (2020), p. 418; Busch, Ch., Mak, V. (2021), p.113; Duinvenvoorde, B. (2022), pp. 49, 50. 77 Information on whether a third party offers the product or service is important also for the provider of online marketplaces. This information is also important for the exclusion of the liability of online marketplace for third party's obligations which may be activated if the consumer is not aware of entering into a contract with a third party and not with the platform. In literature, we find information on the possibility applying accordingly case law of the CJEU: C-149/15, Wathelet, although in this case the offline market was involved. See Narciso, M. (2022b), p. 149. 78 According to case law of the CJEU, the classification of a natural person as a ‘trader’ requires a ‘case-by-case approach’. See Duivenvoorde, B. (2019), p. 224. On the criteria for determination of the status of a natural person as 'a trader' see the judgment of 4 October 2018, Kamenova, C-105/17, ECLI:EU:C:2018:808, para. 38. In the Kamenova case, C-105/17, the CJEU also found that “the mere fact that the sale is intended to generate profit or that a person publishes, simultaneously, on an online platform a number of advertisements offering new and second-hand goods for sale is not sufficient, by itself, to classify that person as a ‘trader’, within the meaning of Article 2(b) of Directive 2005/29 and Article 2(2) of Directive 2011/83” (judgment of 4 October 2018, Kamenova, C-105/17, para. 40).
tourismlaw.ptRkJQdWJsaXNoZXIy MTE4NzM5Nw==