Response to the Green Paper on EU Consumer Protection

ERICA very much welcomes the initiative of the Commission to initiate a consultation at European level on the future direction of EU consumer protection.

ERICA is a European organisation, set up in 1980 by the mainstream consumer movement to conduct research, leading to action, on behalf of vulnerable or disadvantaged consumers. Because of our special expertise in this area and because children are often a special target group in themselves, we focus in this paper on protection of children and the rules which we believe need to be introduced to protect children from unfair marketing practices.

In November last year, ERICA published a survey of children's use of the Internet. The survey included the following findings: 25.2% of children surveyed answered that they had bought something over the Internet or that they had paid for games or entertainment. 68% of these children said they had paid with their parent's credit card, 16.5% said they had paid in a different way (15.2% of children left this question blank). 48% of children surveyed said they had seen headlines or sites which had made them want to buy something on the Internet. Furthermore, 58.1% said they had found something rude on the Internet, 39.2% described some material they had seen on the Internet as violent, 38.1% described some material they had seen as nasty and 24.4% described some material they had seen as upsetting. The overall results of the survey can be found on the ERICA website at http://www.net-consumers.org.

ERICA's research shows that the EU’s Consumer Protection policy needs to be developed to make special provision for children and to take account of children’s vulnerability. Individual Member States have different rules on advertising to children, but in a supposedly Single Market these differences can lead to high levels of protection in some countries being eroded by marketing originating from another Member State. It is therefore time for the EU to act to establish rules to protect children in relation to commercial practices.

The consumer movement throughout Europe has expressed growing concern over the last few years about commercial practices targeting children. There is a proliferation of commercial communications in children’s daily lives and these practices are becoming more and more sophisticated. The new technologies, and particularly the Internet, have allowed the development of highly sophisticated marketing to children, the most distinctive feature of which is the integration of advertising and content. Individualised marketing is increasingly targeted at children, based on their surfing behaviour, which allows marketers to microtarget children with advertising with their favourite cartoon characters, favourite kinds of products or services, etc. (see ERICA policy paper “Commercial practices targeting children on the internet”. Furthermore, marketing is increasingly targeted at schools, including advertising of junk foods. Companies offer incentives, including free gifts (computers, school equipment and even money to get their publications into the classroom.  Steps need to be taken to protect children and to restrict their exposure to certain forms of marketing, given their inexperience and their vulnerability.

Questions raised in the Green Paper

ERICA believes that, in view of the rapidly developing nature of the new technologies, a comprehensive framework Directive, which established a general duty to trade fairly and introduced EU rules for fair commercial practice, supplemented by targeted Directives, where necessary, would be the most effective approach. Within this general legislation, or within a targeted Directive, separate, specific rules must be established for what constitutes fair commercial practice in relation to children. We have set out below an initial list of the main points which must be included in these rules, but would urge the Commission to devote time and effort to developing these rules, in consultation with consumer and children's organisations. Such an approach would not only allow the legal requirements to be flexible enough to adapt to a rapidly changing marketplace, but should also allow the EU to plug the gaps, in terms of protecting children, in the existing acquis communautaire. The rules which are to be established for fair commercial practice in general would obviously apply to children also (eg information disclosure, respect of privacy, undue pressure, etc). The list below should therefore be seen as additional rules to supplement the basic requirements on fair marketing in relation to marketing targeted at children.

In an ideal world, ERICA would like to see full harmonisation introduced at the “highest possible” level. As this is unlikely to be acceptable amongst the different interests involved, or even within the Commission itself, we believe that the best approach would be to set the level for protecting children at a “high level” and then allow Member States to go further, if necessary. We are therefore in favour of maintaining this traditional approach to harmonisation of Consumer Protection laws at EU level. We are concerned by the Commission’s comment in section 3.4 of the Green Paper that “The flexibility of a framework directive would also eliminate the justification for minimum clauses in EU consumer protection directives.” As stated above, we see the framework directive functioning in such a way as to establish general rules on fair marketing in relation to children as a minimum, but allowing Member States to go further if they have justification for doing so.

As regards Codes of Conduct or Codes of Good Practice, ERICA believes that they can play an important role in protecting children from unfair marketing, as long as they are embedded in a legal framework and are of good quality. In particular, we would want to see non-compliance to codes of conduct by businesses, which have voluntarily committed to adhere, considered as an unfair trading practice and therefore an infringement of the framework Directive, with the corresponding legal consequences. In particular, such an infringement should generate civil responsibility towards anyone who could be damaged by such infringement. Such codes of conduct should also be associated with redress mechanisms or even with voluntary alternative means of conflict resolution.

ERICA supports the idea of complementing the framework Directive with non-binding practical guidelines, which interpret the meaning of the legislation in relation to children in a plain and user-friendly language. Such guidelines could help in avoiding differences of interpretation from one country to another of EU rules and better understanding or what the EU legislation is trying to achieve. However, this guidance should be clearly understood as such and not be seen as any kind of official interpretation, which must be left exclusively to the national courts, nor should it replace further legislation where it is needed. In order to avoid future problems, the framework Directive should state very clearly the field of application and the scope of these guidelines and should also clarify the criteria for representation of stakeholders in the drafting of such guidance.

Criteria for fair marketing to children

As stated above, we believe that rules should be introduced to clarify what constitutes “fair marketing” to children, possibly supplemented by a list of practices which should always be considered “unfair”. The following principles should be incorporated into such rules:

• There should be a ban on the collection of personal data from young children, unless prior parental consent has been obtained. Marketers must not ask children to give personal information, nor should they collect it covertly.
• Advertising and marketing targeted at children should be clearly identifiable as such and separated from content.
• There should be a general requirement on marketers that they must not cause moral, mental or physical harm to minors, nor should they encourage children to behave in such a way which could jeopardise their health, safety or general welfare, taking into account the age, knowledge and level of maturity of the intended audience. This would bring marketing in other media, such as the Internet, broadly in line with rules that apply to television advertising.
• Marketers should not exploit minors’ inexperience, sense of loyalty, credulity or the special trust that minors place in parents, teachers or other persons.
• Any advertising or marketing which is unsuitable for children, namely which contains violent or other adult material, should be identified as such, by the presence of a warning.
• Producers of violent or other adult material should make it very difficult for minors to access that material, for example, by use of payment systems such as credit cards which require an adult holder. Furthermore, there should be no free promotional downloads of such material.
• No cigarette or tobacco advertising should be permitted.
• There must be no marketing or incentives given to children to gamble. (On the Internet some gambling sites allow children to gamble for fun or for non-money-related tokens.)
• Marketing must not contain material which incites hatred or discrimination on grounds of race, gender, religion or nationality.

Specifically on the Internet

• There should be a general duty on ISPs to protect children that would encourage them to apply the excellent array of codes and schemes that exist only on a voluntary basis and that have failed without legislative back-up to attract a critical mass.
• There should thus be a requirement on all content providers to rate their material. Unless and until enough sites (including harmless ones) are rated, it will be difficult for filtering systems both to protect children and give them reasonable access.
• ISPs should operate a notice and take down policy, based on a consumer complaint system, and there should be an easily accessible procedure for parents or children to report inappropriate advertising.
• ISPs should provide safety guidelines to children on their home pages, as well as access to information and advice about marketing to help children to understand the purpose of advertising and to help them protect themselves from being unfairly influenced by inappropriate advertising.
• All children’s websites should be required to post a detailed and easy-to-find privacy policy on their home pages.
• Marketers should discourage minors from entering inappropriate websites or communicating with strangers, by means of both filtering and safety messages.
• There should be rating of alcohol advertising to exclude under 16s and alcohol advertising must comply with national codes and legislation.

Contractual rules

There are also a number of other points, not specifically related to marketing but more to contractual rules, which believe need to be introduced alongside the rules on marketing to children.

• Authentication systems for credit cards are urgently needed, including a mechanism for establishing the age of the user, in order to address the problem of children using their parents credit card unauthorised for purchasing on-line. One possible solution could be to require a PIN for use of credit cards on-line.
• Marketers should not encourage, nor indeed permit, young children to contract for the sale or rental of goods and services or for credit without explicit, verifiable parental consent, and should confirm as at least by e-mail. (According to the recent ERICA survey, just over one quarter of children surveyed had bought something or paid for games or entertainment over the Internet including 10 year olds, Nearly 70% of these used their parents’ credit cards and some said they did it without any help, implying possible use without permission.)
• Marketers should not charge minors through premium phone lines.