Regulating artificial intelligence

According to Otmar Lell (vzbv), in particular the role of online platforms has been subject to relatively major changes during the past decades. If in the initial phases of online trading there had only been minimal “information bias”, hence unfair competition, for example due to highest and lowest ranked providers of a product, this has completely changed in the platform economy by the use of algorithms. Whilst consumers of course enjoy many benefits of buying goods and services on online platforms, there is at the same time an increasing trust problem on the side of consumers. The new proposal of the EU Commission on the protection of consumers addresses some parameters to regulate the online market; these should provide the user with more transparency, thereby representing a step in the right direction. According to this, online platforms must for example make their rankings for goods offered transparent, provide information whether the respective goods are offered by a private person or a trader and whether EU consumer rights are applied or not. Apart from that, the online platform must notify for which adverts payments were made for example for a prominent position and to what extent personalised pricing and personalised ranking is taking place. In addition, the vzbv suggests a verification process if there should be any doubt that the information provided is correct. Giving goods from online platforms' own production ranking advantage shall be banned, if end users are not informed accordingly. Apart from that, there should be legal means to tackle false reviews on online platforms. The majority of problems could be remedied by regulating algorithms.

Online dating, wedding dresses and blackmail tactics

The current proposal by the EU Commission limits the right of revocation. If an item has been used “more than necessary”, it is at the discretion of the provider not to give a refund. Isabelle Buschke (vzbv) contrasted this with some hardship cases, consumers had informed her about. In one case, the trader demanded 50 % compensation for a pair of shoes, which a customer had sent back because they were – allegedly – ripped. However, the customer had only tried the shoes on once. One trader refused to accept a returned wedding dress, costing 500 Euro, because it had allegedly been personalised. However, the customer had only had the choice of one colour and sizes 8-14, which are normal off-the-peg sizes. This clearly is also contrary to the Directive on consumer protection, which says that selecting from a “drop-down” menu cannot be compared to made-to-measure production. Another example is a consumer, who paid 388.70 Euro to register on an online dating platform but wanted to withdraw from the contract after six days. Thereupon the provider demanded 291.53 Euro in compensation without providing any real reasons. Blackmail too takes place in online trading. Users for example approached the Consumer Protection Organisation because traders demanded the deletion of a negative review on their website as a condition for a refund. All these cases show that any restriction of consumer protection would only benefit traders; therefore the current regulation should be retained.

Parliamentary Committee against amending the right of revocation

During the meeting of the Committee on Internal Market and Consumer Protection (IMCO) on 3rd September 2018, MEPs of all factions rejected an amendment of the right of revocation. Rapporteur Daniel Dalton (ECR) told the Committee that even though he had sympathies for the concerns of businesses, he would not simply abandon hard won consumer rights. The tenor of the Committee was that there was no reason to amend the right of revocation as long as businesses were not in a position to provide clear figures of abuse cases concerning returns. The Commission subsequently promised that it would forward any available figures to the Committee. The issue of algorithms was also discussed; however, so far ECR and EPP are supporting the position that even if it was necessary to create transparency with regard to rankings, one should abstain from forcing online businesses to publish their algorithms.

Further information:

AK Position Paper: New Deal for Consumers

AK: Consumer rights proposal by the EU “Step in the right direction”

AK EUROPA: Commission wants to make collective redress in Europe more effective

Marktwächter: The right of revocation in practice from a consumer perspective

Federation of German Consumer Organisations (VZBV)