Yearbook of the Estonian Consumer Protection Board
The Estonian Consumer Protection Board would like to thank everyone who contributed to the preparation of this yearbook. We are especially grateful to Nele Peil, Mariann Lugus, Lola Tehver, Katrin TalihĂ¤rm, Oliver Gailan, and Kai Amos. 2
Table of contents Foreword ..................................................................................................................................... 7 General overview of 2017 .................................................................................................... 9 Conference on the development of consumer environment ............................ 9 Information campaigns .................................................................................................. 11 Advising consumers, including digital tools ......................................................... 17 Promotion of consumer education ........................................................................... 19 Other awareness raising events ................................................................................. 21 Cooperation with NGO-s ................................................................................................ 22 Research ............................................................................................................................... 23 Advertising and commerce ............................................................................................... 23 Alcohol advertising .......................................................................................................... 24 Misleading advertising ................................................................................................... 27 Advertisements of discount campaigns .................................................................. 28 Advertisements directed at children ....................................................................... 29 Gambling advertising ...................................................................................................... 32 Involvement of bloggers and vloggers in marketing......................................... 33 Unaddressed advertisements...................................................................................... 34 Consumer games .............................................................................................................. 35 Advertising of pyrotechnic articles........................................................................... 36 Advertising Advisory Panel.......................................................................................... 37 Estonian Association of Marketing Communication Agencies (EAMCA): Marketing communication is on the rise. ............................................................... 38 Problematic topics in commerce ............................................................................... 39 Instruction manuals for technical equipment and household appliances ............................................................................................................................................. 39 Price discrepancies in stores: displaying prices and discount sales ..... 40 Alcohol .................................................................................................................................. 48 Display of alcohol prices at the point of sale ................................................... 49 3
Tobacco................................................................................................................................. 50 Food products .................................................................................................................... 53 Estonian Traders Association: Economic growth in 2017 was the fastest of the five previous years ................................................................................................... 55 The main shortcomings of e-commerce ................................................................. 57 Unjustified exclusion of the right of withdrawal ........................................... 57 Displaying misleading stock and consequences thereof ............................ 58 Difficulties business have with solving consumer complaints ................ 60 Ordering traps............................................................................................................... 62 Disputes with companies from third countries .............................................. 63 Advice for e-traders, including an e-commerce guide ................................. 64 Account administration fees in the osta.ee environment .......................... 65 Miracle products .......................................................................................................... 66 Communication services .................................................................................................... 68 Inspection of the standard terms of the communications service contract .................................................................................................................................................. 69 Proceedings linked with contractual penalties .............................................. 69 Fees required for withdrawal from a distance contract ............................. 70 Standard terms for the payment of monthly fees in full when changing a plan and when concluding a contract ................................................................. 71 Maximum term for the communications service contract ......................... 72 Standard terms concerning the restriction of communications services and fees payable for the duration of restriction............................................. 72 Checking compliance with the prohibition of using unfair trading practices and with the obligation to notify consumers........................................................ 73 Automatic implementation of a day ticket for internet .............................. 73 Roaming data usage in situation when it has been switched off on the phone ................................................................................................................................ 74 Regulation of roaming services and issues of clarity of the related information .................................................................................................................... 74 4
Providing pre-contractual information to the consumer, referring to terms and conditions of the contract and making those available at mobile operators’ company stores. ..................................................................... 75 Restricting the 14-day right of withdrawal from contract ........................ 75 Unilateral amendment of terms of contract ..................................................... 76 Telephone numbers with special rates ................................................................... 77 Periodical charged content services......................................................................... 78 Technical Regulatory Authority: Gone are times when the use of mobile internet abroad had severe effects on the consumer’s wallet. ..................... 79 Product and service safety ................................................................................................ 81 Entrepreneurs’ awareness of product safety ....................................................... 81 Safety of products............................................................................................................. 82 Rapid Information Exchange System RAPEX................................................... 84 Cooperation with the Estonian Tax and Customs Board ............................ 88 Safety of service ................................................................................................................ 89 Adventure parks .......................................................................................................... 89 The aim was to increase awareness among service providers of trampoline services .................................................................................................... 94 Finances..................................................................................................................................... 95 Advertising of financial services ................................................................................ 96 Consumer credit................................................................................................................ 97 Payment services and payment account ................................................................ 98 Estonian Banking Association: 2017 was a successful year for the Estonian banking sector ................................................................................................................... 99 Tourism and entertainment .......................................................................................... 103 The provision of package tours for sale without a security is prohibited and punishable as well ......................................................................................................... 105 New directive of package tours and linked travel arrangements............. 106 Insolvency of Travel Dreams OÜ ............................................................................ 108
The development of claims agencies in the field of air passenger rights ............................................................................................................................................... 109 Estonian Travel & Tourism Association The best travel year for Estonians ............................................................................................................................................... 111 Consumer disputes and the Consumer Disputes Committee .......................... 114 Main dispute topics ...................................................................................................... 116 Electronics and communications equipment ............................................... 117 Vehicles ......................................................................................................................... 119 Tourism......................................................................................................................... 119 Legal aid services ...................................................................................................... 120 Communication services ....................................................................................... 120 Waste services ........................................................................................................... 121 Entertainment services .......................................................................................... 121 Contracts for services ............................................................................................. 122 Claims for damages .................................................................................................. 123 Number of enquiries related to e-commerce ............................................... 125 Other disputes............................................................................................................ 126 Chairman of the committee: 2017 was a busy and fruitful year ............... 127 General statistics of 2017 ............................................................................................... 129
Foreword In 2017, the economic growth in Estonia accelerated, among other things, thanks to the improvement of the general international business environment and that of our neighbouring countries. The gross domestic product (GDP) of Estonia increased by 4.9% during 2017, which was the highest result across the past five years. Somewhat surprisingly, this acceleration of trade growth, which had been the main driving force behind economic growth, slowed down during the second half year. However, e-commerce continued to grow rapidly â&#x20AC;&#x201C; a whopping 37% within the year. These changes and developments are also reflected, often in the form of mirror images and sometimes as distorted images, the enquiries portfolio of the Estonian Consumer Protection Board, a third of which is already made up of enquiries related to e-commerce. Upon closer inspection, it becomes evident that commercial success is best measured in trustworthiness of the trader. We are used to goods and money changing hands almost simultaneously. Modern commerce, however, relies more and more on prepayments and a business model that is quite literally founded on trust, which often stretches across national borders. This is why the consumers no longer prioritise eyecatching and convenient payment environment as much as they do what happens after payment. E-commerce, social media as a place for advertising and trading, sharing economy and e-platforms, electronic content services and mobile applications, bloggers, the Internet of Things, linking of databases, etc. have greatly expanded the concept and opportunities of traditional commerce. The European Union see the Digital Single Market and development of crossborder trade as a support factor for the economy of the union and is moving towards creating a stronger and more trustworthy trading environment. To this end, cross-border cooperation of consumer protection boards is applied in addition to harmonizing the trading environment of the Single Market and the measures of increasing consumersâ&#x20AC;&#x2122; confidence. Emphasis is placed on the boardsâ&#x20AC;&#x2122; supervisory capabilities, efficiency, competence, uniformity and proportionality. The renewed trading environment will create new prerequisites and prospects for cooperation between the establishments of 7
consumer and data protection and those of the supervisory authorities of the field of competition. The new rules shall set new challenges to traders and new heights will have to be achieved in professional servicing. The coming years are likely to bring faster convergence on the e-commerce market, higher quality and more crossborder transactions. At the same time, the divide between e-commerce and traditional retail trade is getting increasingly steep. Powerful expansion of traditional retail trade in Estonia, primarily in Tallinn, will increase competition even more, which in turn ought to have a positive effect on the quality of services. The prerequisites for this are already there, at least in the simpler categories of quality indicators. We hope that competition will result in electronic disclosure of pricing, campaign and product information, thereby making electronic price tags an elementary part of commerce very soon. Consumer research conducted in Estonia and the EU shows that consumers donâ&#x20AC;&#x2122;t tend to be very persistent in claiming that things get put right after unsuccessful transactions. But statistics also show that this reluctance is not justified, as most people who have opposed traders who have done them wrong have received what they demanded. Although it is true that the diversifying consumer environment offers seemingly unlimited options, not all of those are worthy of trying out. It is our daily wellthought-out risk behaviour and rationality, based on experience and knowledge that should provide a competitive edge to quality in the renewed consumer environment.
Andres Sooniste Director General of the Consumer Protection Board
General overview of 2017 Conference on the development of consumer environment
During the first half of 2017, a lot of energy and focus went to preparing for the conference organised in the framework of the Estonian Presidency of the European Union. The conference took place on 20 September and was preceded by a formal dinner for the participants. Organisers of the conference were the Consumer Protection Board, the Ministry of Economic Affairs and Communications and the Estonian Competition Authority. The main target groups of the conference were representatives of EU networks, partner agencies from other European countries, entrepreneurs, policy-makers and public authorities, sectoral umbrella organizations and professional associations. In total, 266 people attended the conference, including 226 delegates from all EU countries, 22 speakers and 19 organizers. A reoccurring theme was the information overload and lack thereof causing confusion among consumers with regard to filing complaints. In order to accelerate the development of sharing economy and provide consumers with
clarity, we need to establish principles that everyone can understand in a uniform manner. Participants of the conference acknowledged that sharing economy as a modern economic model should not be hindered. However, certain ground rules need to be agreed on to promote economy and welfare of consumers. Examples of poor scenarios presented by the participants included consumers having to read dozens of pages of information on sharing economy to understand how its services operate. Yet, as Deputy Director General of the European Consumer Organisation Ursula Pachl aptly pointed out, 30 pages of complicated instructions do not provide consumers with the necessary information. The consumer wants to get an overview of the key matters in a simple language. This was also confirmed by other presenters. The current simultaneous information overload and lack thereof have led to a situation where over half of European consumers are unaware to whom they should file complaints â&#x20AC;&#x201C; whether the legal rights of consumers apply or whether anyone has the right to submit a claim at all. Antonia Fokkema from the European Commission said that we also need to establish relevant terms and definitions. About three or four years ago, sharing economy meant sharing something in a small group, such as neighbours using a lawn mower they bought together as lawn mowers are not used very often, making it reasonable to buy and upkeep them per multiple families. In this case, no regulation is needed. However, today, these processes also include third parties in the form of platforms that make such transactions possible. Thus, arrangements between neighbours have turned into services crossing the boundaries of neighbourhoods. This new framework calls for redefining the term of sharing economy as well establishing some basic rules. Discussions and presentations also focused on data use and protection. Online traders have an immense body of information on their consumers and consumers have the right to assume their data is not violated and the conducted transactions are transparent.
Information campaigns An information campaign to overturn common misconceptions among consumers. In June, the Consumer Protection Board carried out a month long information campaign titled “The Consumer Protection Board can’t always have your back. Know your responsibilities!”. The campaign focused on consumers’ obligations and the Board took to overturning common misconceptions, which often lead to problems and worries among consumers. This was a continuation of the campaign carried out in autumn 2016, as the topic continued to be relevant and required additional awareness raising. The Board was keen to emphasize that, alongside rights, consumers also have basic obligations aimed at cautiousness, and fulfilling these obligations would help prevent a lot of applications sent to the Board. Ill-thought-out and rushed purchase decisions has been proven to often lead to problems. First and foremost, a consumer is obligated to make sure, to the best of their ability, whether they goods they are about to buy are suitable to them, who the trader is and what are the terms and conditions of the purchase. For example, if a web store does not have adequate information on the trader and a web search leads to negative reviews, then the consumer ought not to be very confident that their transaction with said trader will go smoothly. The Consumer Protection Board has numerous examples of cases in which the consumer paid money to a completely unknown e-trader and either did not receive the ordered goods or received goods that didn’t meet their expectations at all. As there are no post-service options or contact information of the trader on the purchase environment, the consumer has no place to which they could send their complaints. However, oftentimes the Consumer Protection Board is also contacted in cases where the other party of the transaction was a private person as well. The Consumer Protection Board cannot help with issues that occur in relation to transactions between private persons. Key points: • Among the common misconceptions is the opinion that a regular store is obligated to repurchase a product that a consumer no longer wants if 11
it is returned within 14 days from purchase. For example, if a consumer has bought some items from a store and later discovered that they don’t actually need those or don’t find them suitable any longer, then the store is not required to repurchase those items. The consumer has had the opportunity to inspect the product and make sure it fits their needs at the store. • Emotional purchases tend to be those that can later cause regrets. For example, a consumer bought a car that was perfectly suited to the colour of their clothes, but failed to pay attention to the technical condition of the car, which later caused a lot of problems and disappointment to the consumer. • Additionally, people often assume that a trader is obligated to reimburse a faulty product right away. They are not. Upon first discovery of a defect, the trader has the right to first fix the item or replace it with a new item of the same kind. Additionally, people often assume that a trader is required to reply to a complaint within a few days. In actuality, legislation stipulates that the trader has 15 days to do so. With the campaign, the Consumer Protection Board wished to emphasise that traders have a role in this as well – a trader who is aware of common misconceptions can address relevant topics already during the sales process. The follow-up campaign incorporated TV clips and websites (www.ostatargalt.ee and www.pokupaisumom.ee,) that had been created for the initial campaign organised in the previous autumn and that included examples of common myths and relevant advice.
Click on the photos to watch the videos!
The Board used eye-catching banners and short clips on the internet (at the DelfiTV website) to draw attention to the campaign.
The Board also organised a public round table, which focused on influencing consumers – “Are campaigns that get consumers obsessed actually inevitable?”The aim of the discussion was to take up the topic, in the eyes of the general public, of why consumers rush out to get campaign offers with such fervour that sometimes even forget about their obligations, and can therefore be dissatisfied with their decision later on, while it is noteworthy here that such decisions are often irreversible. The discussion was started by an economist-psychologist and consultant, Ivar Soone, and continued with a discussion led by Urmas Vaino, the participants of which, in addition to Soone, included Andres Sooniste, the Director General of the Consumer Protection Board, and Olav Osolin, Chairman of the Advertising Advisory Panel of the Consumer Protection Board.
Information campaign concerning misleading price information In autumn, the Consumer Protection Board also carried out an information campaign titled “Respect the Client, Trade Fairly”, which was focused on pricing information. The campaign, which took place from 13 November to 10 December, highlighted two main issues – the differences in product prices on the shelves and at the cash register, and the provision of misleading information on the availability of discounted products. The Board also wanted to focus on concerns, such as the use of unfair trading practices for the advertising, provision or sale of goods and services, and the provision of inadequate or incorrect pricing information prior to conducting a transaction. Also touched upon were the topics of providing false information on prices or the basis for calculating prices and specific discount prices, as well as concerning the availability or nature of certain goods or services. The campaign was aimed primarily at entrepreneurs to bring awareness to the unfortunate situation that currently prevails in retail trade. The necessity for such a campaign was also evident from the number of related complaints submitted to the Consumer Protection Board and the results of the “Situation of Consumer Protection in Estonia” survey, in which every sixth consumer mentioned issues with price discrepancies and unavailability of promotional goods already during the relevant campaign. The survey showed that problems arise primarily in relation to ordinary everyday purchases. A study commissioned by the European Commission also revealed that consumers often experience unfair trading practices, including price differences on shelves and at the cash register. The offering and sale, or marketing in any other manner, of goods and services to consumers shall follow good trade practice and be honest with regard to consumers. In particular, commercial practices are unfair if they mislead consumers or are aggressive with respect to consumers. Prices have to be displayed in a way that they are clearly visible and can be understood unambiguously. A commercial practice is also deemed to be misleading if, due to its influence, the average consumer makes or is likely to make a transactional decision that he or she would not have made otherwise, and if the commercial goal of the 14
commercial practice has not been mentioned and it is not evident from the context either. During the campaign, the Consumer Protection Board inspected prices in stores across Estonia. The goal was to get and overview of the accuracy of pricing information by comparing prices on shelves and at cash registers and those of discount products that had been advertised at certain prices. The summary of results and subsequent conclusions have been included in the commerce chapter of this yearbook. In the fall of 2017, the Board presented the results of the inspection separately at a meeting with entrepreneurs and publicly with the participation of the media, in the framework of which a discussion moderated by MĂ¤rt Treier was also organised.
Participants of the discussion were (from left to right) Andres Sooniste, Director General of the Consumer Protection Board, Ave Makke, Head of AS Tallink Duty Free Sales Department , Jaanus Vihand, Chairman of the Coop Eesti KeskĂźhistu, Nele Peil, Managing Director of Estonian Traders Association, and Marje Udras, Head of Retail at Bauhof Group AS. The 15
discussion focused primarily on the uniformity of prices on shelves and at the cash register and unambiguity of displaying prices. Also discussed were the current situation of retail trade and potential solutions. The Consumer Protection Board created a thematic page on its website, to which campaign materials and brief information of the problematic topic were added. Estonian and Russian radio clips were also created for mall radios, as well as television clips, which can be seen here (click on the photo):
In order to reach the target group, the Board also used online banners.
The campaign received a great deal of media attention. In addition, consumers actively shared their experiences on social media and sent tips for inspection. A significant part of the media coverage was due to inspections carried out at stores, the results of which attracted attention. Through the media, the Board also had the opportunity to publish articles and messages of a practical nature. Radio channels were involved as well and they were eager to contribute to increasing awareness among entrepreneurs and consumers by way of interviews.
Advising consumers, including digital tools The Consumer Protection Board offers various channels through which consumers can ask for advice. Changes have occurred in the consumers’ preferences towards ways of asking for advice; the channels that provide quick answers and do not require consumers to show up in person have become the most popular. This is how, over time, we have reached a situation in which most consumers prefer digital consultation channels from all the public services offered by the Consumer Protection Board; this has significantly decreased the need for consumer receptions. It is also noteworthy here that most questions asked during meetings where consumers come in for a consultation could have been answered in a way that does not include a face-to-face meeting, or concerned matters outside of the competences of the Consumer Protection Board. In 2017, almost 1,700 consumers came to consultations in person. In addition to the office in Tallinn, consumers can also go in for a consultation in Haapsalu, Jõhvi, Pärnu, Tartu, Valga and Võru; however, the offices are not open for consultations every day, but only on a few fixed days per month. Relevant information is available to the public on the website of the Board. The popularity of consultation at offices has decreased, whereas, the information line has turned out to be very popular when it comes to getting a speedy initial answer for consumers’ questions. In 2017, over 19,000 people received consultation over the phone. Those asking for advice are predominantly consumers, but also institutions and businesses.
In the case of specific and more complex problems, consumers can turn to the Consumer Protection Board by filling in a form on the Board’s website or sending them an email. The Board receives over six thousand written enquiries per year. The Consumer Protection Board has set the consultation of consumers as its main objective for several years now, in 2017 that aim was put into motion with the development of information channels both on the Board’s website and in terms of interactive solutions. The Board supplemented the content of its website by adding informative materials for entrepreneurs and updated information targeted at consumers. Work was also continued with topics of the Consumer Disputes Committee, concerning which preparations were started to transfer the information of the Consumer Disputes Committee from the website of the Consumer Protection Board to a separate website. The Board also updated all consumer protection related materials on the eesti.ee portal. As of 2017, the website of the Consumer Protection Board also includes an online helper tool for consumers; the aim of this tool is to provide quick answers and information to consumers. Solving consumers’ problems is conducted based on the troubleshooter principle; the person is asked various guiding questions and they will, by selecting answers to 6–12 questions, be directed to a specific answer about how to carry on to solve their problem. In the case of more complex situations, consumers always have the opportunity to ask for advice over the phone as well. In 2017, during the app’s first year, it was used about 5,000 times. In 2015, the Consumer Protection Board installed information booths for answering questions concerning travel rights in the Tallinn Airport. In 2017, passengers read tips from those kiosks in about 9,000 cases. It is important to note here that a few kiosks were not operational for a couple of months due to the construction works conducted at the airport in the summer and the external hacker attack that occurred in autumn.
As an extension of the electronic helpers project, a major step was taken in 2017 â&#x20AC;&#x201C; for the first time, consumers were given the opportunity to get answers to questions concerning the consumer field directly at the source, in shopping centres. At the end of the year, the Board installed information kiosks to PĂľhjakeskus shopping mall in Rakvere, Centrum in Viljandi and Saaremaa Shopping Centre in Kuressaare. The aim of electronic helpers installed in shopping centres is to provide consumers with information on consumer rights concerning goods and services, and to do this as simply as possible with the help of verification questions. During the following year, the Board will monitor the use of these information booths and gather feedback from consumers in order to assess the success rate of the pilot project. In the future, it would be wise to link other state institutions with the system so that consumers could be provided information quickly and via an operative communication channel across the services of the entire public sector.
Promotion of consumer education The Consumer Protection Board took part in the activities of working groups and the steering group of financial literacy, which were led by the Ministry of Finance and involved two meetings in 2017. The Consumer Protection Board also provided input for the citizen initiative project Action Meter (Teomeeter) www.teomeeter.ee, the goal of which is to make the society of Estonia more caring. In cooperation with the Estonian Youth Work Centre, topics that could be important for young people aged 7â&#x20AC;&#x201C;26 were reviewed. 19
The Consumer Protection Board carried out several consumer education lectures in schools. In 2017, the Board visited the Ülenurme High School, the Türi Joint Gymnasium, the Valga Gymnasium, the Võru County Vocational Education Centre, the Tallinn Kuristiku Gymnasium, the Haapsalu Vocational Education Centre, participated at a conference held at the Pirita Gymnasium of Economics, and spoke about the rights and obligations of consumers to school leaders and long-term unemployed. The Consumer Protection Board also participated in jury work at the Estonian Student Company Trade Fair, which was organised in February by Junior Achievement. In cooperation with Realister OÜ, consumer themed tests and educational pages were added to mathematics, chemistry, Estonian and English notebooks.
In addition to activities within Estonia, the Board also participates in international projects, for example, in the work group of the Nordic-Estonian Consumer Education Project. The Board was also involved, as an expert, in creating the Digital Competence Framework Document, which was compiled at the initiative of the European Commission. This is the first official consumer education document compiled on the European Union level. Consumer education has reached kindergartens as well. Since summer 2016, the University of Tartu, in cooperation with the Consumers’ Cooperation Chamber, has organised consumer education training courses at kindergartens. By summer 2017, a total of 28 kindergartens across Estonia had already participated in these training events. In spring, the University of Tartu prepared consumer education courses for class teachers and teachers of the I–II education level. In autumn, seminars were launched on consumer rights and obligations and domestic households’ matters in Tallinn, Tartu and Pärnu.
Other awareness raising events The tourism fair Tourest, which took place during 10–12 February, marked the seventh time the Consumer Protection Board participated at this event. The Board conducted a survey among visitors of the fair and organised a
travel-themed game on the main stage. This time the Board also took an airport information booth to the fair to introduce it to fair goers. A safety day was held at the Kuressaare Airport in Saare County on 8 September, where all those interested could acquire knowledge about dangerous toys and other products. Most of the participants were children, as the organizer of the Safety Day invited schools, child care facilities and families with children to attend the event.
Cooperation with NGO-s Similarly to previous years, in 2017, the Consumer Protection Board invited representatives of consumers’ non-governmental organisations to various events organised by the Board, including “Suunanäitaja” (Compass) information days and the Conference on the development of consumer environment. In accordance with the procedure for applying for and allocating state budget subsidies to consumer protection, the Board announced a call for proposals for operation support. By the deadline, 5 applications from NGOs had been sent in. The Estonian Consumer Protection Association, the Estonian Union of Co-operative Housing Associations and MTÜ Tarbijate Koostöökoda (the Consumers’ Cooperation Chamber) received support.
Research A study titled â&#x20AC;&#x153;Consumer protection situation in Estoniaâ&#x20AC;? was completed by the Consumer Protection Day on 15 March 2017. This is a biennial study conducted to assess the state of the consumer environment in Estonia. This year, the study was conducted by the Estonian Institute of Economic Research, as they won the corresponding bidding. In the fourth quarter of 2017, credibility surveys concerning organizations were completed, the results of which showed that the Consumer Protection Boardâ&#x20AC;&#x2122;s position has gone down, but still remained above the average among the evaluated organizations. The reliability of the Consumer Protection Board was at 64%, i.e. the Board ranks at 11th among the 25 institutions. Research was carried out by Turu-Uuringute AS.
Advertising and commerce The field of advertising and commerce was formed in its current form in 2017, when the divisions of the two fields were merged. In April, the advertising field, which had previously been part of the services division, was joined with the field of commerce of the commerce division, thereby forming a joint advertising and commerce field in the market surveillance department. The work plan of the advertising and commerce field for 2017 focused on such topics as information provided for consumers during the sale of technological products, including instruction manuals and guarantee terms and conditions, as well as information concerning submission of claims and guarantee. Also highlighted were sales contracts, sales of products with restriction on sale in terms of retail sale and e-commerce (alcohol, tobacco products). As well as, e-commerce monitoring, including pre-contractual information, standard terms, price information, advertising directed at children and alcohol advertising.
Alcohol advertising On 20 December 2017, the Riigikogu passed a Draft Act amending the Alcohol Act and the Advertising Act; the Draft Act includes amendments envisaged in the “Alcohol Policy in the Green Book” approved by the Government of the Republic in 2014. With regard to advertising, the changes will be enforced on 1 June 2018, and the rest of the changes will be enforced exactly one year later. The Consumer Protection Board actively participated in the meetings held during various procedural stages of the Draft Act and submitted written proposals for the Draft Act. At the same time, the Board noted the entry into force of the amendments will bring about an increased need for resources. The main changes to alcohol advertising requirements are that alcohol advertising may only include: • • • • • • • • • •
name of the product, type, name of the manufacturer, brand, country of origin, geographic region, alcoholic strength by volume, image of sales packaging, characteristics (colour, aroma, flavour) and way of serving.
It is only allowed to display neutral information concerning the main characteristics of the product; the objective for this is to reduce the effects that alcohol advertising has on shaping the values and social norms in society, especially among minors. Requirements for health warnings in alcohol advertisements were clarified to prevent the reduction of the impact of health warnings through the use of design and other elements by advertisers.
The new legislation has laid down a number of additional demands concerning alcohol advertising, which all traders are required to take into account in their activities. • Information contained in advertisements of alcohol should be presented in a product-centred and neutral manner. • The audio and visual design of the information provided in the advertisement should not contain any living entities, photos or images thereof in any way except in the form of a person’s voice. • Advertising may not contain an animated image of a non-living thing, encourage people to buy or consume alcohol, display the serving or drinking of alcohol, or associate alcohol with a holiday, event, activity or season. • Advertising should not, in any way, leave the impression that alcohol is a natural part of life or that alcohol consumption has a positive effect. • An advertisement should not associate alcohol with driving a vehicle, to highlight a high ethanol content as a positive aspect of alcohol, to mimic the voice of a well-known person or character, or that of a person or character from a film, television, music or entertainment show or event that is meant primarily for children. • Alcohol advertising has been prohibited on social media, except on the website of the alcohol manufacturer. The aim of the amendment is to reduce the exposure of children and young people to alcohol advertising. These changes require active communication with professional associations before the entry into force of the Act and cooperation with the Estonian Traders Association and the Ministry of Social Affairs. It is important to note that extensive legislative changes will increase the counselling and supervision burden of supervisory officials in the field. It is also noteworthy that, in the framework of the Estonian Presidency of the European Commission, a conference of the Ministry of Social Affairs titled “Cross-Border Aspects in Alcohol Policy – Tackling Harmful Use of Alcohol” was held in October, addressing new social media aspects in the context of the regulation of alcohol advertising. In view of alcohol use culture among the youth, the requirements set for alcohol advertising and means of the 25
digital age, the suggested solutions were restriction of social media mechanisms in cooperation with social media platforms, e.g. removing the “like” and “share” buttons from alcohol advertisements. It is known that several technology companies are testing their environments for the selective restriction of alcohol advertising. Reducing alcohol consumption and responsible marketing by alcohol producers are among the key issues that apply across the European Union.
The main supervisory issues in the field of alcohol advertising were related to information on the health risk of alcohol, i.e. the mandatory warning text in advertising. Advertising of alcohol shall include the textual warning: “Tähelepanu! Tegemist on alkoholiga. Alkohol võib kahjustada teie tervist.” (Attention! This product contains alcohol. Alcohol can damage your health.) The warning shall, given ordinary attention, be noticeable, understandable and clearly distinguishable from other information. Entrepreneurs frequently asked the Board for advice when preparing various campaigns. In addition, the Consumer Protection Board has been contacted concerning advertising on social media. The Board has found that photos and posts published on Facebook fan pages of manufacturers / importers / sellers of alcohol or tobacco products, if these photos or posts include text or visual images of alcohol products / products related to tobacco products and the aim of such posts is to increase sales, also constitute as advertising of products linked with alcohol and tobacco products. As a rule, the aim of photos published on social media and of games organised on fan pages is to increase the turnover of the entrepreneur. Therefore, such activities are considered as advertising and they have to comply with 26
requirements stipulated in the Advertising Act and the Alcohol Act. In order to get a better overview of the requirements set for alcohol advertising, the Consumer Protection Board has also drafted corresponding guidelines for entrepreneurs.
Misleading advertising Misleading advertisements are a common cause for advertising related complaints from entrepreneurs and consumers. If an advertisement is misleading if it creates an incorrect impression of the product or service, the advertisement may be a case of misleading advertising. As online advertising is currently very beneficial in marketing, the topic of keywords used in search engines was also highlighted. For example, traders have started to use phrases or terms similar to other entrepreneurs. A bought advertisement can therefore help a lesser known entrepreneur use the same phrase that their more popular competitor uses. This way a less popular entrepreneur can get more attention via online searches. In order to get an opinion on such activity, the Consumer Protection Board turned to an expert committee that operates at the Advertising Advisory Panel. The Advertising Advisory Panel finds that the requirements set out in the Advertising Act are applied to the content of advertising, but the same Act does not regulate the use of key words in search engines, nor the displaying of advertisements by the search engines. Both parties can use keywords that describe their business in search engines and decide which keywords will lead to the displaying of advertisements of their company. Once the consumer sees an advertisement, they can tell, to which company the advertisement belongs and therefore there is no reason to speak of providing misleading information to consumers. The Consumer Protection Board also repeatedly encountered misleading advertisements that promised free delivery of goods. When it came to purchasing the goods, it became clear that additional terms and conditions 27
had to be met, for example, free delivery would be offered if the purchase amount reaches a certain sum, or the free delivery would not apply to some particular products. According to the Consumer Protection Board, this kind of advertising is not allowed, even if those terms are disclosed to consumers later. Such advertising has a misleading effect on the consumer even if the consumer does not follow through with the transaction, concerning which they were previously given misleading information. The position of the Board has been confirmed by the European Court of Justice, as it finds that the term “transaction decision” does not only cover the decision to acquire or not to acquire a product, but also what is directly related to the acquisition decision, in particular the decision to enter the store. Therefore, the term “transaction decision” includes pre-purchase and post-purchase decisions as well.
An example of a misleading advertisement, the shortcoming of which is the lack of information on the campaign period.
Advertisements of discount campaigns When advertising a range of discount prices, the trader has to be very careful and keep in mind that the discounted goods have to include proportionate amounts of products with higher and lower discount percentages. The main influencing factor of a consumer’s transaction decision is the upper limit of the promised discount range, i.e. the highest advertised discount percentage. For example, if a big discount or discount sale is advertised to clients, but it turns out at the store that only a fraction of the products at the store are actually discounted, that kind of a situation is considered to be a case of advertising that is misleading for consumers. For example, an advertisement 28
with the line “Up to 50% off on all items” means that all goods in the store should be reduced by up to 50%. The Consumer Protection Board issued a number of memoranda to entrepreneurs regarding the proportionality of discounted products when compared to the advertised discount. For example, one company had advertised a discount that included 400 items that were said to be discounted up to 60%, in reality, only 4 products were on sale at a 60% discount. In addition, this disproportionality is also illustrated by the fact that most of the discounted products were smaller and larger household appliances, whereas the 4 products on sale at a 60% discount were replacement straps for pulse watches, the prices of which were very low compared to the other discounted products to begin with. The Consumer Protection Board compiled instructions on publishing the sales and unit price and informing about selling at a discounted price. The purpose of these instructions is to draw attention to the requirements imposed by law concerning the disclosure of the price of the goods and to facilitate traders’ compliance with the requirements.
Advertisements directed at children Advertising in facilities for children According to the Advertising Act, advertising is prohibited in the rooms of preschool children’s institutions, basic schools, upper secondary schools and vocational schools. This requirement does not apply to the following advertisements: advertisements that provide instructions to children on how to behave in public spaces, advertisements concerning events and informal education activities for children, advertisements displayed outside of school hours when the venue is used for events aimed at adults. In terms of advertising aimed at children, no significant violations were identified in 2017; cooperation with education boards and heads of education institutions, which had been started in 2016, was continued. 29
Representatives of the Consumer Protection Board participated at information days for heads of schools and kindergartens in the Harju County with a presentation titled “Advertising in Establishments for Children”. One of the key words in improving the market is awareness raising among education leaders. Such cooperation was conducted due to previous complaints submitted to the Board concerning advertising materials distributed in schools and kindergartens. At the time, there were some cases where promotional gifts (bookmarks, notebooks, reflectors, etc.) and various coupons for gifts or discounts (Selver’s coupon for a free ice-cream, a discount coupon at the Baby Back eatery) where sent to establishments for children. There have also been cases of advertising food, i.e. distribution of product samples to children (Barni).
Children’s events with violent computer games According to section 25 of the Child Protection Act, it is prohibited to manufacture, show and disseminate to children printed matter, films, audio and video recordings and objects that promote violence or cruelty or include pornographic content. The aforementioned section is covered by the supervisory competence of the Consumer Protection Board, which received several complaints about a violent computer game demonstration at an event for children. Another such event was scheduled at the Kosmos IMAX cinema, where a youtuber who’s popular among the youth was supposed to present an extremely violent game “Outlast 2”. The target group of the event was minors and the Board sent a memorandum to the cinema to draw their attention to the current regulation and the need to ensure that no children would attend the event. The cinema cancelled the event, thereby raising the question of the legitimacy of the memorandum of the Board among the general public and
Screenshot from the game Outlast 2.
This case caused a lot of controversy among gaming enthusiasts and promoters in Estonia and brought about a great deal of media coverage as well. In this light, a petition of “We stand for Estonian e-sports” was started; signatures were collected for the protection of the organization of computer game competitions, which are considered to be e-sports, without taking into account the age limitations of the Child Protection Act for works that promote violence and cruelty. The organisers of the petition explained the necessity for it as follows: “The content of games does not carry any significant meaning in e-sports. Regardless of whether it is a shooter, football or card game, in e-sports a game is means for competition among players, requiring strategic thinking, teamwork skills, stress tolerance and reaction speed.” They also asked for clarifications from various ministries and the Chancellor of Justice. The Ministry of Social Affairs, under whose jurisdiction the Child Protection Act is, acknowledged that there is a practical need in society for greater clarity regarding the implementation and interpretation of section 25 of the Child Protection Act with regard to video games. 31
Both the Consumer Protection Board and the Ministry of Social Affairs received a wide range of questions regarding specific games and the organization of events related to games, for example, MängudeÖÖ (Gaming Night), Loading vol 2 LAN party; and the following games: Counter-Strike, Global Offensive, Unreal Tournament 2016 (PC), Mortal Kombat XL (PS4). In the aforementioned case, the Chancellor of Justice, Ülle Madise, was also convinced that the Consumer Protection Board had acted correctly: “Section 25 of the Child Protection Act stipulates that it is prohibited to manufacture, show and disseminate to children printed matter, films, audio and video recordings and objects that promote violence or cruelty or include pornographic content. The Consumer Protection Board as a supervisory authority has correctly interpreted that this prohibition also applies to video games.”
Gambling advertising In terms of gambling advertising, the Board received questions from entrepreneurs, complaints and conducted a few monitoring proceedings in order to eliminate breaches. For example, an advertisement for gambling was published at the terminal of the Port of Tallinn, which was not in line with the Advertising Act, and the advertisements were removed as a result of the consequent proceedings.
Involvement of bloggers and vloggers in marketing Advertising is increasingly relocating to various media channels. One way for introducing products and services is to work with bloggers and vloggers, in order to reach consumers through the social media content created by bloggers and vloggers. Of course, such forms of advertising are most appealing to younger target groups. Representatives of the Consumer Protection Board gave expert interviews for two bachelorâ&#x20AC;&#x2122;s theses at the University of Tartu. One thesis focused on communication between PR agencies and bloggers. The other one looked into brand cooperation on Estonian fashion and beauty blogs, focusing on whether and how such cooperation should be regulated. The main parts of the works consisted of interviews with bloggers, which included, among other things, questions about their practices in disclosing cooperation with brands and views on different ethical principles. Examples of questions asked during the expert interviews: â&#x20AC;˘
How to define advertisements on blogs and social media networks (e.g., sponsored videos and Instagram posts)? Are paid collaboration posts, for which bloggers are not paid in money, but receive products, gift cards or the like as payment, considered to be advertisements? Which cases are considered advertisements and which merely cooperation, what are sponsored posts and how should those be differentiated / explained to consumers? To what extent can the Advertising Act be applied in cases like these?
To what extent do you consider it necessary to create a single document, a code of ethics or a brand cooperation manual? Such a document would be aimed at bloggers and it would help, with principles stipulated in the Advertising Act, to regulate how advertising content is included in the posts. Where should such a document be published / made available / shared? Can a similar document be compiled for companies to give them instructions on how to create advertisements in cooperation with the content creators of new media? 33
To what extent has the Consumer Protection Board been working with topics related to advertising on social networks and sponsored content including the so-called influencers? (Influencer – a person who has acquired a certain following on social media and can therefore influence the consumer decisions of their followers.) Has the Board encountered specific cases linked to blogs, Instagram or Youtube?
The university students presented the results of their research during the Information Day of the Consumer Protection Board. In conclusion, it was concluded that there is no clear understanding of the current regulation in the field and that the responsibility concerning the content created and its effects are perceived very differently. In part, it was considered necessary to develop a single document with instructions and to comply with it, or to harmonize certain rules. Taking into account the practice of EU Member States, one likely option for Estonia is for the Consumer Protection Board to develop this kind of instructional materials.
Unaddressed advertisements AS Eesti Post has turned to the Board regarding different practices in the market of delivery services concerning the acceptance of the “Addressed mail only” sticker. As the Consumer Protection Board considers it important to take into account the consumer’s request to not receive unaddressed commercial material, a roundtable was held by the Board to discuss possible solutions concerning unaddressed advertisements and the acceptance of requests of not receiving unaddressed advertisements. Although it was agreed at the meeting that adherence to said principle by all market participants is necessary and hope was expressed that a corresponding written document of good will shall be signed in the near future, it was not done in 2017.
Consumer games The organization of consumer games is a widespread marketing approach, the format and content of which can vary greatly. People turn to the Consumer Protection Board in relation to consumer games quite often. Often it is a situation in which there is no direct consumer relationship – no goods or services are purchased (as would be the case with commercial lottery); instead, the prerequisite for participation in the prize draw is sharing, liking or commenting a specific post on social media. The number of complaints and notices related to such games has increased. How to determine what kind of regulation applies to a consumer game? First it is necessary to evaluate: • Is a contribution necessary to participate in the consumer game? • Is it possible to win something by participating in the consumer game? • Will the winner be chosen at random? If all three of these three features (contribution, chance, and winning) are present in the consumer game, it is considered to be commercial lottery. In other cases, it is just an entertaining consumer game. Commercial lotteries, the winning fund of which exceeds EUR 10,000 are subject to the Gambling Act. Although commercial lotteries with a winning fund of less than 10,000 euros are defined as gambling, the Gambling Act does not apply to such games. Unlike gambling, there are no restrictions set on the advertising of a commercial lotteries (except general requirements in the Advertising Act). Since consumer games do not have a specific legal regulation, their organisation and conduct should be based, first and foremost, on good commercial practice. The organised campaigns often create competitive arousal of consumers and thus they might essentially change the purchasing patterns of consumers. Therefore, it is essential to carefully plan and prepare the conditions of consumer games and advertising texts. Upon receipt of complaints from consumers, the Consumer Protection Board always assess possible violations of requirements arising from the Consumer Protection Act on a case-by-case basis. 35
Advertising of pyrotechnic articles Requirements set for the advertising of pyrotechnic articles were amended as of 4 July. In an advertisement for a pyrotechnic article, it is important to adhere to the requirements set for goods and services that require specialist knowledge, are technically complex or contain dangerous substances. Additionally, attention should be paid to the necessity to take into account requirements for behaviour when using pyrotechnic articles in a public place. Legislation does not stipulate the wording of compulsory information that has to be added to advertisement. It is important to ensure that the compulsory information is provided in a clear and easily readable font / easily followed tempo of speech, and fulfils the aims set by law â&#x20AC;&#x201C; to provide important information to the consumer. In cooperation with the Technical Regulatory Authority, the Consumer Protection Board sent a notification concerning the amended legislation and arising requirements to holders of activity licence of operating pyrotechnic articles. At the end of the year, the Consumer Protection Board inspected advertising of pyrotechnic articles on the basis of major media publications and there was a surprisingly low number of advertisements that did not comply with the requirements. Approximately 90% of the inspected advertisements included additional information required by the Advertising Act. However, violations were discovered on social media, where compliance with the requirements of the Advertising Act is mandatory as well. The Agency is pleased to note that both representatives of media publications and entrepreneurs themselves have turned to the Consumer Protection Board prior to the publication of advertisements to receive answers to additional questions in order to prevent the violating requirements of the Advertising Act.
Advertising Advisory Panel In 2017, the expert committee of the Advertising Advisory convened three times to counsel the Board in relation to advertising-related proceedings that required broader evaluation. In total, the Panel discussed 16 cases. Evaluations regarding urgent issues were also provided via email. Topics of the Advertising Advisory Panel in 2017
Misleading advertising 25%
Advertising of financial services Advertising of alcohol Advertising of tobacco
Members of the Advertising Advisory Panel are Olav Osolin, Anne-Liis Ostov, Meelis JĂ¤rvela, Heiki Abel, Andres JĂľesaar, Tiina Hiob, and Toomas Vara, who replaced Urmas Oru, long-term member representing the Association of Estonian Broadcasters. The topics discussed by the Advertising Advisory Panel is very diverse. For example, advertising of financial services, tobacco products and alcohol was discussed, as well as advertisements for various services, and, as usual, the basic requirements of the Advertising Act and the topic of potential misleading advertising. Also, assessed were the sign of the location of a waterpipe bar and a hanging part of an advertisement on the LasnamĂ¤e bridge as a potential violation of the Advertising Act.
Estonian Association of Marketing Communication Agencies (EAMCA): Marketing communication is on the rise. The unexpectedly rapid economic growth in 2017 also sped up business on the advertising market. The information volume aimed at consumers increased multifold. At the same time, there were discussions about the introduction of additional restrictions on advertising, which meant that advertisers and traders were forced to operate in a novel situation and conditions. It is important to companies in the field of marketing communication that the regulations applied would be unambiguous and easily understood. In 2017, we worked on ensuring better understanding of the amendments in cooperation with representatives of traders and the Consumer Protection Board in relation to issues arising from the amendment of the Advertising Act. As no useful solutions to the advertising restrictions have come up so far, we needed to draw more attention to the topic. First and foremost, we wish that advertisements that do not adhere to the legislation would not reach consumers. In 2017, we began debates concerning the requirements set for advertising financial services and discussed the nature of the so-called compound advertisements. 38
We will certainly continue cooperation with the traders and the Consumer Protection Board to better understand the regulations in force. Lola Tehver, CEO of the Estonian Association of Marketing Communication Agencies
Problematic topics in commerce Although the Consumer Protection Board has provided various guidelines to traders, not all of them are aware of the requirements imposed on goods, and a lot of violations are discovered during inspections. The following shortcomings have become apparent as a result of trade monitoring: • Price discrepancies (shelf vs register) Compliance with the requirements for displaying prices and fulfilment of sales requirements during sales of discounted goods. • Non-compliance to contractual terms and conditions of goods, for example, in relation to the quality or description of a product. • Technical equipment, such as household appliances, tools, devices, lack instruction manuals in Estonian or the manuals provided do not match the product. • Lack of labels in Estonian or problems related to translation. • Information about the time of submission of complaints and the warranty against defects is unclear and the trader has not understood the claim and the meaning of the warranty against defects.
Instruction manuals for technical equipment and household appliances The Consumer Protection Act requires that, in the case of technically complex products, traders provide consumer with instruction manuals in Estonian for the purposeful use, maintenance, installation, assembly and storage of the technical device. 39
Although, as a rule, goods have to be accompanied by an instruction manual in paper format, the trader can, upon agreement with the consumer, provide the instruction manual in some other format as well, e.g., by sending it to the consumer via email. If the product does not have an instruction manual and damages occur with the product due to lack of manual, the consumer has the right to file a claim for compensation to the company for damages arising from non-compliance with terms and conditions of the contract. Technical goods (household appliances, tools, technical products) sold at regular stores and web stores often lack instruction manuals in Estonian. This has been confirmed by the number of corresponding notices sent to the Board, in addition to those shortcomings found during inspections. It is not uncommon for traders to provide consumers with an instruction manual that does not correspond to the purchased product or a specific model, so that the product cannot be used for its intended purpose. If a trader promises to send a specific instruction manual to the consumer after the purchase, in reality, the consumer may receive a translated instruction manual after quite some time has passed. However, over the years, consumers have become more knowledgeable, and therefore they are able to request Estonian instruction manuals from traders after making a purchase, if the lack of a suitable instruction manual has become apparent only after getting home with the purchase. Price discrepancies in stores: displaying prices and discount sales In autumn 2017, the Consumer Protection Board carried out a price inspection in Estonian stores the goal of which was to get an overview of the accuracy of pricing information by comparing prices on shelves and at cash registers and those of discount products that had been advertised at certain prices. The need for such a large-scale price inspection arose because the Board receives consumersâ&#x20AC;&#x2122; enquiries concerning retail sales prices of goods nearly 40
every day. From January to 24 September 2017, the Board received 200 such enquiries. Consumers’ enquiries mainly include information about price discrepancies in the sales area and at the cash registers. Consumers also provide information on misleading promotional campaigns – when the consumer is not able to buy goods at the discount percentage that was advertised, or when the goods advertised in commercial materials have been sold out from the stores before the end of the campaign period. The price inspection at retail stores was conducted on 25–26 September, an additional price inspection was carried out during 10–13 October and 17–18 October. The Board inspected 77 shops of major store chains. Up to 25 items of food and/or industrial and/or construction products were selected in each store, the prices of which were recorded at the store’s cash register and the official conducting the inspection transaction received a purchase receipt. Price discrepancies were found more or less in every store chain, but not in every store. Cases of misleading customers were detected in 41 stores. The highest number of such cases were found in stores that sell construction goods. Although the price discrepancies on the shelf and at the cash register can seem small for a single transaction, 10–20 cents per item, this certainly affects the trader’s reliability in the eyes of the consumer. Traders often explained the price discrepancies with having little time to replace price tags after a discount campaign had ended, the Board, however, finds this to be a sign of a systemic problem in the proper organisation of work. Inspections showed that price discrepancies could reach 10% of the basket of goods purchased. For example, a basket of goods that cost 144 euros, gained another 14 euros at the cash register due to price discrepancies. Additionally, one store chain was found to charge 1 extra cent per item at the cash register for every customer. The Board also found other mistakes, for example, that a consumer was not able to get a clear understanding of an item’s current price when looking at the price tag, and some goods did not have a price displayed at the point of 41
sale. Prices have to be displayed in a way that they are clearly visible and can be understood unambiguously. Total of price discrepancies found during the price inspection (by stores):
There was no price displayed for the goods Detected price discrepancies at the point of sale (total number of goods) (number of goods)
Examples from stores. What is wrong in the pictures?
The price information has been displayed as if it were the sales price of the Ostumรถll campaign, and should therefore apply to all consumers, regardless of whether or not they have the Meistriklubi card. The sales price of the halogen lamp should have been 1.60 euros during the Ostumรถll campaign for all consumer; when in reality, that prices was only valid for holders of the Meistriklubi card and the official who conducted the inspection transaction was charged 3.50 euros for it. In this case, consumers were likely going to assume that, in connection with the Ostumรถll campaign, the price of the product is 1.60 euros and the regular price is 3.50 euros. However, the product was not part of the Ostumรถll campaign and was meant to be purchased at the discount price by Meistriklubi cardholders or at the regular price by everyone else. The pricing information of the product should not have been displayed as if it were a product of the Ostumรถll campaign. 43
It is not easy for the consumer to assess, while at the store, which price is valid for them. The phrase “soodushind Säästukaardiga” (discount price with the savings card) and price 2.09 euros (both in large font) give reason to assume that the price is valid for holders of the Säästukaart. However, that price is actually meant for holders of the Säästukaart Pluss. The price that is valid for holders of the Säästukaart is 2.35 euros instead; this has been marked in very small font at the lower left-hand corner. The lower right-hand corner is a big mess of numbers and letter, which makes it very hard for consumers to understand whether the regular price is 2.09 or 3.29 euros.
When the word â&#x20AC;&#x153;allâ&#x20AC;? is used, the aspect at hand has to apply to all products mentioned. No exclusions or exceptions are allowed. In the case of a long-term campaign, the new price has to be indicated separately for each product.
If a sign indicates that all the products are sold at a 20% discount, then there should be no exclusions. Additionally, this sign included no information about the fact that the discount only applied to Partnerkaart holders. This was revealed only at the cash register.
This photo was taken from the consumerâ&#x20AC;&#x2122;s eye level. The price has been placed so high up that the consumer is not able to see the price information. In addition to the discounted price, the label also included the productâ&#x20AC;&#x2122;s regular price, which the consumer canâ&#x20AC;&#x2122;t see either.
In stores where price discrepancies were found, store managers/employees provided explanations. The main explanation given was that the prices of goods are changed in the system and for several hundreds of products at once, so it is simply not possible to change the physical price labels of all products affected right away (e.g. by the next morning). On the basis of the results obtained during the price inspection, the Consumer Protection Board turned to traders to provide personal feedback in order to direct the attention of traders to their violations. The Board also aimed to find a solution that could be enforced by traders in order to ensure correct prices for consumers, as well as matching prices on the shelves and at the cash register. All traders provided feedback. As the price inspection covered a very small percentage of goods (about 25 different goods per store) and when we take into account the total number
of goods sold at stores, the Consumer Protection Board will continue price inspections at stores in 2018 as well. At a discussion with traders organised at the Consumer Protection Board, the Board emphasised that when seeking solutions for the problem, traders ought to keep in mind that the offering and sale, or marketing in any other manner, of goods and services to consumers has to follow good trade practice and be honest with regard to consumers. As most consumer complaints concern periods during which stores are replacing their campaign prices, the instructions for displaying price information were updated to provide clearer directions to entrepreneurs. It is important for traders to know that: • price information has to be marked on the goods, its sales packaging or in close proximity of the goods; • sales prices and unit prices have to be displayed for all goods sold at the point of sale, including those on display on the window at the point of sale, if those items are not display decorations and can easily be removed and sold to consumers; • price information has to be placed in a location and with such measurements that it is easily visible to consumers; • the regular price has to be easily visible; • in the case of campaigns for long-time customers (holders of loyalty cards), it should be ensured that the special price for long-time customers would not be too overpowering visually, the consumers should be able to see the regular price easily as well. • The Consumer Protection Board recommends, when displaying price information, that the design of price labels and signs be uniform for all different types of goods, in order to avoid misleading the customer. The guidelines also clarified what entrepreneurs should pay closer attention to during discount sales: • the advertisement should clearly disclose to the consumer to which products the discount applies; 47
• price manipulation, i.e. the artificial increase of prices prior to the discount period, is considered unfair towards consumers; • in the case of a discount, the final cost of the goods has to be clearly displayed; • a discount cannot last for an indefinite period as a permanent discount would essentially mean that the discount prices have become regular prices. The Consumer Protection Board also did the same during the information campaign organised from 13 November until 10 December, which is discussed above in this yearbook.
Alcohol As mentioned above, in the conclusion of advertising topics, an Act on the amendment of the Alcohol Act and the Advertising Act was approved in 2017; the amendment also influence the sale of alcoholic beverages. Section 40 of the Alcohol Act will be supplemented with subsections 12 and 13. The following changes are taken into account during supervision conducted by the Consumer Protection Board: • Alcoholic beverages should now be placed separately from other goods at stores. The Riigikogu supplemented the provisions of the presentation of alcoholic beverages, which brought about extensive discussions in society, as follows: Alcoholic beverages should not be placed in such a way that the consumer will inevitably come into contact with them when visiting a store, and the display of alcoholic beverages should not be noticeably visible from the rest of the sales area, unless this is not reasonably feasible to meet these requirements due to the size of the sales area. • A requirement was added according to which the display of alcoholic beverages should not be noticeably visible from outside the point of sale.
Both amendments will come into force on 1 June 2019. The meaning of “noticeably visible” has been the focal point of abundant discussions. The explanatory memorandum of the Act sets out that visibility is an absolute concept and “noticeably visible” is a more flexible term, which expresses the aim that alcohol would be displayed less. These are concepts that will enforced further by administrative practice.
Display of alcohol prices at the point of sale Traders often turn to the Consumer Protection Board to get answers to questions concerning the sales price of alcohol, in particular, they want to know whether the sales price of alcoholic beverages may be displayed as the former price and the new price. According to subsection 43 (1) of the Alcohol Act, the selling price of alcoholic beverages has to be published during retail trade. According to subsection 43 (2) of the same Act, the selling price of alcoholic beverages is not allowed to be displayed in such a way that the former and new selling price of alcoholic beverage are simultaneously visible to the consumer. The Consumer Protection Board has also received questions regarding the display of prices at self-service registers – whether or not the self-service controller can provide both new and old prices for alcoholic beverages. The Consumer Protection Board found that the self-service controller could not be considered part of the register as fixation of a retail sale transaction of alcoholic beverages via a self-service controller does not allow the retailer to ensure that the requirements for restrictions on the consumption of alcoholic beverages are met. The requirements for selling alcoholic beverages are more stringent than, for example, those applied to the sale of food. Based on the information displayed on the self-service controller, the consumer has the opportunity to inspect the product and in case of doubt about the suitability of the product, the consumer is able to cancel the transaction. If it were an extension to the register, then it would be necessary to also verify sections 45, 46 and 47 of the Alcohol Act. 49
Additionally, pursuant to subsection 43 (2) of the same Act, the sales price of alcoholic beverages is not allowed to be displayed in such a way that the former and new selling price of alcoholic beverage are simultaneously visible to the consumer. If the self-service controller displays the former and new price of an alcoholic beverage, then both prices of the beverage are simultaneously visible to the consumer. Therefore, the Act does not specify through which technological means the sale price is displayed, but prohibits the disclosing of the sales price in a way, in any case, that the consumer can simultaneously see the former and new selling price of the alcoholic beverage.
Tobacco Monitoring of the Tobacco Act In 2017, the field of tobacco supervision was characterised by amendments to the Tobacco Act, which were adopted a year before and which amended the Act with requirements on the labelling of electronic cigarettes. In this regard, the Consumer Protection Board, together with the Health Board, sent a letter to market participants directing their attention to amendments to legislation. The task of the Consumer Protection Board is, among other things, to check compliance with the requirements set to electronic cigarettes and refill containers thereof concerning information and accompanying leaflet. We wrote about those requirements in greater detail in the yearbook of 2016. To give a few examples here, rules have been set for packaging, the size and composition thereof. For example, for each sales packaging and the grouped packaging directly covering the sales packaging has to include a list of all the ingredients contained in the product in descending order of the weight, an indication of the nicotine content of the product and the delivery per dose, the batch number, and recommendation to keep the product out of the reach of children. The following health warning shall appear on the front and back external surface of each sales packaging of nicotine-containing pre-filled electronic 50
cigarettes and refill containers and the grouped packaging directly covering the sales packaging: â&#x20AC;&#x153;See toode sisaldab nikotiini, mis on kergesti sĂľltuvust tekitav aineâ&#x20AC;? (This product contains nicotine, which is a highly addictive substance). During supervision, it has to be inspected that the following information appears on the front and back external surface of each sales packaging of nicotine-containing pre-filled electronic cigarettes and refill containers and the grouped packaging directly covering the sales packaging: 1. a list of the ingredients contained in the product in descending order of the weight; 2. an indication of the nicotine content of the product and the delivery per dose; 3. the batch number; 4. recommendation to keep the product out of the reach of children.
The Tobacco Act was amended once more during 2017 when the Act amending the Tobacco Act was adopted on 13 December. A change that is significant to handlers is that the availability of electronic cigarettes will be restricted by law more than before. A ban on domestic distance sale of tobacco products or related products will be added to the current ban on distance sale across state borders. Additionally, it is not allowed to sell refill liquids of electronic cigarettes the flavour of which differs from regular tobacco. A visible display and presentation of a tobacco product brand or brand of a product related to tobacco products at the point of sale of said product is prohibited, with the exception of: 1. at a retail point of sale that is specialised on selling tobacco products or products related to tobacco products, provided that the products sold and the brands used along with them are not visible outside the point of sale; 2. on an international ship; 3. at a retail point of sale operating at the closed territory of a passenger port or airport; 51
4. commercial information, compliant to section 10 of the Trading Act, provided at a retail point of sale of a tobacco product or product related to tobacco products, in written form concerning the name and brand or price of the tobacco product or product related to tobacco products. The amendment will come into force on 1 July 2019. During the first half of 2017, the Consumer Protection Board conducted 3 inspections at the points of sale of electronic cigarettes. Two of those inspections were conducted in cooperation with the Tax and Customs Board. The main problem identified was that salespeople of points of sale mix different filler fluids together according to clientsâ&#x20AC;&#x2122; wishes. In autumn 2017, 6 points of sale were inspected. The main problem detected was the lack of information leaflets on sales packaging. No significant violations concerning the volume of tobacco products set out in the Tobacco Act were found during the inspections â&#x20AC;&#x201C; no disposable electronic cigarettes or disposable cartridges of electronic cigarettes sold were found to exceed the 2 ml limit. Nicotine-containing refill containers of electronic cigarettes were also compliant with legislation, i.e. these did not exceed a volume of 10 ml. The Consumer Protection Board reminded sellers of electronic cigarettes and refill liquids that subsection 162 (4) stipulates that sales packaging of pre-filled electronic cigarettes and refill containers shall include a leaflet with information on: 1. instructions for use and storage of the product, including a reference that the product is not recommended for use by non-smokers; 2. information regarding contraindications; 3. warnings to specific target groups; 4. possible adverse effects; 5. addictiveness and toxicity; 52
6. contact details of the undertaking importing these products into Estonia for transfer or the undertaking manufacturing tobacco products in Estonia. The most common questions asked by entrepreneurs are about the labelling of tobacco products and placement of general warnings on health risks. In order to help traders understand the legal requirements better, the Board has compiled answers to relevant frequently asked questions.
Food products In addition to the Consumer Protection Act, the Consumer Protection Board also exercises state supervision over restrictions imposed by the Food Act. The activities of 2017 in this area were characterized by the penetration of ecommerce into the food market, consumer information and food quality topics in various European Union countries. As the rapid development of technology allows for food to be ordered online as well, this creates new situations that the stateâ&#x20AC;&#x2122;s supervisory authority has to intervene when necessary. The Consumer Protection Board has received complaints regarding the mediated sale of alcohol in situations where the company does not have the corresponding entries in the register of economic activities. Clause 40 (1) 12) of the Alcohol Act stipulates that retail sale of alcoholic beverage by e-commerce is permitted through shops or catering establishments belonging to an undertaking specified in the information in the register of economic activities. In this case, the Consumer Protection Board has analysed whether companies that deal with the sale of alcohol through an online platform and who also provide delivery services are subject to clause 40 (1) 12) of the Alcohol Act. If a company provides an information society with a service that informs the consumer of offers of catering companies and enables money transmission 53
and transport services, then it is considered an intermediary that connects service providers with users using an online platform and facilitates communication between the client and the provider. It is also important to display food-related information in compliance to legislation in retail stores. Consumers have turned to the Consumer Protection Board with concerns that the information provided was inadequate as the allergen content in the products was not displayed. Due to the combined effect of the Consumer Protection Act and the Food Act, the trader and the manufacturer should provide the consumer with correct information about the properties of the food. The information provided should not mislead the handler or the consumer. Information regarding substances or products that can cause allergies or intolerances, should be listed in the list of ingredient, by adding a reference to a substance or product listed in Annex II of the Regulation 1169/2011. In doing so, the name of the substance or product should be emphasised in the printed form by clearly distinguishing it from other ingredients listed, for example, by using a different font type, style or background colour. In Annex II, substances that cause allergies or intolerances include, among others, peanuts and products made from peanuts, as well as various other nuts and products made from nuts, except for nuts used for making alcoholic distillates including ethyl alcohol of agricultural origin. In addition to the requirements for food information, consumers have also turned to the Board in relation to the labelling of food packaging, regarding which the Board has explained that labelling on the sales packaging of a product is not considered as advertising and that an advertisement on or affixed to the sales packaging is not considered to be a label. Additionally, advertising is not allowed to encourage people to engage in activities that harm their health or the environment. The question of quality came to prominence as a new measure in the food sector of several European countries. Food products in different European regions are believed to vary in their quality level. Member States have expressed their desire to obtain food products of the same quality as in 54
Western Europe. Consumers have noticed that some products are of a different quality in their home country than the same products of the same brand made by the same manufacturer in the neighbouring country. Food labelling has been compared in Latvia, Hungary, Slovakia, Lithuania and the Czech Republic. The European Commission has expressed its support for Member States who wish to combat unfair trading practices in this area. In Estonia, the Consumer Protection Board, in cooperation with the Ministry of Rural Life and the Veterinary and Food Board, has set up a working group to find out the extent of this problem in Estonia. However, it should be noted that regardless of the coverage of the issue abroad, the Estonian Consumer Protection Board has not received any corresponding complaints.
Estonian Traders Association: Economic growth in 2017 was the fastest of the five previous years The rapid economic growth of 2017 was driven by export, which is a very positive development for the economic situation in general. Trade was the main driver of economic growth in the second half of the year, which in 2016 was the main driving force behind economic growth. According to Statistics Estonia the added value of trade, which experienced a decrease during the second half of the year, only increased a total of 1.8%. Growth in sales revenue was the largest in the field of selling cars and the most significant decline in sales revenue occurred in food stores, which are still negatively affected by border trade. The growth of consumption was hampered by an increase in prices, which in 2017 was the fastest across the past four years. According to Eesti Pank, the cost of living in Estonia increased by 3.4%, which was largely due to an increase in input prices and was most significant in the food products segment. Prices of dairy and alcohol increased significantly. In 2017 saw a strong expansion of e-commerce in terms of food products. Large store chains developed their online stores and took to offering home deliveries. On the digitization front, the network of self-service registers was expanded, in 55
addition to grocery stores, gas stations took to using this solution as well. Contactless payments were also well received by the people in Estonia, and so traders were quick to incorporate this payment option in their stores. Shopping centres were updated and expanded. Solaris Centre has undergone renovation, Ă&#x153;lemiste Centre announced of an expansion, and renovation works were started at Kristiine Centre and Eeden Centre in Tartu. Construction of the new building of Kaubamaja was confirmed, work on the new building will start in a few years. Retailers opened up a lot of new stores and closed some of the unprofitable ones. Retail facilities are still expanding and growing in number, which will surely continue over the following few years. During the year, a few significant brand exchanges took place, and a couple of well-known players left the market. A & O, Konsum and Maksimarket were merged under the name of COOP, Statoil became Circle K., SeppĂ¤lĂ¤ went bankrupt, and Marks & Spencer left Estonia. At the same time, Lidl is expected to enter the market of food products in 2020. During the year, Rimi got a lot of praise for developing conscious business and the developer of the Balti Jaam Market was highlighted for creating a beautiful and modern shopping environment in the heart of Tallinn. The state sent quite a few worrisome signals to the trade sector in 2017. Ideas were tossed around concerning all sorts of mini fees, which would have increased unfair competition on the market and wasted resources on administrative burden. Measures were implemented with regard to Acts that significantly alter the sales of alcohol and tobacco. Investments to trade brought about by those changes were significant, the content of the requirements was unclear to both market participants and state authorities. In the new year, the trade sector is expected to have a calmer time, allowing for dealing with topics like underemployment, increasing of efficiency and modernisation of retail facilities. Nele Peil, CEO of the Estonian Traders Association
The main shortcomings of e-commerce Unjustified exclusion of the right of withdrawal Often, traders exclude the right of withdrawal based on justifications that are not at all compliant with legislation. For example, some traders might assume that the basis for exclusion of the right of withdrawal is much broader than it actually is according to legislation, or they might come up with their own justifications for not allowing consumers to use their right of withdrawal from a transaction. They do this to try and avoid too many products from being returned, or to avoid the returning of products that cannot be sold again. The law stipulates specific exceptions in which the consumerâ&#x20AC;&#x2122;s right to withdraw can be ruled out. If the situation does not fall under any of those exceptions, the trader has no right to exclude the right of withdrawal. The most classic cause for exclusion is in cases where the product has been used more than just for viewing, i.e. not the way a consumer could do in regular stores. For example, a consumer hasnâ&#x20AC;&#x2122;t just tried the ordered blouse on, instead, the item has traces of wear, it is dirty or has had its labels removed. In such cases, the trader has no right to exclude the right of withdrawal, but the consumer is obligated to compensate the loss of value of the product to the trader. It is also possible that the consumer will be required to reimburse the total value of the product. Traders try to interpret the exceptions in legislation in a broader sense than intended and to fit in situations that are not covered by the exceptions. For example, for hygienic reasons, the right of withdrawal is completely excluded in the case of lingerie. However, a provision sets out that, for hygienic reasons, it is possible to exclude the right of withdrawal in the event that the package of a product has been opened and the hygiene of the product has been compromised. If the trader has packaged the product in a transport package in such a way that the product is not in a separate package once the transport package has been opened and the product is not returnable due to reasons of hygiene, it is debatable whether the trader has the right to exclude the right of withdrawal in the case of such a product, as the trader themselves
has not ensured, from the very beginning, that the hygienic risks would not occur in relation to the product. The Consumer Protection Board has compiled numerous memoranda and notices of initiating administrative proceedings, which have directed the attention of traders to violations of law in providing pre-contractual information contrary to the Law of Obligations Act. Often, the trader initially disagrees with the Consumer Protection Board, but after more detailed explanations, will amend the conditions to comply with legislations.
Displaying misleading stock and consequences thereof Often, e-traders disclose how many products are available and in stock. The consumer orders the product according to the information published on the website, however, during assembly of the order, the trader discovers that they have run out of the product, can no longer order it from the supplier and therefore withdraws from the contract. There are also cases where the trader promises to deliver the product during a certain period, but since they donâ&#x20AC;&#x2122;t have the item in stock, they have to order it from a partner, which in turn extends the waiting time for the consumer. However, information displayed to the consumer on the website has indicated that the product is in stock and the product will be delivered to the consumer in due time. Such cases are misleading trading practices because the information displayed to the consumer is incorrect and the consumer has made a purchase decision based on the incorrect information. In order to avoid such a situation, the trader is required to display the actual availability of the product on the product information page of their website. If the trader is continuously unable to display the correct product information on the website in real time, it may be necessary to notify the consumer that they should contact the trader directly prior to making an order to confirm that the product is available. In order to avoid misleading consumers, the trader has to be as clear and unambiguous as possible when disclosing information, so that the consumer would be able to make a well-informed purchase decisions. 58
The worst cases are those in which the trader has displayed information about the availability of a product and a lot of consumers have ordered it. The trader, however, was unable to fulfil the orders as the supplier no longer supplies the trader with the product. When consumers withdraw from a contract, the trader is not able to pay them back for the products the orders of which they have cancelled, as the sums prepaid by the consumers have already been directed to other channels. One of the most problematic cases dealt with the activity of Crazydeal Group OÜ (www.crazydeal.ee), the proceedings of which were continued in 2017. The Consumer Protection Board made two inquiries to the trader because the trader offered products for sale on their website that they could not supply and thus withdrew from contracts. However, the trader did not refund the money paid for the goods that were left undelivered to the consumers. The Board received a total of over 1,000 complaints from consumers. With the first precept, the Consumer Protection Board ordered the trader, inter alia, to stop using the misleading trading practices, which were based on non-delivery of goods to customers during the delivery period, not refunding the consumers’ money within the 14 days after the receipt of the cancellation application, provided by law. The Board also required the trader to remove such products from their range concerning which the entrepreneur had reasonable doubt that they might not be able to deliver to the consumer within the set delivery time. The trader failed to comply with the precept, and so the Consumer Protection Board imposed a penalty of 4,800 euros on the trader. The Consumer Protection Board also notified the police about the offence committed, but no criminal proceedings were initiated. As the website was still accessible for consumers, the Board compiled another precept to the trader and obliged them to make the website www.crazydeal.ee inaccessible to third parties. The trader did not comply with the precept, therefore the Board got Zone Media OÜ, who had registered the domain and who then blocked access to the website, involved in the proceedings. The misdemeanour proceeding against Crazydeal Group OÜ continued. 59
Unfortunately, CrazyDeal’s activities also brought about a large number of cross-border complaints sent to the EU Consumer Centre, as the company had directed its activities to other Baltic countries as well. In 2017, problems also arose in relation to Arb Trade OÜ (www.palmtek.ee). The trader displayed their product inventory on the website as if the products could be ordered and purchased. The goods were purchased by many consumers, but due to supply problems, the trader could not fulfil their contracts with consumers. The trader also failed to refund the purchase sums of the products. In addition, there was a problem with the non-compliance of the products to the terms and conditions of the contract. The trader accepted the products into warranty repair, but did not actually repair them nor return the products. The Consumer Protection Board requested clarifications regarding the situation in the precept sent to the trader. The trader gave vague answers, due to which the Board compiled an administrative procedure for the trader and provided them the opportunity to eliminate the violation without a precept. The trader made changes to the inventory of products displayed on the website, but later notified of having filed for bankruptcy. The Board terminated the administrative proceeding.
Difficulties business have with solving consumer complaints In 2017, there were also cases in which, in the event of problems, traders failed to provide appropriate customer service to address consumer complaints and to provide information to consumers. This means that traders cannot be contacted via the customer service number disclosed on the website and that they do not respond to consumers’ emails. The cases where the trader’s place of business displayed on the website is fictitious are not rare either, due to which consumers are not able to go to the place of business of the trader or they always find a closed office. One such case concerned the activity of IShop.ee OÜ (www.ishop.ee; www.ilike.ee). The trader failed to take into account the increasing consumer 60
demand, which prevented the trader from delivering the goods in due time or rendered them unable to deliver any goods at all. The Consumer Protection Board received enquiries from consumers who notified the Board that it was not possible for them to contact certain traders via the customer support number in order to resolve a complaint, and that they did not receive replies to their emails or the email replies did not answer their questions. The Board initiated an administrative proceeding to direct attention to the violation of law. The trader explained that, due to increased orders, there were unexpected problems in delivering goods and because of this, consumers were more likely to contact the trader, and therefore customers could not be served in due time. The trader complied with consumer demands, no new enquiries were made to the Board, and the administrative proceeding was terminated. The aforementioned traders Crazydeal Group OĂ&#x153; and Arb Trade OĂ&#x153; also failed to resolve consumer complaints.
If the Board receives a lot of enquiries concerning one specific trader in a short period, it is important to assess the risks to consumersâ&#x20AC;&#x2122; economic interests and to consider notifying the general public already at an early stage of the proceedings in order to prevent any further damage. In 2017, the Consumer Protection Board disclosed public notices regarding five web stores: www.crazydeal.ee, www.palmtek.ee, www.rulood.com, www.fokus.ee, www.baumax.ee. In these cases, many enquiries were submitted during a short period of time. Therefore, the Board found it necessary to inform consumers, as the websites continued to receive orders in a situation where they could not deliver the goods to consumers and there were cases in which consumers who ordered the goods had not been returned their money. The information provided to the public can be based not only on a large number of enquiries, but also on the price of the goods sold by the trader, the conditions of sale, trading practices and many other things that may mislead consumers and constitute a serious threat to their economic interests. On the 61
other hand, the impact of informing the public on the company itself has to be assessed, and the risk and the measure should be proportionate, so as not to violate the rights of traders.
Ordering traps Ordering traps are a situations in which consumers are given the impression that they will be able to try products or services for free or for a minima fee. When in reality the consumer is, by making an order, agreeing to the terms and conditions of a contract, pursuant to which they will have to pay recurrent payments for a product or service. Consumers are not clearly and understandably shown during the ordering stage that by filing an order, the consumer is also concluding a contract. In 2017, our colleagues in Sweden turned to the Consumer Protection Board regarding problems with companies registered in Estonia who were directing their business to Sweden and Denmark through their websites. The enquiries by Swedish colleagues were driven by the activities of U.P.S.F OÜ (www.autopriser.net). The company offered a car valuation service, which required the consumer to enter their data and that of their car and press the button “Evaluate my car – yes, thank you”. The trader had not indicated the function button with clear wording that would have made it unambiguously understood that by clicking on the button the consumer is concluding a contract with the trader and agreeing to the terms and conditions of the contract. The Consumer Protection Board started an administrative proceeding and pointed the violation of law out to the trader in a notice sent to them, i.e. that the function button was not correctly marked and gave them the opportunity to eliminate the violation by marking the button correctly. The trader did not agree with the Consumer Protection Board’s position and the Board considered it necessary to oblige, with a precept, the trader to change the marking of the button. The trader did not comply with the precept. The Board set a penalty for the trader twice, after which the trader changed the marking of the button. In parallel, a court proceeding, which 62
ended with the trader withdrawing their application, was also underway involving the trader. Swedish counterparts of the Consumer Protection Board also turned to the Board in relation to activities of Nordicpartner OĂ&#x153; (www.carprice.no), who offered car valuation as well. The trader had not added correct wording to the order button, which would have explained to the consumer that they were taking on a payment obligation by clicking on said button. Nordicpartner also operated on the Finnish market (http://www.autonhintaarvio.fi/). The Consumer Protection Board initiated an administrative proceeding to direct attention to the violation of law and, if necessary, eliminate the violation of law. The trader did not follow through with this and so the Board made a precept to the trader to oblige them to do so. Nordicpartner did not comply with the precept in due time, which resulted in the Board imposing a penalty of 500 euros to be paid by the trader. The trader changed the wording of the button on the website www.autonhintaarvio.fi, but not on the website www.carprice.no, which resulted in imposing another penalty 1,000 euros to be paid by the trader. The trader paid the penalty and changed the wording on the website www.carprice.no as well.
Disputes with companies from third countries The EU Consumer Centre has received enquiries regarding goods ordered from a third country, e.g., from China and the United States. Consumers often assume that the web store they are purchasing goods from is a trader that has been registered in the European Union. While in reality, the parcel will be dispatched from China or elsewhere outside of the EU and will include similar or totally different products than the consumer ordered. Therefore, the consumer faces a problem if the trader outside of the EU does not want to resolve consumer complaints. A domain address ending with .co.uk or .nl does not necessarily mean that the web store has been register in the UK and the Netherlands. Neither can 63
you assume the registration country just from the EU member state address displayed on the web store site. For example, a UK trader www.eugus.com is allegedly registered in United Kingdom, Purfleet, 49 Joslin Rd, Purfleet, which, according to Google maps, is a private residence. In reality, the website was registered in the U.S. or Panama and only a few days old. The Board and the EU Consumer Centre have explained to consumers that they have no competence for supervisory activities in the case of traders from third countries. Neither is it possible for consumers to contact the Consumer Disputes Committee when the trader has not been registered in Estonia. Consumers can only be helped if the traders they have disputes with are traders registered in the European Union. In such a case, the consumer will have the opportunity to contact the EU Consumer Centre, where they will be assisted in contacting the Consumer Protection Board of the country where the trader has been registered. The issues consumers have been faced with are receiving wrong goods and being unable to return those goods or the consumers have not been delivered the goods at all. The fact that third country traders are not able to communicate effectively can make matters more difficult. Often, consumers have not checked the information provided on the website, for example, the legal name, email address and telephone number of the seller might be missing from the website. At the same time, consumers have become more cautious by asking the Consumer Protection Board for advice when assessing the credibility of a website from a third country. The Board has explained to consumers that, when assessing the reliability of a trader, it is important that the trader has disclosed their business name and contact data on the website. If the trader has not done so, it will not be possible to conduct a background check on the trader. It is also important to familiarize yourself with the terms and conditions of sale and to critically evaluate what is promised on the website.
Advice for e-traders, including an e-commerce guide The Consumer Protection Board has organised training events for e-traders in framework of â&#x20AC;&#x153;SuunanĂ¤itajaâ&#x20AC;?, which have been discussed more specifically 64
in the yearbook. In 2017, “Suunanäitaja” was focused on explaining the obligation to disclose pre-contractual information to e-traders. In autumn, the Consumer Protection Board also carried out a web seminar, during which the Board explained to e-traders what is a contract signed via communications devices (distance contract) and what kind of requirements a contract like that is subject to. In order to provide traders with a more compact overview of requirements, the Board reviewed and substantially supplemented the e-commerce instructions. E-traders are also advised in the context of day-to-day operations when the trader turns to the Consumer Protection Board with a request for clarification. Often traders wish to know how to understand one or another situation or what the trader’s right and obligations are in a particular situation. For example, a trader turned to the Consumer Protection Board to find out what kind of records ought to be kept on returned goods. Traders have also enquired about the format in which they are required to provide invoices to consumers when they operate a web store.
Account administration fees in the osta.ee environment In 2017 Allepal OÜ, which manages the auction portal osta.ee, changed the sales conditions of site and introduced a passive account management fee for customers of the website. The portal considered the following activities to be active behaviour: cash withdrawal from the e-account, bidding in auctions, making purchases, adding sales. If no operations have been made in the account for 12 months, an account management fee will apply. Consumers turned to the Consumer Protection Board with problems regarding the introduction of the fee, i.e. the option of deleting an account is difficult to find and the account cannot be deleted independently or initiated on the portal. Consumers also complained that the minimum value limit of 1.60 euros was applied to withdrawing money from the e-account, while some users had a much smaller balance. Consumers also wondered if the ban on creating a new account in the future is a standard and legitimate practice for the company. 65
The Consumer Protection Board met with representatives of Allepal OĂ&#x153; to clarify how consumer rights are ensured after enforcing the modification. Based on the information gathered, the Board issued a memorandum to the trader, pointing out that the trader did not correctly inform consumers about the modification of the sales conditions. It turned out that the trader provided the consumer with a newsletter, which ended with a note about the price list being expanded. However, this notice might have been confusing to consumers, as they were not told in greater detail what exactly was changing about the price list. The Consumer Protection Board advised the trader to inform the consumer more clearly and in detail about the changes. If the consumers had been properly informed about the changes in account administration fees, they would have been able to make an informed decision to close their account or accept the change. The trader accepted the remarks. In addition, the trader replied that the technical changes, which will enable the consumer to close their account independently, will be completed by 30 September of the same year.
Miracle products Products that are advertised to cause miraculous healing, but the actual effect of which is not known, are considered miracle products; furthermore, the use of such claims about healing is prohibited. There are a lot of websites online that sell products by promising all sorts of miraculous effects. Companies selling such products, as well as their websites, are usually registered in third countries. They set up websites in Estonian, which gives the site credibility in the eyes of local consumers, who tend to assume that the website is that of an Estonian trader. Such websites often sell supplements, weight loss pills, hearing aids, bunion
treatments or equipment, anti-impotence medications, etc. If something seems too good to be true, then it probably is. The products sold are alleged to completely treat diseases for which traditional medicine has not yet found solutions or the sites claim that their product is more efficient than legal medications. Often the websites will include recommendations by doctors and users of the product, but when searching for said people by their names, it’ll be impossible to find them or the personal data used will belong to someone who has nothing to do with the product. Consumers have turned to the Consumer Protection Board and the EU Consumer Centre for the reason that the goods they have ordered haven’t been delivered or they haven’t been able to use the products or return them to the trader. For example, a consumer ordered a hearing-aid device with three ear buds of different sizes. None of the ear buds fit the consumer, so they were unable to use the product and told to send it back to Poland. The Consumer Protection Board can monitor traders who are registered in Estonia and it is possible to turn to the Consumer Disputes Committee if the trader involved is registered in Estonia. When ordering a product, it is important to determine what company you’re ordering from, how to contact them and what are the sales conditions set out by the trader. The situation is made more serious by the fact that such companies have started to advertise their product in print media, i.e. advertisements of the products have been displayed in publications of Eesti Meedia, Õhtuleht and elsewhere. The products are primarily aimed at elderly consumers, as they are more easily influenced. The advertisements did not mention the manufacturer’s name or contact information; the products could be ordered over the phone or by filling out an order form on their website. The consumer paid for the product to the courier in cash. If the product was ordered over the phone, then there was no reply from the same phone number once a complaint had arisen in relation to the product. The Consumer Protection Board contacted media outlets asking them for the name and contact data of the company that ordered the advertisements. It turned out that the company who ordered some of the advertisements was registered in the Comoros, which is an archipelago in the Indian Ocean. By 67
explaining to media publications that the advertised products had not been delivered to consumers or that there are no sales permits regarding the products, Eesti Meedia stopped publishing the relevant advertisements; whereas, Ekspress Grupp took the Boardâ&#x20AC;&#x2122;s explanations about the advertisements into account, but did not promise, in clear terms, not to publish those advertisements in the future. The aforementioned websites include various products, all of which have to have sales permits. Therefore, it was necessary to include the Health Board and the State Agency of Medicines in order to assess whether the products sold were in the category of pharmaceuticals or medical devices and whether the company could sell them. The Health Board assessed the compliance of the hearing aids to legislation and found that they were non-compliant medical devices. The Health Board sent a press release to the media advising consumers to avoid buying the product. The Consumer Protection Board informed consumers via the media, explaining what miracle products are and how to recognise the website of a scam and miracle product.
Communication services Pursuant to consumer complaints and complaints and changes to legislation, in 2017 the focus was in the field of telecommunications services was primarily on compliance with the prohibition of unfair trading practices, contracts and matters thereof. The Consumer Protection Board has checked the standard terms of the communications service contract, how pre-contractual information is provided to the consumer, and how the unilateral modifications of the communications service contract took place. Special attention was paid to telephone numbers with special rates, including the provision of short numbers in customer service and the provision of content services via an SMS service number. 68
Inspection of the standard terms of the communications service contract The Consumer Protection Board conducted monitoring proceedings in relation to the standard terms of the communications operatorsâ&#x20AC;&#x2122; contracts as it appeared that several terms caused unreasonable harm to consumers.
Proceedings linked with contractual penalties The Board started several monitoring proceedings with respect to contractual penalties imposed by communications companies. Clause 42 (3) 5) of the Law of Obligations Act stipulates that in a contract where the other party is a consumer, a standard term is considered to be unfair if, in particular, the term prescribes that the other party shall, in the event of nonperformance of the partyâ&#x20AC;&#x2122;s obligations, pay an unreasonably high contractual penalty to the party supplying the term or an unreasonably high predetermined amount of compensation for damage or other compensation, or the other party is deprived of the opportunity to prove the actual size of the damage. The Board finds that a communications companyâ&#x20AC;&#x2122;s standard term, which sets out that the consumer has to, in the case of an early withdrawal from a communications service contract, pay a fixed amount of contractual penalty without taking into account the time of withdrawal from the contract, is unreasonably harmful to the consumer. According to the Consumer Protection Board, a contractual penalty should also take into account performance of the contract by the consumer and the required contractual penalty cannot be the same in each case. For example, if the consumer withdraws from a 24-month contract after 3 or 22 months have passed from the time of concluding the contract. In the latter case, the consumer has fulfilled the contract for the majority of the predetermined time and that should be taken into account. In addition, contractual penalties should be as close as possible to the damage actually caused by the consumer. In the standard terms of the communications companies, the
aforementioned provisions had not been taken into account when imposing contractual penalties. The Board also addressed other issues in relation to standard terms. For example, when the communications company changes the terms and conditions of the contract unilaterally, if the consumer does not accept the changes and withdraws from the contract, the consumer should immediately buy the phone and pay all the instalment payments, and the consumer will lose any concessions, i.e. the instalments will be calculated on the basis of the full price of the phone. According to the Consumer Protection Board, that is not legal. Such a situation inhibits the consumerâ&#x20AC;&#x2122;s right to, pursuant to subsection 99 (3) of the Electronic Communications Act (ECA), withdraw from a communications service contract when the consumer does not agree to modifications of the contract, as the consumer might not be able to pay for the device in full right away. In addition, the abolition of the concession corresponds to characteristics of a contractual penalty, demanding of which is prohibited under subsection 99 (3) of the ECA. As a result of proceedings, the standard terms have been made compliant with legislation. With one company, the Board has agreed that the calculation of the contractual penalty will be made proportional and the concession will not become invalid in the case of the consumer not agreeing to the communications companyâ&#x20AC;&#x2122;s unilateral changes to the contract, the consumer will withdraw from the communications service contract, but will also continue to pay for the phone in instalments. The Consumer Protection Board will continue to monitor the terms and conditions related to contractual penalties.
Fees required for withdrawal from a distance contract Mobile network operators also demanded fees similar to contractual penalties in situations where consumers wanted to use their 14-day right of withdrawal. Consumer enquiries revealed that operatorâ&#x20AC;&#x2122;s customer service clerks made great offers for service plans with affordable smartphones over the phone. 70
Consumers who agreed to those offers, were sent a smart device to their home via courier. Later, however, a few consumers found that they did not want the smart device and decided to use their legal right to withdraw from the distance contract within 14 days. However, consumers were in for a bad surprise when it turned out that the withdrawal is accompanied by a financial liability. Pursuant to legislation, any agreement or term or condition of a contract, that makes it harder to use the right f withdrawal or that is linked to the payment of a preliminary deposit or a contractual penalty, is null and void. A company may, in the event of a consumerâ&#x20AC;&#x2122;s withdrawal from the contract, submit a claim to the consumer only if the condition of the returned device has deteriorated and its value has decreased, and in the case of direct costs involved in returning the item, unless otherwise agreed upon. In this regard, it is important to know that the consumer has no obligation to bear the costs of returning the item if the trader has not informed the consumer of this beforehand. As a result of the monitoring proceedings carried out by the Consumer Protection Board, the submission of unwarranted and unjustified claims for payment to consumers was ended.
Standard terms for the payment of monthly fees in full when changing a plan and when concluding a contract The Consumer Protection Board also analysed the standard terms related to the exchange of plans and the payment of monthly fees in such a situation and the obligation to pay a monthly fee in full upon termination of the contract. The Board discovered that the communications company uses a standard term, pursuant to which the consumer is required to pay a full monthly fee for the month during which the contract is terminated, regardless of the date. The company also applies, in the case of changing a plan, the monthly fee of the more expensive plan during the entire month of the change of plan. The Consumer Protection Board found that such standard terms cause unreasonable harm to consumers. 71
As a result of the proceeding, the communications company has confirmed that it will bring its business in line with legislation and will, from now on, calculate fees payable by consumers in proportion to the time of consumption of the service.
Maximum term for the communications service contract The Board has conducted and initiated proceedings in relation to the duration of a contractâ&#x20AC;&#x2122;s fixed term. On the basis of subsection 96 (5) of the ECA, the initial minimum period for a fixed-term communications service contract with a consumer shall not exceed two years. According to enquiries received by the Board, there have been cases where companies signed 36-month contracts with consumers. In one case, the communications company has modified its activities to comply with legislation and confirmed that it no longer concludes 36-month contracts with consumers; however, proceedings concerning another company are still underway.
Standard terms concerning the restriction of communications services and fees payable for the duration of restriction On the basis of complaints received by the Consumer Protection Board, Tele2 allowed consumers to adhere to payment schedules to pay their debts, but retained restrictions on the services for the duration of the payment schedule and demanded full payment of monthly fees. The Board found that such terms and conditions cause unreasonable harm to consumers and, as a result of the proceedings by the Board, Tele2 changed its payment schedule procedure. Tele2 confirmed that it allows for the services to be used in the extent of the monthly payment for the duration of the payment schedule and that it will lay down an additional limit for using services. The communications service shall be restricted at the clientâ&#x20AC;&#x2122;s request. In particular, invoices should be paid on time in order to avoid debts and additional costs. The trader does not have a direct obligation to postpone the payment of debt or to allow it to be paid in instalments. However, when 72
concluding such an agreement (payment schedule), the requirements set out in legislation should be observed, and the terms and conditions agreed upon cannot cause unreasonable harm to the consumer. In a situation where a payment schedule has been concluded and an agreement has been reached in terms new payment deadlines and the consumer complies with the obligations taken on by themselves, it is not legal to keep the communications services of the consumer restricted and at the same time demand a full monthly payment. Otherwise, the consumer would have to pay for services that they have not actually received and the circumstances of the consumer who is in a difficult financially situation would thereby become even more burdensome. Communication services should be restricted only at the discretion of the consumer in order to avoid additional financial obligations. If communication services have been restricted, the consumer should not be required to pay a full monthly fee. The conditions related to the restriction of the service and the demand for pay are also in other communications companies and a similar procedure has already begun concerning Telia.
Checking compliance with the prohibition of using unfair trading practices and with the obligation to notify consumers Automatic implementation of a day ticket for internet In the first quarter, the Consumer Protection Board completed the monitoring proceeding related to the implementation of internet day tickets. In the course of the proceeding, it became clear that some consumers who did not have an internet service in their monthly plan had a day ticket for internet applied to them outside of a plan, although there was no agreement with the consumer in this regard. As a result of the proceeding, internet daily tickets were eliminated and 100 MB of data was added to all voice plans that do not include internet service. A recalculation was made for consumers who had signed contracts that did not include an agreement concerning daily tickets. 73
Roaming data usage in situation when it has been switched off on the phone On the basis of consumer complaints received by the Board, monitoring proceedings were carried out concerning two companies, since consumersâ&#x20AC;&#x2122; phones used data roaming when the option had been switched off. It turned out that in a sensitive 4G data network, the technical traffic of data is considered to be data usage, which is also reflected in the invoices submitted to the consumer. As a result of the proceedings, the companies adjusted their technical systems so that these small, so-called spontaneous data sessions would no longer be taken into account. Consumer complaints were reviewed on a case-by-case basis.
Regulation of roaming services and issues of clarity of the related information On 15 June 2017, a new regulation on roaming services in the European Union entered into force, which enables consumers to choose an appropriate mobile communication services plan. It allows them to call and send messages in the European Union, Norway, Liechtenstein and Iceland on the basis of the same terms and conditions as in Estonia without paying any additional fees. The Board received enquiries from consumers after the changes had been enforced, which revealed that the consumers were not aware that calls made from Estonia to foreign countries, including those in the EU, were not considered roaming, but international calls instead. Therefore, the Board turned to communications companies, on several occasions, to request that they take this into account when advertising and providing services and to provide the consumer with clear, necessary and accurate information to enable the consumer to make an informed choice. In several cases, communications companies corrected consumer information as a result of this. 74
Providing pre-contractual information to the consumer, referring to terms and conditions of the contract and making those available at mobile operatorsâ&#x20AC;&#x2122; company stores. The Consumer Protection Board conducted an inspection of providing precontractual information, referring to and ensuring access to terms and conditions. It turned out that two (Telia and Tele2) of the three mobile network operators has serious shortcomings. During inspection transactions, communications companies failed to provide sufficient precontractual information, as set out in section 141 of the Law of Obligations Act and did not mention the standard terms annexed to the contract. The availability of standard terms annexed to the contract was not ensured at company stores. The Board will continue monitoring proceedings in this matter.
Restricting the 14-day right of withdrawal from contract In the last months of the year, complaints grew more frequent about consumers not being able to use their right of withdrawal in the case of contracts concluded over the phone. According to consumersâ&#x20AC;&#x2122; enquiries, the agreement on the terms and conditions of the contract and regarding the conclusion of the contract had been reached over the phone and only the signing of previously prepared contracts took place at company stores, in some cases, the selection of the colour or model of the phone included in the contract also took place there. No negotiations or discussions about the terms and conditions of the contract took place at the company stores. The Consumer Protection Board initiated the proceedings and directed the attention of the communications company to the fact that the 14-day right of withdrawal applies even in a situation where the consumer concludes both the communications service contract and the device purchase contract (which are linked) over the phone, even in a situation where the choice of model or colour of the device is selected at the company store.
In accordance with the Law of Obligations Act, if the consumer exercises their right of withdrawal from a distance contract, the consumer shall also be deemed to have withdrawn from the secondary contract related to the distance contract, which, in this case, is the sales contract of the device. The choice of colour or model of the phone in a company store cannot be considered as negotiations concerning important terms and conditions. Therefore, the sales contract of the device cannot be considered to have been concluded at the company store, if the phone models on offer have been listed to the consumer over the phone and the consumer has agreed to conclude the contract. In order to avoid any future disputes and to adhere to their diligence obligation in terms of fulfilling consumer protection related requirements, the communications company agreed to change their telemarketing procedures. In the future, regardless of how the customer receives the device and what has been agreed upon during the telemarketing call, the right of withdrawal applies in all cases, including in a situation where the customer chooses the device at the company store.
Unilateral amendment of terms of contract At the start of the year, monitoring proceedings, which were based on amendments to the subsections 99 (3) of the ECA enforced on 13 June 2016, concerning communications companies that had not altered their standard terms of contracts to comply with legislation were continued. Due to the amendment to legislation, the consumer and trader were required to specifically agree (in the contract) on the mode by which the trader shall notify the consumer of planned unilateral amendments of contract terms. The Consumer Protection Board finds that consumers have to, first and foremost, be given the opportunity to choose between receiving notifications via email or regular post â&#x20AC;&#x201C; drawing from the declaration of intent set out in the General Part of the Civil Code Act and the regulation of unfair standard terms set out in the Law of Obligations Act. A notification that fully corresponds to legal requirements can be sent to the consumer along with
an invoice. Notifying consumers of changes merely via a website, which was allowed on the basis of the previous ECA, is no longer allowed. As a result of monitoring proceedings, all communications companies corrected their standard terms so that they comply with legislation, and experience shows that the market has been streamlined in this respect. In several monitoring proceedings carried out in 2017, no unilateral modifications to a communications service contract were detected and consumers have received individual notifications of changes separately or with personal invoices. However, it should be noted that one monitoring proceeding is still ongoing. In connection with the amendments to the regulation on unilateral modification of a communications service contract, the Board also updated the corresponding guidelines.
Telephone numbers with special rates The Consumer Protection Board continued complaint-based monitoring activities in relation to companies who provided a phone number with a price rate, which is higher than regular, for consumers who wish to contact them in relation to questions about contracts. For example, a short number the calls to which usually cost 0.23 euros/min when calling from the Telia Eesti AS and the Tele2 Eesti AS networks, and 0.30 euros/min when calling from the Elisa Eesti AS network. Pursuant to article 21 of Directive 2011/83/EU of the European Parliament and of the Council on consumer rights (hereinafter the Directive), Member States shall ensure that where the trader operates a telephone line for the purpose of contacting him by telephone in relation to the contract concluded, the consumer, when contacting the trader is not bound to pay more than the basic rate. This Directive has been transposed into Estonian legislation with amendments of the Law of Obligations Act, which were enforced on 13 June 2014. Subsection 281 (3) of the Law of Obligations Act provides: â&#x20AC;&#x153;If a trader allows a consumer to contact the trader for communicating messages or expressions of will relating to a contract or in connection with other 77
circumstances relating to the performance of the contract by calling the phone specified by the trader, the trader may not demand that the consumer make an additional payment for it.â&#x20AC;? Agreements which derogate from the provisions of this section to the detriment of the consumer are void, on the basis of subsection 4 of the same section. In the Court of Justice preliminary reference proceedings C-568/15 (concept of the basic rate), of 2 March 2017, in which Estonia issued an opinion, the Court found, just as Estonia, that the term â&#x20AC;&#x153;basic rateâ&#x20AC;?, included in article 21 of the Directive, has to be interpreted in a way that the fee for a call, which is related to a concluded contract and which has been made to a support phone line of the trader, cannot exceed the fee for calling a regular geographic landline or mobile phone number. As a result of monitoring proceedings, entrepreneurs have improved their activities, so that they now comply with the law, by providing a phone number with a regular price rate for consumers who wish to contact them in relation to questions concerning contracts.
Periodical charged content services In addition to monitoring activities concerning voice service numbers with special rates, the Board also conducted monitoring proceedings in relation to SMS short numbers with special rates. The Board receives enquiries concerning the periodical paid content services quite often. These are services that have a weekly or monthly fee, and which periodically (e.g. once a week) offer, to those who have signed up for the service, new mobile content of entertaining nature (e.g. ringtones, background photos, horoscopes), which are offered via the aforementioned SMS short numbers. Consumers are billed for the services through communications companies. Consumers sign up for these services due to unawareness. In most cases, these services are advertised as an opportunity to win a new phone in a prize draw, play mobile games, receive a personal horoscope or IQ test results. There have been cases where consumers are invited to sign up for the service after filling a satisfaction survey compiled on another company. In addition, 78
there have been cases where the content service has been joined due to a phone virus. The terms of service and cost information are usually shown on the website in a small, grey font that the consumer may not always notice. Service providers are mostly cross-border companies, often the companies are from third countries, such as China or the Seychelles. In the case of third countries, the Board does not have coercive measures to regulate the activities of entrepreneurs. In terms of this problem, the Board mostly organises awareness raising activities among consumers and negotiates with companies of third countries. However, constructive cooperation has also been conducted with communications companies in situations where it is obvious that the content provider has committed fraud. Work has begun on updating and amending the guidelines for the provision of content services.
Technical Regulatory Authority: Gone are times when the use of mobile internet abroad had severe effects on the consumer’s wallet. Instances where it is necessary to make changes that affect the consumers of the entire European Economic Area are very rare. Even rarer among those are changes that have a positive effect on the consumer’s wallet. The year 2017 was special in this respect – on 15 June, a new roaming regulation entered into force in the European Union, which stipulated prices for the use of mobile telephone services abroad. The principle applied now is that people should be able to use services abroad at the same prices they do at home. The times in which switching data communication on abroad meant made a serious dent in the consumer’s wallet are long gone, at least in the European Economic Area. Pursuant to the new regulation, the retail prices of mobile roaming services fell significantly in the European Union, as well as in Norway, Liechtenstein and Iceland.
The maximum prices allowed for roaming calls are 3.8 cents/minute (one and a half times the previous price), 1.2 cents for a roaming SMS (a two-fold price drop) and 9.24 euros/GB for data roaming (a six-fold decrease). This was a fairly complex task for communications companies as they had to reorganise the provision of their services. They had to assess what the crossborder data usage volumes are likely to be, whether the price drop can lead to losses, whether there is a need for additional fees, etc., as the concept of prices back home could differ across the EU. The Technical Regulatory Authority had the competence to implement the regulation at the so-called wholesale level of communications companiesâ&#x20AC;&#x2122; communications service, but the regulation also resulted in several issues raised by consumers. Service provision in terms of plans offered to consumers also required reorganisation. To this end, we invited the experts of the Consumer Protection Board, who attended various joint meetings as well as meetings with each of the communications companies, to participate at an early stage of the process. Looking back today, we can say that the change was implemented in a very smooth manner for the Estonian consumer. One could say that this was a great example of public and private sector cooperation, where all the details regarding the implementation of legislation were discussed in the form of open dialogue. We are glad to see that the smooth multilateral cooperation eventually lead to benefits for the consumer. A big thank you to our colleagues at the communications and finance department of the Consumer Protection Board! Oliver Gailan, Head of Communications and Media Services Department at the Estonian Technical Surveillance Authority
Product and service safety Consumers have the right to demand and receive products and services that are safe to their life, health and properties. They should be safe for the consumer and their surroundings. The need for more efficient monitoring is increasing, because new products and services are added to the market daily. The Consumer Protection Board monitors compliance with the requirements of the Product Conformity Act and sub-acts thereto. In addition, the Board coordinates the functioning of the RAPEX system on the national level by being its contact institution in Estonia and dealing with customs cooperation. In the field of product and service safety, the Consumer Protection Board also has the competence to conduct monitoring activities concerning leisure activities. The input for the work plan that is drawn up for each year is made up of regulatory requirements, enquiries received by the Board, information received from RAPEX on dangerous products, and the results of joint projects, market testing and product testing.
Entrepreneurs’ awareness of product safety In addition to supervisory activities, the Consumer Protection Board also contributed to raising awareness among entrepreneurs. The “Suunanäitaja” event held in spring 2017 focused on sales requirements, safety and marketing of children’s products. There were 65 participants at the information day. The discussions at “Suunanäitaja” touched upon the safety and labelling of children’s products, RAPEX and the requirements for the sale of children’s products via online store. In autumn, the “Suunanäitaja” events, which focused on the topics of sales requirements, safety and marketing of children’s products, were organised in Narva (with simultaneous interpretation); and the “Suunanäitaja” events 81
focusing on the rights and obligations of e-traders were organised in Tallinn. There was a total of 85 participants. The number of enquiries submitted to the Consumer Protection Board by entrepreneurs increased in 2017. This was largely related to the arrival of new products on the market, such as spinners, and issues related to playful childrenâ&#x20AC;&#x2122;s books were also topical.
Safety of products One of the focal fields of the Consumer Protection Board, in terms of product safety, is the safety of products meant for children, i.e. primarily toys. The Board conducts monitoring regarding retail traders of toys, during which attention is paid to labelling in Estonian and its compliance to requirements, the existence of CE marking and warnings. In addition, products are tested to determine their compliance with safety requirements. In 2017, the Board carried out 69 inspection visits to check the labelling of toys at toy stores, 42 cases of which led to discoveries of violations. A total of 2,500 toys were inspected. The main violations were the lack of proper labelling or lack of instruction manuals in Estonian. Cases, in which warnings in foreign languages on the labelling of products have been translated into Estonian only partially, are not rare. The Board also discovered toys without the CE conformity marking. A total of 20 toys were tested, 2 of which proved to be dangerous due to excessive content of phthalates and sound volume. The Consumer Protection Board notified other EU countries of toys that were found to be dangerous and taken off the market through the RAPEX system. The Consumer Protection Board also participated at the Market Surveillance Project JA2015 of EU Member States, organised in the framework of the PROSAFE (Product Safety Forum of Europe), with a total of 17 market surveillance authorities. The project focused on the safety of plastic toys â&#x20AC;&#x201C; chemical risks such as phthalates, short-chain chloroparaffin, bisphenol A, polycyclic aromatic hydrocarbons and some heavy metals in products. Prolonged exposure to the aforementioned substances can lead to various health problems, such as hormonal and developmental disorders, allergies, 82
etc. The project included dolls, inflatable toys, books and bath toys, which were taken for testing from regular stores and web stores. In the framework of the project, 15 plastic toys were taken for testing from stores in Estonia (including 5 web stores), of which 1 plastic doll was found to be dangerous. As analysis of project data is ongoing, the final report of the project has not yet been completed and a further overview of the project results cannot be presented at this time. In 2017, the Consumer Protection Board also inspected personal protective equipment, focusing on the labelling of sunglasses. The Board carried out 14 inspections of personal protective equipment and found violations in 9 cases. A total of about 60 products were inspected. With regard to sunglasses, the Board sent a notification letter of to major retail stores and optics stores, which drew the attention of traders to the compliance with labelling requirements for the sale of sunglasses. Since the role of sunglasses is to protect the wearer’s eyes from UV radiation, the labelling should provide consumers with information about the level of protection that the products provide. This information should be placed on the frame, label or packaging of the sunglasses, the CE marking is also compulsory. In 2017, the Consumer Protection Board participated in a joint project “Safety at Adventure Parks in the Baltic States”, which, as its name suggests, focused on safety at adventure parks. In particular, the safety and compliance to requirements of personal protective equipment (carbines, harnesses, gloves, etc.) used at adventure parks were inspected. You can read more about this project below in the section concerning safety of services. The safety of personal protective equipment was also checked during inspections of other leisure activity services; the main issues found were the wear and care of such equipment. Traders do not follow manufacturer’s instructions for use and maintenance of products. The Consumer Protection Board usually also focuses on reflectors. In this regard, the Board made announcements through the media to raise awareness among consumers about the requirements set for reflectors and on how to choose a reflector that performs its task efficiently. 83
Regarding general product safety, attention was paid to consumer products and they were tested for chrome VI content in leather products and nickel content in fashion jewellery. A total of 17 products were tested and 4 of them were found to be dangerous. Entrepreneurs were obliged to withdraw the dangerous products from the market and recall them from consumers. In addition, information on dangerous products found on the market was published through the Rapid Information Exchange System RAPEX. Rapid Information Exchange System RAPEX Product safety is one of the main priorities across the entire European Union (EU). The extensive internal market of EU requires that particular attention is paid to product safety, as the free movement of goods means that products that are sold in one country may move to other member states very quickly. The Rapid Information Exchange System RAPEX has been created in order to ensure that supervisory agencies of member states could exchange information about dangerous products discovered on the market. The Consumer Protection Board is the contact establishment of this system in Estonia. In 2017, member states have exchanged information through the RAPEX system concerning 2,201 products.
The most common alerts sent through RAPEX in 2017 700
600 500 400
Clothing and footwear
Countries use RAPEX to exchange different types of notifications. In 1,860 cases, countries sent notifications about products that may be dangerous to consumers. In 150 cases, notifications were submitted about products that do not pose a serious threat, but for which restrictions regarding the release into the market apply in the EU member states. Additionally, 191 notifications with informative content were sent through RAPEX. In order to assess the safety of products, the Consumer Protection Board took 37 products from retail sales in 2017. The products collected were toys, which were then tested for chemical content (including phthalates) and detachment of small parts; leather products were tested for chromium VI content and fashion jewellery was tested for nickel content.
Tested products and products that were found to be dangerous: Basis
The Product Conformity Act and sub-acts thereto
Testing of toys, including: Chemical compounds (including phthalates) in toys Sound pressure Mechanical and physical properties (small parts detached, sharp edges, etc. in toys for children under the age of 3) Chromium VI in consumer products Fashion jewellery
Number Compliant of tests
Noncompliant to Dangerous requirements
Examples of products that were determined to be dangerous during testing:
Traders who carried products that were found to be dangerous during inspection in their inventory were obligated to remove the respective products from sale on the basis of a precept. The precept included the obligation to inform consumers regarding the risks of using the product as well as the option of returning the product. In the case of a serious and highrisk products, other member states were notified through the RAPEX system as well. 86
Notifications from the Estonian Consumer Protection Board and the Health Board concerning dangerous products sent via RAPEX in 2017
Clothing and footwear (chromium VI)
Cosmetic products (prohibited substances, microbiological indicators) Toys (phthalates, small detached parts, sound volume) Fashion jewellery (nickel)
As RAPEX works bilaterally, in addition to transmitting notifications by themselves, national supervisory authorities should also check notifications sent by other to better monitor their internal market. In 2017, a total of 125 products, which were reported in RAPEX, were found on the Estonian market. The replies sent to the Committee mainly concerned motor vehicles (103 notifications), childcare products (8 notifications) and toys (6 notifications). The Consumer Protection Board considers it important for companies to be more aware of product safety. To this end, entrepreneurs should periodically monitor information sent into RAPEX concerning dangerous products and they should also have a clear understanding of how the system works. The topic of RAPEX and product safety was discussed at the “Suunanäitaja” training days aimed at entrepreneurs. It was also written by the Consumer Protection Board in the Teataja publication of the Estonian Chamber of Commerce and Industry. 87
Cooperation with the Estonian Tax and Customs Board Cooperation with the Tax and Customs Board is also important in the field of product safety; the Board exchanges information and conducts cooperation, concerning the determination of product safety of goods imported to the European Union, with the Tax and Customs Board. Information exchange primarily involves toys, childrenâ&#x20AC;&#x2122;s products, clothing and textiles, footwear and personal protective equipment for leisure activities.
Notifications sent by the Tax and Customs Board regarding goods seized at customs (total of 106) 2% 9%
Toys Other industrial goods
Personal protective equipment Childcare products
In total the notices sent to the Tax and Customs Board were linked to 81,274 products, of which the Consumer Protection Board decided to ban from the market 41,706 products (75 notices), 39,557 products (32 notices) were allowed on the market after having detained at customs, and concerning 11 products (4 notices) the Consumer Protection Board did not have the right to make a decision. The main reason behind the ban was the absence of a necessary conformity mark. The key phrase for customs cooperation in 2017 was fidget spinners. All EU countries considered them as toys and the popularity of products also led to 88
active import. Since the labelling of such products was often not in line with the requirements stipulated in the EU (lack of CE marking, model numbers, warnings, etc.), the products were directed to additional inspection. Documents submitted by the importer/manufacturer to prove the productâ&#x20AC;&#x2122;s compliance to requirements often failed to meet the requirements or the documents could not be linked to a specific product. Therefore, such products could not be considered as compliant to requirements and were banned from being released into free circulation.
Safety of service Consumers are offered more and more options for leisure activities, which gives people the chance to fill their free time with activities that are more or less extreme. Given the popularity of such services, this topic is also relevant in the light of the competence of the Consumer Protection Board. In 2017, the Board focused on the safety of services offered by adventure parks and inflatable trampolines.
Adventure parks From April to September 2017, a joint monitoring project for adventure parks in the Baltic States was organised for the first time. The project was launched as rope courses are becoming increasingly popular in the Baltics, and therefore the need to increase the safety of adventure parks has also become more topical. The aim of the project was to conduct a thorough inspection of matters related to adventure parks and to determine minimum requirements for ensuring safety at adventure parks. A total of 6 adventure parks were inspected, two in every country. The OtepĂ¤Ă¤ Adventure Park, which is one of the oldest adventure parks, and the Pirita Adventure Park, which also provides night time rope course services (nighttime climbing), were inspected in Estonia. The adventure parks that were involved in the project received feedback on any shortcomings and on what they had done well. The overview sent to the
adventure parks allows them to compare themselves with other service providers, learn from their mistakes and find great solutions. During the inspection, the documentation, construction and safety of rope courses, the existence and compliance to requirements of the personal protective equipment used, as well as the information provided to the consumer, contracts, etc., were examined in depth. In conclusion, the boards found that the state of the inspected adventure parks was mediocre. There is room for improvement in all areas of improving safety: the use of personal protective equipment, information provided to consumers, contracts in foreign languages, etc. According those conducting the inspections, some of the service providers did not pay sufficient attention to the safety of the provided service, as some parks had not made any improvements after the opening of the park. Additionally, it became evident that rope courses and personal protective equipment did not receive sufficient maintenance, and a lot of violations were found in this area. For example, worn-out personal protective equipment was used, as well as damaged rope course elements (ladders, platforms, etc.) and safety equipment (padding on trees). Some examples of shortcomings discovered: worn-out personal protective equipment
rope course devices that were worn-out and rusty
On the basis of this data, the boards collected, analysed and compiled joint guidelines for safety in adventure parks. The completed document is titled “Safety Guide for Adventure Parks” and it is accessible on the Consumer Protection Board’s website under the section of guidelines for entrepreneurs. In addition, a self-monitoring questionnaire was compiled, so that entrepreneurs have an opportunity to self-assess the current state of their adventure park and make possible improvements. Naturally, such a joint project also benefitted supervisory authorities, the experts of which were able to share experiences with one another.
The aim was to increase awareness among service providers of trampoline services The Consumer Protection Board continued its work related to inflatable trampolines and focused on awareness raising activities as well. The main problem in this area is that service providers are not aware of and do not follow manufacturers’ instructions for the use and maintenance of products (including personal protective equipment) used when providing their services. Similarly, the entrepreneurs do not think about how to ensure the safety of consumers prior to offering the service, neither do they put a lot of consideration into what kind of information should be provided to consumers, what kind of information the manufacturer has given on the use, installation and maintenance of various products, how to proceed in the case of an accident, etc. In spring, the Consumer Protection Board organised an information day for entrepreneurs who provide services with inflatable trampolines and 20 representatives of companies participated in the event. At the meeting, entrepreneurs got an overview of the results of the previous year’s inspection, the main problem areas and explanations of the requirements arising from the legislation. The meeting also gave entrepreneurs the opportunity to discuss their concerns. In spring, before the start of the season, the Consumer Protection Board sent a notification letter to service providers, local authorities and fair organisers, directing their attention to the most significant aspects of ensuring safety 94
concerning inflatable trampolines. Additionally, the Board also ordered some press releases to increase awareness of safety related matters among consumers and entrepreneurs. The Consumer Protection Board also went to fairs and other open air events to inspect inflatable trampolines. Violations were discovered in four instances during the seven inspections that were conducted. In one case, the violations of the safety requirements detected were so severe that the Board issued a precept to immediately suspend provision of the service.
Finances As in the past year, financial service advertising was one of the most important topics in the financial sector in 2017. A general inspection of adherence to requirements of standard terms of consumer credit contracts, precontractual information and responsible lending was also continued. In addition to other topics in the financial sector, the Consumer Protection Board also focused on collection service companies and insurance; the Board expressed their opinion concerning the good practice of travel insurance prepared by the Estonian Insurance Association. In September 2017, monitoring of gambling advertising was added to the monitoring of the financial sector; whereas, it had previously been covered by another department at the Board. In terms of collection service companies, the Board monitored how the reimbursement of collection costs is calculated and how consumers are notified of their debts. The main problem seems to be the submission of unfounded claims. A collection service company is obligated to prove that it has the right to demand the fulfilment of an obligation from the consumer, i.e. the payment of their debt and, in the case of a late payment, a fine for delay. As a result of the inspection, all companies confirmed that consumers are able to demand base documents and those will be sent to them by email or regular post, according to the consumerâ&#x20AC;&#x2122;s request.
Advertising of financial services The largest number of monitoring proceedings in the financial sector are related to advertising of financial services. As the advertising of consumer credit was prohibited in television and radio programmes, the Consumer Protection Board began, in addition to its usual monitoring activities, paying attention to advertisements broadcast on television and radio as of mid2017. Despite the ban, there are still matters related to advertising financial services that require attention. As a result of the ban, trademark and reputation advertisements, which are generally qualified as advertising of financial services, and sponsored notices that are not considered advertising for the purpose of the Advertising Act, are growing in numbers. Advertisements of financial services are mainly posted on the internet, often on such news portals as postimees.ee, Ăľhtuleht.ee and delfi.ee. Also popular for this purpose are social media sites, for example, in the second half of 2017, the Consumer Protection Board found dozens of financial service advertisements that violated the Advertising Act on Facebook. The topic of compound advertising was also raised in the second half of the year; the question at hand was whether or not such ads should comply with the requirements for advertising of financial services. Compound advertisements are advertisements where information is disclosed both concerning goods and financial services. The Board finds that in the case of such advertisements, it is compulsory to adhere to restrictions of advertising of financial services, as an advertisement cannot include and advertisement of another person, product or service, if the advertisement of such a person, product or service is prohibited at the given time, place or manner of disclosure. In a situation where restrictions on the advertising of certain services are set out in the legislation, it would not make sense to allow for exemptions for compound advertisements. Any other interpretation would be unjustifiably expansive and would not take into account neither the advertising restrictions nor the aim of exceptions thereof. As part of the monitoring activities, the Board met with umbrella organizations in order to improve cooperation and explain the provisions stipulated for advertising of financial services. The Board met with the Estonian Leasing Association, the Estonian Association of Marketing 96
Communication Agencies, the Estonian Traders Association, the Estonian Association of Foreign Media Companies and the Estonian Chamber of Commerce and Industry. Indicative guidelines were prepared in cooperation with the Financial Supervision Authority, to provide instructions for compliance with the requirements of advertising of financial services, which came into force in January 2018. Advertising of financial services is one of the areas of monitoring in which boards have shared competencies. Therefore, a joint and uniform clarification of requirements and understanding of expectations is also necessary from the point of view of market participants.
Consumer credit In 2017, the general monitoring of standard terms stipulated for providers of consumer credit was continued. During the year, the Board monitored the terms and conditions of contracts of a total of 28 credit providers and intermediaries. As a general remark on shortcomings in standard terms, one can mention the following: 1.
The general terms and conditions of a contract did not include the withdrawal time of a credit contract related to residential property. Prior to the Amendment Act enforced on 21 March 2016, it was not possible to withdraw from a mortgage credit contract, but after that date, a withdrawal period of seven days was stipulated for such contracts. The general terms and conditions stipulated a different procedure for early withdrawal and amount of compensation than had been set out in section 411 of the Law of Obligations Act. The terms and conditions stipulated a contractual penalty that the creditor is entitled to claim in the case of delayed payments from the consumer. Pursuant to section 415 of the Law of Obligations Act, it is not allowed to demand a contractual penalty from the consumer in the case of a delay in payment; 97
The terms and conditions also limited the time during which the consumer was entitled to repay the loan after withdrawal from the contract.
Simultaneously with the inspection of standard terms, the Board also monitored adherence to the principle of responsible lending. During the inspection, a few websites were identified that could not be considered to be in compliance with the principle of responsible lending. These companies had to remove this information from their website. In addition, the Consumer Protection Board overviewed pre-contractual information provided to consumers by creditors and intermediaries, i.e. European Consumer Credit Information Sheets and the European Standard Information Sheets. These are standard forms for pre-contractual information established by the Minister of Justice; it is not allowed to change the forms. The monitoring proceedings revealed that the majority of enterprises have changed their standard forms. With the adoption of the Mortgage Credit Directive, a different precontractual information format has been introduced for consumer credit related to residential property when compared to so-called regular consumer credit. It has become apparent that prior to the start of proceedings, some of the creditors were not aware that they are required to submit a European Standard Information Sheet instead of the European Consumer Credit Information Sheet. Similarly to the previous year, the Financial Supervisory Authority asked information from the Consumer Protection Board with regard to determining important aspects of financial monitoring. In 2017, the Financial Supervision Authority enquired information regarding a total of 591 persons.
Payment services and payment account In connection with the amendments to legislation, payment service contracts and payment accounts received a lot more attention from the Consumer Protection Board. On 10 January 2017, the amendment to the Law of 98
Obligations Act came into force, giving the Consumer Protection Board additional competence in relation to the requirements set out for payment service contracts, in addition, the requirements for pre-contractual information were supplemented and specified. The payment service contract is a contract with which the payment service provider undertakes to make, at the request of the payer, payment transactions specified in the Payment Institutions and E-money Institutions Act, and the client of the payment service provider shall pay a fee for it. Basic payment services are, for example: 1) opening, using and closing a payment account; 2) contributions to the account; 3) withdrawal of cash from a payment account (both at a place of business and from an ATM); 4) execution of a payment transaction (by means of payment, including internet payments); 5) execution of credit transfers, including the execution of standing orders (direct debits, credit transfers, standing orders) on a regular or pre-determined date at the payment service providerâ&#x20AC;&#x2122;s instructions. A payment account is an account maintained for making payment transactions on behalf of a payment service client, i.e. essentially a current account. In relation to the amendments, the Board has participated in a number of different discussions regarding the allocation of competences, particularly in terms of the section on restrictions of fees charged for basic payment services.
Estonian Banking Association: 2017 was a successful year for the Estonian banking sector As 2017 marked the year with the fastest economic growth in Estonia across the past five years, the economic environment was characterized by an increase in wages and consumption, the loan portfolios of banks and deposits of households continued to grow as well. Wage increase, low levels of 99
unemployment and favourable loan rates enhanced the growth of households’ demand for loans. The volumes of both home loans and consumer loans, as well as loans taken from outside of banks, increased. The average loan amount, the amount of payments and the average payment amount continued to grow as well. Although no significant changes in terms of trends concerning key indicators of the banking sector or economy in general, several updates, which have great potential to influence the ways in which people use banking services, are currently in the preparatory or introduction phase. The impact of both technology and regulation is most palpable in terms of payment services. Contactless payments Client of local banks have been able to use contactless payments already as of 2016. As these days it is often enough to place you card near the terminal when making a purchase, it is a fairly radical change from the chip cards, which required that the user confirms every transaction with their PIN code. The introduction of the new functionality of card payments on the market was also met with a certain level of caution among clients – the primary risk feared was the possibility of malicious use of the new solution. During the launch period, which lasted over a year and only allowed for maximum 10-euro payments, no misuse cases of contactless payments were discovered. This was also confirmed by the experiences of countries that had adopted contactless payments earlier; they didn’t see an increase in frauds with the adoption of the new technology either. This is why, in October 2017, the limit was increased from 10 euros to 25 euros. Ensuring security is remains important – in order to decrease the likelihood of misuse, the use of the car is continuously monitored by monitoring systems and, if necessary, corresponding algorithms interfere and ask for an additional PIN code to be entered at random, even for smaller payments. Most of the bank cards issued today have the contactless payment option, and the transition to the new solution will take place over the course of a few years in the natural renewal process of bank cards. The increase in the number of contactless payments is also enhanced by updates to the terminal park – by today, nearly 80% of terminals have transitioned to the new technology, the 100
goal for 2020 is 100%. Banks are also working on a wider implementation of the online PIN function, which would allow contactless payments that exceed 25 euros as well. If this project is carried out, payments that do not required entry of card into a terminal will be the norm already in the next few years. Flash payments In 2017, a new solution was created to radically speed up transactions between banks. On the basis of the current interbank payment scheme, a flash payment scheme was created; participating banks have to ensure immediate processing of payments round the clock, regardless of the day of week or holidays. This ensures that clientâ&#x20AC;&#x2122;s payments move between banks almost in real time. Although only one bank operating in Estonia has joined the flash payments scheme so far, most local banks are planning to make this option available to their client in 2018. Immediate interbank payments open up new opportunities for both individuals and business client, providing an attractive alternative to both cash and card payments. New payment and account information services As a result of the new directive of payment services, in the framework of the initiative of open banking, standardised opportunities will be created in 2019 for the use of payment services or services of account information providers. This means that in the future, the client will be able to provide the service provider with the right, for example, to obtain information about the status of their account and the transactions carried out on that account from all banks, thereby combining all the information about the clientâ&#x20AC;&#x2122;s current accounts into one environment. The same principle applies in the case of a payment service â&#x20AC;&#x201C; the client is able to order the payment service provider to initiate a payment, e.g., at a web store, from the bank account determined by the client. As a result, we will certainly see new payment service providers enter the local market, as well as new services offered by banks. By now, 33% of Estonian e-shoppers have purchased goods from foreign web stores as well, doing some primarily by using a payment solution based on card payments. However, when shopping at web stores, most Estonian consumers prefer to use the bank link service, the cross-European spread of which, with
the help of a payment service based on open banking, indicates that the service will be popular among local clients. Safety first As a result of the Payment Services Directive, the way clients verify their identity electronically at the bank is changing, and options of using code cards, which are still widely used today, are limited to a degree that forces people to find handy and secure alternatives. Banks have been encouraged customers to use secure authentication tools for quite a while now; however, there are still some 300,000 active clients who only use a password card for identification and confirmation of transactions, both in the case of banking services and for other e-services (including those of the state). The transition has been hampered, first and foremost, by peopleâ&#x20AC;&#x2122;s habits. In addition to the ID card, Mobile ID and PIN calculator, banks, in cooperation with the Certification Centre, last year, the banks brought Smart ID to the market in all Baltic countries. This is a free authentication tool, the sole precondition of the use of which is the availability of a smartphone. The security vulnerability detected in Estonian ID cards in 2017, which required the rapid development of a remote updating solution for certificates and the closing of electronic use of ID cards with certificates that had not been updated, made it very clear that in our modern world, which is dependent on e-services, it is very wise to have several secure authentication means accessible at all times. Awareness A rapidly changing payment environment, however, can also be a challenge for consumers â&#x20AC;&#x201C; although todayâ&#x20AC;&#x2122;s new solutions are designed to be used in an intuitive and convenient way, it is still wise to take some time to learn about the specific terms and conditions of a service. In addition to monetary rights and obligations, more and more attention should be paid to the terms and conditions linked to the processing of client data by the service provider both at the time of conclusion of the contract and in the future. As the importance of digital services increases every year, consumers need to think about raising their awareness more as well. The Estonian Banking Association, in cooperation with member banks, also pays attention, through various initiatives, to how everyone can more effectively and securely use both new and 102
old payment services, improve their digital literacy and make smart decisions in their financial affairs. The Banking Association wishes to remain in its role as an active cooperation partner for both the public and private sector. Katrin TalihĂ¤rm, Managing Director of the Estonian Banking Association
Tourism and entertainment The tourism sector differs from other sectors in terms of one specific requirement â&#x20AC;&#x201C; all travel undertakings offering for sale and selling package holidays should have a sufficient security to cover the obligations of passengers listed in subsection 15 (1) of the Tourism Act. The focus of the 2017 monitoring of the tourism sector was mainly aimed at raising awareness among travel companies in relation to assessing and ensuring that a security is sufficient. The existence and adequacy of a security is essential so that it would be possible, if necessary, to cover the return and accommodation of all travellers to their starting point and also to refund all travel expenses paid by consumers and payments for gift cards of unused package tour tickets. There are two main criteria for assessing whether the security is sufficient: 1. The travel undertakingâ&#x20AC;&#x2122;s security should comply with the minimum requirements, pursuant to the Tourism Act, for the activities chosen by the undertaking. The minimum requirements have been disclosed, depending on the field of activity, as a percentage of the planned annual total sales of the travel undertaking. Additionally, the security, e.g., in the case of small sales plans, may not be lower than the minimum amount stipulated in legislation.
2. All (advance) payments made by consumers on the basis of a package tour contract for package tours that have not been completed yet, should be covered by a security at all times. This means that the companyâ&#x20AC;&#x2122;s security should cover the payments received by them on the basis of package tour contracts until the end of the trip, irrespective of whether the tour operator has already paid the direct service providers for the services in the package tour contract. When calculating the sufficient security of a travel intermediary, it is important to keep in mind that the travel intermediary is responsible to travellers/consumers only in the extent of the financial obligation they had yet to fulfil to the tour operator. The obligation to assess the adequacy of the security and the liability for insufficient security is the responsibility of the travel undertaking. In general, it can be said that, although travel undertakingsâ&#x20AC;&#x2122; awareness of the security requirement and calculation of a sufficient security set out in the Tourism Act has increased with each year; however, the Consumer Protection Board still finds companies that have not set a sufficient security. Unfortunately, there are examples form recent times and distant past in which the recently insolvent company has not been able to satisfy the clientsâ&#x20AC;&#x2122; claims in full, i.e. the security was insufficient. Insufficient securities are likely to occur in the case of those travel undertakings who do not evaluate the sufficiency of the set security regularly and comprehensively and who assume that the minimum sum of security is sufficient, when it reality that might not be the case. It should be noted here that a large number of companies whose security has turned out to be inadequate during the monitoring proceedings have acknowledged that the insufficiency of their security was a surprise to them. The most effective tool for a travel undertaking for avoiding an insufficient collateral is the obligation to predict its sales volumes by compiling annual sales plans, and later on make plans on a quarterly basis. Even more accurate forecasts can be made, on a current and daily basis, based on planned sales offers, campaigns, invoices issued, etc. 104
Travel undertakings often find that making sales plans to assess the initial need for collateral is impossible and almost like telling someoneâ&#x20AC;&#x2122;s future by reading tealeaves. The Consumer Protection Board does not agree with this. The easiest way to predict sale volumes for the new period is to base the prediction of previous experience. As a rule, sales volumes of an actively operating travel undertaking tend to be increasing, and therefore, the basis for calculating their security, based on a forward-looking sales plan, should be more objective and realistic than modest. A consistent and daily analysis of its activities helps to prevent situations in which a security turns out to be inadequate and notifies the company in due time if the security needs to be permanently of temporarily increased. A lack of proper security, including inadequate security, is a significant violation. In the case of violation of that kind, legal persons are required to pay a significant fine of up to 50,000 euros.
The provision of package tours for sale without a security is prohibited and punishable as well The Consumer Protection Board has also monitored sales offers for package tours, the sellers of which have not complied with the security obligation set out in the Tourism Act, thereby completely neglecting to protect the rights and interests of travellers. Both the sale of package tours and offering package torus for sale require the existence of a security, and pursuant to the Tourism Act, violations of that requirement result in a penalty. Some decisions have been contested. For example, the Board discovered sales offers and sale of package tours in the case of which the security requirements had not been fulfilled. The Board punished the entrepreneur with a fine of 2,500 euros pursuant to subsection 311 (4), which the entrepreneur contested at the beginning of 2017. The company challenged the Boardâ&#x20AC;&#x2122;s misdemeanour notice with a complaint submitted to the court; 105
the company requested, with the complaint, that the fine be cancelled or reduced and the fine amount be scheduled across a year. The court agreed with the views of the Consumer Protection Board â&#x20AC;&#x201C; this was a situation in which the person who committed the violation had failed to comply with the security requirement while offering package tours for sale and selling package tours. The court also agreed with the penalty imposed, considering that it corresponds to the extent of the violation, and that all the circumstances to be taken into account pursuant to section 56 of the Penal Code have been taken into account. The punishment should be significant enough to ensure that the punishment is not more favourable than adherence to legislation.
New directive arrangements
One of the biggest keywords in tourism in 2017 was the adoption of the new directive of package tours and linked travel arrangements1 and drafting of the amending act of the Tourism Act and the Law of Obligations Act and adopting amendments to legislation on 6 December. This draft was prepared jointly by the Ministry of Economic Affairs and Communications and the Ministry of Justice, within the framework of which the Consumer Protection Board was also able to make recommendations and proposals. The purpose of the Directive is to harmonize the requirements for package travel and linked travel arrangements, thereby increasing the transparency of travel undertakingsâ&#x20AC;&#x2122; activities and improving consumer protection. The directive stipulates numerous significant and minor changes. The following changes can be highlighted as a few examples. â&#x20AC;˘ The concept of package tours is expanding and a new term of linked travel arrangements is added. The recitals in the Directive state that: 1 Directive 2015/2302/EU of the European Parliament and of the Council on package tours and linked travel
arrangements, which will amend the Regulation (EC) No 2006/2004, the Directive 2011/83/EU of the European Parliament and of the Council and will repeal the Council Directive 90/314/EEC.
“In the light of market trends, it is wise to define package tours according to alternative objective criteria, which relate, first and foremost, to the way in which travel services are offered or purchased, and in the case of which travellers may legitimately expect protection pursuant to this Directive. For the sake of transparency, a package tours should be distinguished from other linked travel arrangements, whereby companies or travel agencies operating online make it easier for passengers to acquire travel services, resulting in the conclusion of contracts by travellers with different travel service providers, including via related booking operations; linked travel arrangements do not have the characteristics of package tours and it would not be appropriate to apply all the obligations applied in the case of package tours to other related travel arrangements.” • The number of companies considered to be travel undertakings is increasing, whereas the security requirements of travel agencies is eliminated. This means that, in a situation where the travel agent is acting solely for the purpose of offering and selling package tours conducted by another travel undertaking, they do not need to apply for and have the security set out in the Tourism Act. The security obligation is the responsibility of the tour operator. The aforementioned does not apply in a situation where the travel agent mediates package tours prepared by a travel company established outside the European Economic Area. • Travel undertakings are required to provide a standard information sheet so that travellers would get more information on package tours and linked travel arrangements. • Amendments to the Law of Obligations Act make the provision of precontractual information mandatory. Before a traveller concludes a package tour contract or makes a binding offer for this, the traveller should be notified that it is a package tour in the definition provided in Directive 2015/2302/EU and that all rights applied to package tours apply in relation to the traveller. It is also necessary to inform the traveller that the tour operator is fully responsible for the provision of 107
the package tour in its entirety and that the tour operator is required to have a security. • Before a traveller enters into or makes a binding offer to any contract that will result in linked travel arrangements, the traveller should be informed of the following. Firstly, they cannot use the rights provided for package tours and each service provider is responsible for providing their service. And secondly, in case of linked travel arrangements, the security is provided in accordance with the terms and conditions set out in the Tourism Act. All the upcoming changes will be addressed by the Board during the 2018 “Suunanäitaja” information days and via other channels as well, to inform companies and travellers; the Board will also compile guidelines and recommendations for entrepreneurs.
Insolvency of Travel Dreams OÜ In July 2017, Travel Dreams OÜ notified the Consumer Protection Board that it was no longer able to meet its obligations to consumers arising from package tour contracts and requested the Board to use the security to satisfy the claims arising from consumers’ package tour contracts. The Consumer Protection Board determined that for all the travellers who were currently travelling, the necessary payments and arrangements had already been made, therefore there was no need to use the security to cover the return of the travellers to their starting point or to cover their accommodation until their return. The Consumer Protection Board set the term for submitting claims. Claims for refunds for the price of the package tour to consumers upon cancellation of the package tour, to compensate for the cancelled parts of the package tour and to return the price of the unused package gift certificates to the consumer, were accepted by the Board until 4 August. Two justified statements of claim were submitted by travellers; the statements of claim were satisfied from the security of Travel Dreams OÜ in the justified extent. 108
The development of claims agencies in the field of air passenger rights Regulation (EC) No 261/2004 of the European Parliament and of the Council concerning the rights of air passengers in the has been in force for over 10 years. The rules laid down in this regulation will help to mitigate the damage that may be caused to an air passenger, the rules will also guarantee the right to financial compensation and care. The regulation obliges the airline to pay compensation to a passenger whose flights have been cancelled, delayed for a long time or who has been not allowed on their flight despite the passenger’s wishes. Air carriers are not required to pay compensation for a delayed or cancelled flight only if the delay or cancellation was caused by extraordinary circumstances. Enquiries sent to the Consumer Protection Board and the EU Consumer Centre at that show that oftentimes, passengers do not receive compensation pursuant to regulation from air carriers, as air carriers have relied primarily on technical failures to explain extraordinary circumstances. However, according to case-law of the Court of Justice, a technical failure may be regarded as an exceptional circumstance only in very exceptional cases. Air carriers’ reluctance towards payment of compensation has led to the development of a new field of activity. An emerging trend on the market is the creation of companies whose main field of activity is the representation of consumers during the collection of claims for compensation pursuant to the aforementioned Regulation. As a rule, a contract is concluded with the traveller with which the consumer agrees to give up to 30% of the compensation as the company’s service fee, which is why it is necessary to ensure that their activities are in line with consumer protection requirements. The so-called claims agencies has helped increase travellers’ awareness of their rights. This is also made evident by the number of enquiries, based on the regulation, sent to the Consumer Protection Board by travellers. In 2016, 109
the Board received 91 enquiries from travellers and in 2017, that number was 276. A traveller is also able to turn directly to the air carries with their claim for compensation. If the airline does not provide a satisfactory solution to the passenger, the passenger can contact a national implementing agency or an ADR entity â&#x20AC;&#x201C; the Consumer Protection Board and the Consumer Disputes Committee. In doing so, the traveller will not be obliged to transfer a certain amount of their compensation as service fees charged by the claims agency. In many EU countries, implementing agencies and ADR entities also have the right to refuse to resolve a complaint that has been received through a collection agency. Consumers have to take this into account.
Disputes over reimbursing ticket fees In 2017, the case concerning the Eros Ramazzoti concert, which was supposed to be held on 30 March 2016, at the Saku Suurhall, but was cancelled, was continued. The problem consumers had lied in getting refunds for the ticket fees they had paid. According to the Consumer Protection Board, as of July 2016, a total of 1,474 tickets had been left unreturned in the sum of 73,602.2 euros. During the sale of tickets, Piletilevi AS has acted as an agent for SIA Herman Stage Co, thereby also being responsible for carrying out a proper sales process and issuing tickets. The Latvian company SIA Herman Stage Co, who was the organiser of the concert, was liable for conducting the event. Therefore, it was recommended that consumers first turn to the relevant company to get refunded for the ticket fees they have paid. Piletilevi, an intermediary in ticket sales, informed the public that payments were suspended, as the Latvian company SIA Herman Stage Co, the organizer of the concert, had not provided additional funds for this. The Consumer Protection Board found out that the tickets sold had already been refunded, to a large extent, by the funds allocated to Piletilevi AS by the organiser of the concert for this purpose. Piletilevi AS informed all the ticket 110
holders still waiting for their refunds that in relation to an ongoing trial in Russia concerning the organizer of the concert and the marketer of the event (Global Communications), the organiser is forced to extend the reimbursement period. On 29 March, Piletilevi AS announced on its website that SIA Herman Stage Co won the case at the Moscow Arbitration Court. According to the judgment, Global Communications (the company that had concluded the contract with the artist) should compensate Herman Stage Co SIA for losses incurred by 18 January 2018. Piletilevi AS has promised to continue to repurchase tickets as soon as the organizer receives financial resources necessary to do so. As a foreign company is concerned, the EU Consumer Centre, which cooperated with Latvian counterparts, was helpful in communicating information to consumers. According to the feedback received from Latvia, the local Consumer Protection Board turned to the Latvian police to determine possible evidence of crime committed by the organiser of the concert. As the organiser of the concert in this case did not contest the obligation to refund tickets, the Latvian Consumer Disputes Committee refused to process consumer complaints. A liquidation proceeding has been started with regard to Herman Stage Co SIA on 27 December 2017, which meant that consumers had to turn to the insolvency administrator.
Estonian Travel & Tourism Association The best travel year for Estonians According to the data of Eesti Pank, in 2017, Estonian people travelled to other countries 25% more than ten years ago, visiting foreign countries for a total of about 3.75 million times. Travelling is influenced by two important factors â&#x20AC;&#x201C; the availability of time and money. As the economic environment has become more stable in recent years and income has increased, people are more confidence to travel to distant locations for their holidays, but they take travel vacations in their home country as well. According to the Estonian Travel and Tourism Association, Estonian people are travelling further and further. The choice of destinations is influenced, first and 111
foremost, by the existence of connections, and in the case of distant destinations, by how good the prices are that airlines offer. People have been travelling a lot to Asia for several years now and our people are currently discovering Africa and Latin America more and more. Last year, people took to visiting Estonians’ beloved sun destinations Egypt and Turkey again. The popular resorts that fell to the side due to unfortunate events a few years ago have become accessible again, travel undertakings have added those resorts back to their selection and people’s trust in those sunny and affordable holiday destinations is increasing once again. People in Estonia are eager to discover all that domestic tourism companies have to offer. The trend that has stayed strong for several years – achieving new records in domestic tourism – was carried onto 2017 as well. The number of domestic tourists increased by 9.5% to 1.39 million compared to the previous year’s results, i.e. last year, every Estonian took at least one trip to another place in Estonia. We are glad to see that new and exciting attractions are launched in various regions of Estonia every year. Domestic tourism is very important for smaller tourism companies. As of May 2016 to May 2018, the Estonian Travel and Tourism Association will hold presidency of ECTAA (European Travel Agents & Tour Operators Association), the umbrella organisation of travel and tourism companies in the European Union, and Merike Hallik, one of the Vice Presidents of the Estonian Travel and Tourism Association, will be the President of ECTAA. The Estonian Travel and Tourism Association actively contributes to the work of ECTAA, our experts belong to various sectoral committees (committees of aeronautics, legal, fiscal, technological, destination and sustainable tourism, and tour operators). Work with the European umbrella organisation helps us bring competences of other countries and examples of the best practices to Estonia, it also enables us to be actively involved in international lobbying activities. In 2017, one of the main topics in the tourism sector included matters related to preparations of the Package Travel Directive, which will be enforced on 1 July 2018. The implementation of this Directive will impact the tourism sector significantly as it will change the definition and content of package travel. Travel and tourism undertakings are actively preparing for the implementation of new requirements and expect the directive, which according 112
to tourism professionals in various EU countries was adopted in a hurry and without adequate analysis, will benefit the consumers despite the increase in the administrative burden for travel undertakings. It has become evident that consumers have taken to turning to professionals more than before. Even though all of us have access to unlimited sources of information, making sense of all that information is becoming increasingly complicated. Members of the Estonian Travel and Tourism Association aim to be excellent and reliable partners for all travel enthusiasts at all times. The Association continues conducting outstanding cooperation with the Consumer Protection Board. Side by side, we participate in legislative procedures that affect travelling; representative of the Estonian Travel and Tourism Association are among the members of the Consumer Complaints Committee. The Consumer Protection Board takes part in the annual international tourism fair Tourest, where representatives of the Board provide necessary and comprehensive advice to all those interested in travelling. These good practices of providing the best service will be continued, as will the custom to stand for the customersâ&#x20AC;&#x2122; best interests. Travel is a fundamental right for the citizens of free and democratic countries. Many of us still remember that this has not always been so self-evident. We attach great importance to the credibility of the members of the Association, the quality of the services and products offered, so that they can inject people into a continual dining experience through pleasant and positive travel experiences. Travelling and discovering the rest of the world can help us see more clearly why it is so good to live at home in Estonia. We wish you safe and exciting travels when discovering the world! Mariann Lugus, Secretary-General of the Estonian Travel and Tourism Association
Consumer disputes and the Consumer Disputes Committee The Consumer Dispute Committee is an independent and impartial unit working that works on consumer disputes and operates at the Consumer Protection Board. The three-member Committee consists of a chairman and members of the Committee, who are representatives of business or professional associations and representatives of organizations that represent consumer interests. The Consumer Dispute Committee resolves consumer disputes as a extrajudicial alternative to consumers turning to the court. Settlement of a dispute in the Committee is free of charge for the consumer and should take place within 90 days. The Committeeâ&#x20AC;&#x2122;s decisions are voluntary guidelines for the parties and, in the case of disagreements with the decision, the same dispute can be continued in the county court. Resolving consumer disputes in the Consumer Disputes Committee is a frequently used option for consumers when dealing with simpler disputes with traders that have occurred on a daily basis. In 2017, the number of applications submitted to the Consumer Disputes Committee by consumers increased. In 3,246 cases, the consumer and the trader failed to resolve the dispute by themselves and the consumer asked for help to solve the dispute.
Applications submitted to the Consumer Disputes Committee 3300
3200 3100 3000
2900 2816 2800 2700 2600 2016
In the case of every fourth application, specifically 825 of them, the Secretariat of the Committee managed to reconcile the parties or find some other satisfactory solution for the parties. A total of 1,944 applications were sent to the Consumer Disputes Committee, and some cross-border disputes were resolved through the EU Consumer Centre. A total of 681 cases ended with a decision made in the favour of the consumer or the trader, of which the Committee solved 487 and 194 ended with the parties reaching a compromise during discussion or the Committee closed the proceeding on other grounds. The majority of sessions were conducted in writing, without inviting parties to discuss the dispute in person.
Termination of proceedings by grounds (%)
Claims satisfied during proceedings (the trader satisfied the consumerâ&#x20AC;&#x2122;s claim or a compromise was reached) Proceedings terminated by the consumer
Since the purpose of the Committeeâ&#x20AC;&#x2122;s proceedings is to provide a quick and inexpensive alternative to legal proceedings, in 538 cases, the circumstances of the case did not allow for resolving the dispute in the form of a proceeding of the Committee. The main problems were the need for a thorough investigation of a case and hearing the witnesses, the poor prospects of gathering additional evidence or making a decision, which led to the closure of the proceeding due to the case being unfit for proceedings by the Committee. In these cases, the consumer was advised to resolve the dispute faster and more effectively either by negotiations between the parties, by court proceedings, or the consumer was advised about their rights in further communication with the trader.
Main dispute topics The range of disputes has been extremely diverse. It includes purchase and sale, travel, entertainment, beauty services and other services. Disputes have also focused on services left unprovided, delivery of goods, warranty, repair services, furniture manufacturing and installation, insurance disputes,
compensation for damages, repayment of prepayments, etc. In 2017, the number of enquiries related to electricity services increased. However, disputes have occurred where the legal relationships between the consumer and the trader have arisen from both a contract of purchase and sale and a consumer contract for services, and a combined claim is submitted, including a claim for compensation of damages. Therefore, it is relatively common that goods have been purchased and installation ordered from the same trader and the complaint concerns the goods that are connected to services. The increase in the number of consumer applications submitted in the field of e-commerce continues, which is explained by the growing number of users of e-commerce and various online stores. For example, in 2017, a total of 1,043 applications were submitted, in which the dispute arose from a consumer contract concluded in the framework of e-commerce. A great deal of those were linked to web stores such as CrazyDeal.ee, palmtek.ee, etc. Taking into account the popularity of online stores, the number of corresponding enquiries and proceedings will continue to increase. The number of companies who did not voluntarily adhere to the decision of the Consumer Disputes Committee increased as well. Of the Committeeâ&#x20AC;&#x2122;s decisions, 118 were left unfulfilled, which makes up about a quarter of decisions made in consumersâ&#x20AC;&#x2122; favour.
Electronics and communications equipment The main issue brought out in applications continues to be that consumers discover defects in purchased devices, the traders refuse to admit the defect or find that it has been caused by the consumerâ&#x20AC;&#x2122;s faulty operating of the device. Oftentimes, traders claim that the defect has been caused by a mechanical damage or moisture damage, or that the problem has been caused by an application that the consumer downloaded. Due to the subjectmatter of the dispute, it is difficult for the consumer to provide evidence that would prove their claims in a situation like this, as relevant expert assessments tend to be complex, costly and time-consuming. 117
One noteworthy trend is the fact that the Committee has made more decisions regarding situations in which the consumer’s argument is that the device had no mechanical damage at the time of handing over to the trader; however, said damage was determined later maintenance works, even though such damage should have already been visible to the salesperson who accepted the returned device. Such situations have been resolved to the disadvantage of the consumer and the Committee has taken the view that the consumer should be able to prove that the defect was in fact a manufacturing defect or to prove the wrongful conduct of the trader. The submission of evidence will be decisive, i.e. whether or not the consumer can prove that the defect of the device was a manufacturing defect. In addition, there were disputes in which Tele2 interpreted contractual agreements made on the phone as ordinary contracts and, according to the trader, consumers did not have the 14 day right of withdrawal as the devices were issued at a company store. Disputes still occur concerning depreciation where a device is returned pursuant to the 14-day right of withdrawal and the trader estimates the loss of value for the consumer in the amount and methodology that is incomprehensible for the consumer. Additionally, there have been disputes over warranty duration of electronics – the manufacturer’s one-year warranty. For example, a dispute arose in a situation where the trader argued that Apple only provides a one-year warranty for its phones, and so the two-year time limit for submitting a claim shall not apply. The Committee found that the condition of a limited warranty period in a sales contract substantially reduces consumer rights and, therefore, this condition of the contract was null and void, as the legislation stipulates that the trader is required to resolve a consumer’s enquiry during a period of submitting claims, which shall last a minimum of two years. There are also disputes over the warranty against defects, namely because consumers believe that a new warranty period will apply to repaired or replaced parts. The Committee has found that if the consumer has not been given more favourable terms than the legislation provides, then a renewed warranty period will not apply to the repaired item and the time limit for submitting a claim will not be extended.
Vehicles The main reason for submitting applications is a car’s noncompliance to terms and conditions of a contract and what was initially promised to the consumer. Unfortunately, the market of used cars is, to some extent, characterized by inadequate or misleading information provided by traders, concealment of vehicles’ defects or lack of knowledge of their existence, which will come to light later on. It is not unlikely that some traders have chosen this as a conscious behaviour, hoping that the defects won’t come to light right away or that consumers will not turn to the trader in due time, and instead try to eliminate the defects themselves, thereby allowing the trader to list various reasons why the consumer can no longer turn to the trader with their complaint or why the defect is already considered to be natural wear, which relieves the trader from liability. The solution came down to evidence submitted by the consumer, i.e. whether or not it was a hidden defect and thereby a violation of contract or not, as traders, as a rule, do not admit to such non-compliance to terms and conditions of a contract. One reason for this is, of course, that consumers are not all that aware of the need for a pre-purchase inspection of a car or it can occur that a purchase decision is made on a whim. If consumers had the cars inspected prior to buying them, the number of applications concerning shortcomings of used cars would likely decrease significantly. Also noteworthy is ALM Invest OÜ, who has been on the black list across several years with a varied number of decisions and in the case of whom, complaints from consumers concerning the sold vehicles are frequent.
Tourism Complaints concerning air travel and package tours continue to dominate in the tourism sector. In the case of package tours, the problems often include poor quality of hotels, booked hotels not meeting the terms and conditions of the contract, and additional services added at the hotel. Among the additional services, it has been pointed out that although the travel description promises the presence of a travel agent and an information 119
briefing at the travel destination, the tour operator has not fulfilled those conditions â&#x20AC;&#x201C; there is no tour operator nor an information briefing at the destination. The tour operator has a statutory obligation to inform the traveller in writing of passport and visa requirements. The tour operator does not have that obligation if the requirements set for travel documents have been listed earlier, in the travel catalogue. To the extent that this is a statutory obligation, the provision of information to the traveller should be verified by the tour operator. Travel agents or travel agencies have violated their obligations on several occasions. The traveller can file their claim against the tour operator, in which case the tour operator can file a recourse against the travel agency.
Legal aid services Several complaints have been made regarding legal aid services and the Committee has found that the trader did not operate professionally when providing the service. In the event of providing an unsatisfactory legal aid service, the consumer will have the right to pay a reduced price for the service. In one dispute, the Committee evaluated the importance of the traderâ&#x20AC;&#x2122;s breach of contract and gross negligence and found the consumerâ&#x20AC;&#x2122;s claim was justified to reduce the claim for payment by 50%. As of 2018, the Estonian Bar Association will also be able to solve disputes, to the extent of its competence, that are related to legal aid services.
Communication services In the telecommunications sector, the payment and sum of a contractual penalty in the case of an early termination of a fixed-term contract continue to be one of the issues of dispute. In a situation where the consumer has concluded two separate contracts, a communications service contract and a contract for the use of the device, traders often demand contractual penalties from the consumer for early termination of the contract of use. The Committee pointed out that under the terms of the contract for the use of the device, the device was given to the consumer for the purpose of using the 120
communications service, therefore, the contracts are interconnected. Therefore, if the consumer has the right of early withdrawal from a communications service contract pursuant to legislation, then the same right of withdrawal also applies to contract related to the communications service contract.
Waste services The Consumer Disputes Committee often receives complaints concerning unpaid invoices for waste services when the unpaid sum is already being demanded by a collection company. In one such dispute, where the main claim unpaid by the consumer was 3 euros, the Committee noted that parties of a contractual obligations have to treat each other pursuant to the principle of good faith. Taking into account the previous payment behaviour of the consumer, as well as the fact that the trader has not done everything in their power to get the money owed by the consumer, causing a collection cost that is ten times the size of the debt is contrary to the principle of good faith. In a situation like that, the consumer has the right to demand that the unreasonably large collection cost be decreased to a reasonable size.
Entertainment services Several consumers have turned to the Consumer Protection Board because they havenâ&#x20AC;&#x2122;t been satisfied with the quality of events they have attended. The difficulty of resolving such disputes in favour of consumers arises from the fact that it is difficult to retrospectively prove the low quality of a service without further proof from witnesses. If the consumer wishes to contest the provision of services, they have to turn to the trader with their complaint. In a situation where a consumer has been present for the entirety of a concert and notifies the trader of any issues several days later, the complaint may not be justified. Similarly, the Committee has not agreed to satisfy a consumerâ&#x20AC;&#x2122;s claim if the consumer has decided not to attend a concert due to changes in the programme that were not to the consumerâ&#x20AC;&#x2122;s liking. If the trader has 121
previously notified consumers of the possibility that the lineup/schedule may be subject to slight changes and the consumer does not attend the event due to this, the consumer has no right to submit a complaint concerning the quality of the concert.
Contracts for services Complaints about custom made furniture continue to be sent in. This is a highly complex contractual area, where the completion of work requires a number of different processes: design, production, transport, installation, etc. Often, disputes arise concerning the catalogue and drawings, surveying the space at the consumer, building furniture and installing it. A lot of questions arise that require agreements between the trader and the consumer. The dispute may arise even in a situation where the parties have failed to agreed on when the furniture will be installed and by whom. Therefore, it is important, int he case of such compound orders, to discuss and lay down all related aspects. Frequent disputes related to contracts for services also arise concerning beauty services and personal services. For example, cosmetic or haircare services, in the case of which the consumer is not satisfied with the result, cut or colour. In this respect, it is important that the consumer gives the trader the opportunity to improve their work. In many cases, when the consumer leaves the place where the service is provided and tries to fix the situation at home (dying their hair again, etc.), it is no longer possible to prove the violation later on. After receiving the service, the consumer should overview the work right away and, in the case of problems, submit a complaint right away, and document the situation in the form of photographs and/or order an expert evaluation, if necessary. A fitting example here is a case with a wedding cake; the consumer was supposed to take a multi-layered cake stand to the trader so that the trader could fulfil the order. The trader received the cake stand, but failed to notify the consumer that the cake stand was not suitable for the cake that had been ordered. The trader made an independent decision and reduced the size and 122
amount of cake by at least a half. However, the trader did not agree to reduce the price paid for the cake by the consumer, although the cake did not match the order in appearance or quantity and half of the consumer’s guests were left without cake due to this. The Committee satisfied the consumer’s claim and explained that the trader had knowledge and, as a consequence, a notification obligation; in the absence of such a possibility, the trader should have found a solution to the problem, which would have ensured compliance with the contract.
Claims for damages It is wise to have a more detailed overview here of claims for damages that the Committee has dealt with. Claims for damages are one of the most frequent submissions sent to the Consumer Disputes Committee, and often the claim for compensation for damages accompanies another claim. Unfortunately, a considerable amount of those disputes are not taken further to proceedings, when the likelihood of the consumer achieving their aims in an extra-judicial proceeding is very low and when resolving the dispute is not possible without thorough investigation and interviews with witnesses, so that it would make more sense to solve the dispute at a county court. One of the most complex issues has been correct proof of damage, i.e. providing evidence to prove grounds for compensation for damages. The trader has to pay compensation for damages only if the damage was caused as a result of the trader’s activities and not due to any other reasons. Examples of this include complaints about dry cleaning of clothes and car wash companies. Even situations in which the trader has admitted that the item has been ruined may not ensure a solution in the consumer’s favour. The trader claims that they carried out the cleaning according to the maintenance instructions and therefore refuse to satisfy the consumer’s claim for compensation. In most cases, consumers submit a claim for compensation of the cost of the damaged item, yet often, they have no purchase document to provide. The consumer has to provide proof of, not just the sum paid for the product, but of the item’s condition prior to and after the cleaning and potential reduction of value. 123
If damage has been caused, but the exact amount of damage cannot be established, the amount of the compensation is for the court to decide. Usually consumers claim that the item was in very good condition when taken to dry cleaning and that it had only been worn a few times. For example, an extract from the Committee’s decision: “The consumer took his suit jacket to dry cleaning. It became evident that the fabric of the item was damaged during the cleaning process (it had been poorly ironed, the interfacing had fallen apart). In their complaint, the consumer notified the trader that the suit jacket had cost 120 euros and been bought 5 years ago. The trader confirmed that the cleaning process was carried out according to the item’s label and technological requirements. The suit jacket is clean, it has maintained its functionality and aesthetic appearance. There are barely noticeable uneven places on the fabric, which could not be eliminated by repeated ironing. According to the trader, these defects are linked to exploitation and have not occurred due to any fault of the trader. The trader pointed out that the term “very dirty” had been written on the receipt for the jacket at the dry cleaning. The consumer claimed that he had worn the suit jacket 6 years ago for 6–7 months and the defects could not have occurred in such a short time. According to the consumer, the suit jacket was no longer fit for wearing and demanded compensation for the damages in the sum of 120 euros, on the grounds of that being the minimum sum for purchasing a similar item to replace the damaged suit jacket. The consumer did not have a purchase receipt to show. The Committee rejected the application, emphasizing that when submitting a claim for damages, the consumer should substantiate and prove the extent of damage caused by the unlawful conduct of the perpetrator and the existence of a causal link between the unlawful conduct and the perpetrator.” Similarly, the consumer who claimed that their jacket, which had been bought from Italy and only been worn a couple of times, was ruined, lacked any substantial evidence. The consumer had no document of purchase or any evidence that the defects had occurred due to the fault of the trader and not due to something else. There was no evidence to support the claimed sum. Neither did they have any proof of the jacket’s condition prior to cleaning or of the reduced value. 124
When assessing the prospects of continuing proceedings, the Secretariat of the Consumer Disputes Committee has asked consumers to take into account that when submitting a claim, the consumer has to be able to prove circumstances that form the basis for the claim. Unfortunately, the committee cannot help consumers in situations without relevant evidence and the only option here is for the consumer to turn to court.
Number of enquiries related to e-commerce Considering that web stores are gaining popularity and the number of disputes related to e-commerce is also growing, it should be treated as a separate topic, even though it falls under general trade (with a different point of sale and method of delivery). Every fourth enquiry submitted to the Board was about e-commerce. The most critical issue is the failure to deliver goods. There is also a lot of controversy surrounding the problem of reduced value of products that have been purchased in the framework of e-commerce and returned when using the 14-day right of withdrawal. In 2017, a significant part of consumer enquiries were related to the receipt of goods ordered from web stores and problems related to withdrawal from contracts. Consumers are obligated to pay 100% of the cost of items ordered via communications means and they have no options for diversifying risks by paying a smaller advance payment or providing some other collateral. In cases where the trader does not sent goods to the consumer, return the purchase sum to them or enable the consumer to use the 14-day right of withdrawal from the contract, the consumer is forced to spend a considerable amount of time/money in order to protect their rights. In e-commerce, many disputes were raised about situations in which the consumer returned goods that they had tried/used or the package of which they had broken and that the trader then refused to accept the goods, or demanded that the consumer pays compensation to the trader for the reduced value of the goods. It is difficult to provide evidence for the compensation sum for reduced value, which has led to a lot of controversy, and the Committee has difficulty deciding on specific sums returned without 125
sufficient evidence. For example, in the case of one dispute, the consumer wanted to withdraw from the sales contract of a refrigerator concluded in a web store, and the trader agreed to reimburse only 50% of the price of the refrigerator as the consumer had used the it for two days. According to the Committee, however, the value of the refrigerator had not decreased, and the consumer has the right to be reimbursed 100% of the purchase price. Enquiries related to web stores are linked to a high risk of consumer rights’ violations; in many cases the web store had been closed down and liquidated, which left consumers in a vulnerable situation, and the Committee’s decision made in the favour of the consumer does not help in situations like that.
Other disputes We would like to include a couple of unconventional disputes that the Committee has had to work on. The consumer won a game on Facebook, the prize of which was a free campfire site. The trader promised to build a campfire site, but did not fulfil their promise. The consumer had repeatedly contacted the trader, but the trader still failed to fulfil their promise. The consumer then turned to the Consumer Disputes Committee. The trader did not respond to the forwarded complaint either. The Committee found that the consumer’s application should be satisfied because the trader had failed to fulfil their obligation. The company has been added to the black list. Second example. A consumer returned a defective product to the trader in 2014 and received a plastic gift card in return. The gift card did not have an expiry date specified on it; a representative of the trader had said that the gift card does not have an expiry date. The consumer used the gift card once in 2015. Then, in 2017, the consumer wanted to use the gift card when making a purchase, but the trader refused to accept the gift card, claiming that gift cards are valid for two years. The consumer did not have any proof of payment or a check to prove their claim. According to the trader, all employees know that gift cards are valid for two years. The same information is also disclosed on the purchase receipt and gift card envelope. The consumer did not agree with the trader’s response and the application was referred to the Consumer Disputes Committee for a decision. The Committee 126
concluded that the trader has not proved that the consumer was given confirmation of the value and expiry date of the gift card and that the trader should restore the possibility of using the gift card. Pursuant to the Committee’s decision, the trader reimbursed the sum that had been left on the gift card to the consumer.
Chairman of the committee: 2017 was a busy and fruitful year When evaluating the activities of the Consumer Disputed Committee, the great cooperation of the Chairman of the Committee and the Secretariat of the Committee ought to be highlighted as it has enabled the harmonization of the practice of qualification of consumer claims and dispute solving. A total of 1944 applications were submitted to the Committee for resolution, of which 681 were resolved by a decision of the Committee. This data indicates that the Secretariat has been able to effectively reconcile consumers and traders before their disputes reach sessions of the Committee. Consumers can choose which of the Committee’s procedural form they prefer – an oral proceeding or one conducted in writing. In 2017, the Committee settled the majority of claims during written proceedings, as this was preferred by consumers. This is actually unfortunate as not having the parties take part in a session of the Committee, the Committee has no way of directing the parties to arrive at a compromise. Neither will the Committee have a chance to discuss the legislative nature of the dispute, the distribution of obligations between the parties and potential consequences of violations of obligation with the parties. Oftentimes, the aforementioned discussion is what helps the parties understand the circumstances of the dispute better, thereby making them more willing to make a compromise. An analysis of the Committee’s work shows that the Committee is not able, in some cases, to settle the dispute and should terminate the proceeding. For example, this may happen when there is a dispute between the parties about the extent of reduced value of an item, which may arise, among other things, in claims for damages and those concerning the reduction of prices. According to the Law of Obligations Act, disputes concerning the size of the extent ought to be submitted to the court. Regarding this question, the practice in other EU 127
member states should be analysed. Some member states use, during consumer disputes, charts that help calculate reduction in value; under certain conditions, these might be applicable in our judicial area as well. Kai Amos, Chairman of Consumer Disputes Committee
General statistics of 2017 Table 1. General data of the Consumer Protection Board 2007â&#x20AC;&#x201C;2017
Number servants 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
General data Budget and people of public Budget (in euros) 62 907,550 61 1,118,450 61 1,041,760 61 1,201,540 61 1,314,600 61 1,519,100 64 1,602,505 64 1,868,131 62 2,000,140 62 1,874,378 62 2,105,576
Table 2. General data of monitoring work 2007â&#x20AC;&#x201C;2017 General data of monitoring work Number of Number of Precepts Fines (in euros) inspections* fines 2007 3,837 89 518 19,100 2008 5,018 108 862 35,100 2009 5,030 67 981 48,800 2010 7,373 44 772 30,800 2011 5,221 66 409 36,860 2012 4,802 109 454 60,950 2013 4,596 46 437 56,667 2014 2,725 41 123 17,645 2015 2,086 54 23 33,280 2016 1,316 49 8 15,450 2017 520 52 17 32,400 * inspection reports, certified statements, protocols of implementing the monitoring measure 129
Table 3. General enquiry data 2007â&#x20AC;&#x201C;2017 Consultations in general Views of Consultations the Consultation Written over the Complaints consumer receptions enquiries phone helper tool online
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
13882 13726 12808 14038 23551 26096 26639 25847 23792 23646 24586 19399
3385 3221 3122 3373 3171 2993 2810 2360 1652 1611 1768 1689
1274 2308 3809 5940 5987 7051 7760 8280 7068 7283 6975 6168
1904 1633 2164 2037 2870 1785 2192 2060 2137 2058 2804 3229
Tips from information Total of booths at enquiries the airport
20445 20888 21903 25388 35579 37925 39401 38547 34649 34598 36133 44197
Table 4. Topics of complaints 2016â&#x20AC;&#x201C;2017
Topics of enquiries Top three complaints By types of products/services Topic 2016 Topic 2017 Packages 340 Air carriers 328 Clothing and footwear 287 Clothing and footwear 284 ICT products 263 ICT products 247 By content of the issue Topic 2016 Topic 2017 Quality of goods and Quality of goods and 810 851 services services Contracts and sales
Product delivery service provision
Product delivery / service provision
Contracts and sales
Topic E-commerce Retail store Other place (including car sites)
By method of sale 2016 Topic 2017 962 E-commerce 1,327 Other place (including 500 322 car sites) 284
Table 5. Topics of inquiries 2016â&#x20AC;&#x201C;2017 Topics of enquiries Top three requests for explanations By types of products/services Topic 2016 Topic 2017 ICT products 522 ICT products 341 Clothing and footwear 347 Clothing and footwear 290 Financial services 276 Leisure equipment 262 By content of the issue Topic 2016 Topic 2017 Contracts and sales 1,362 Contracts and sales 1,423 Quality of goods and Quality of goods and 1,187 871 services services Product delivery / service provision
By method of sale Topic 2016 Topic 2017 E-commerce 1,523 E-commerce 1,615 Retail store 803 Retail store 665 Other place (including car Other place (including 402 353 sites) car sites)
Table 6. Topics of phone consultations 2016 Topics of enquiries Top three in telephone consultations By types of products/services Topic 2016 Topic Information and Information and communication technology 2,515 communication technology products products Clothing and footwear 1,562 Clothing and footwear Furnishing 1,181 Furnishing By content of the issue Topic 2016 Topic
2017 1,738 1,139 929 2017
Quality of goods and services 6,964
Quality of goods and services 5,508
Contracts and sales
Contracts and sales
Warranty, warranties established by law and 1,254 product warranty
Product delivery / service 1,529 provision
By method of sale Topic 2016 Topic 2017 Retail store 6,111 Retail store 3,566 Other place (including car Other place (including car 3,182 2,456 sites) sites) E-commerce, excluding mobile commerce and online 2,736 auctions
E-commerce, excluding mobile commerce and online 2,413 auctions
Table 7. Topics of consultation receptions 2016â&#x20AC;&#x201C;2017 Topics of enquiries Top three reception topics By types of products/services Topic 2016 Topic 2017 Clothing and footwear 216 Clothing and footwear 232 Information and Information and communication 200 communication technology 213 technology products products Maintenance and repair services of 148 Furnishing 100 living quarters By content of the issue Topic 2016 Topic 2017 Quality of goods and Quality of goods and services 801 776 services Contracts and sales 316 Contracts and sales 365 Submitting invoices and debt Submitting invoices and 120 126 collection debt collection By method of sale Topic 2016 Topic 2017 Retail store 685 Retail store 606 Other place (including car Other place (including car sites) 464 406 sites) E-commerce, excluding mobile commerce and online auctions
E-commerce, excluding mobile commerce and online auctions
Issued by: Estonian Consumer Protection Board 2018 Pronksi 12, 10117 Tallinn Consultation phone line: +372 620 1707 Email: email@example.com Website: www.tarbijakaitseamet.ee Video channel: www.youtube.com/tarbijakaitseamet Facebook: www.facebook.com/tarbijakaitseamet