Insights European Commission and Member States consumer authorities ask social media companies to comply with EU consumer rules

The Commission explains that EU consumer authorities and organisations have received a growing number of complaints from consumers, who have been targeted by fraud or scams when using social media websites, as well as having been subject to certain terms of services that do not respect EU consumer law.

On this basis, EU consumer authorities, under the leadership of the French consumer authority and with the support of the European Commission, sent a letter to Facebook, Twitter and Google+ last November asking them to address two areas of concern.

On 16 March 2017, EU consumer authorities and the European Commission met with these companies to hear and discuss their proposed solutions. The companies in question will finalise detailed measures on how to comply with the EU regulatory framework within one month. The Commission and the consumer authorities will review the final proposals. If they are not satisfactory, consumer authorities could ultimately resort to enforcement action.

The social media companies have agreed to changes focusing on two areas:

  • unfair terms and conditions; and
  • addressing fraud and scams that mislead consumers when using social networks.

The Commission says that social media platforms’ terms of services need to be brought into conformity with European consumer law. Indeed, the Unfair Contract Terms Directive (93/13/EEC) requires that standard terms which create a significant imbalance in parties’ rights and obligations to the detriment of the consumer (Article 3) are deemed unfair and therefore invalid. The Directive also requires that terms be drafted in plain and intelligible language (Article 5) so that consumers are informed in a clear and understandable manner about their rights.

This means in practice that:

  • social media networks cannot deprive consumers of their right to go to court in their Member State of residence;
  • social media networks cannot require consumers to waive mandatory rights, such as their right to withdraw from an on-line purchase;
  • terms of service cannot limit or totally exclude the liability of social media networks in connection with the performance of the service;
  • sponsored content cannot be hidden, but should be identifiable as such;
  • social media networks cannot unilaterally change terms and conditions without clearly informing consumers and giving them the chance to cancel the contract with adequate notice;
  • terms of service cannot confer unlimited and discretionary power to social media operators on the removal of content; and
  • termination of a contract by the social media operator should be governed by clear rules and not decided unilaterally without a reason.

Social media companies also need to remove any fraud and scams appearing on their websites that could mislead consumers, as soon as they become aware of them, the Commission says. National consumer protection authorities should have a direct and standardised communication channel to alert social media operators and ensure they take down the content. This is in line with EU consumer legislation and the E-Commerce Directive (2000/31/EC), which allows Member States to establish procedures governing the removal or disabling of access to illegal information.

Examples of frauds and scams include:

  • scams involving payments taken from consumers;
  • subscription traps where consumers are offered the chance to register for a free trial but are not given clear and sufficient information;
  • marketing of counterfeit products; and
  • fake promotions, such as “win a smart phone for 1 €”, are common on social media networks. They are true, but involve a hidden long-term subscription of several hundred euros per year.

To read the Commission’s press release in full, click here.