New EU Consumer Law Protections Applicable to Digital Goods and Digital Content Services Providers Take Effect, Requiring Ts & Cs Review

February.14.2022

From 1 January, 2022, contracts governed by French or German law for the sale of digital content and services, and goods with digital elements, will be subject to harmonised European rules that grant additional legal protections to consumers, and impose additional obligations on sellers and professional service providers. In Germany, the new provisions apply to agreements entered prior to that date, where the services under the agreement are provided on or after 1 January 2022. Moreover, in Germany the rules on the information obligations will change on 28 May 2022. In the United Kingdom, consumer law primarily reflects harmonised EU law that was in effect before the end of the Brexit transition period at the end of 2020.

The EU rules provide that a legal guarantee of conformity will now explicitly apply to the supply of digital content and services (such as videos, music files, software, live streaming events, and social media), and to goods with an integrated digital element (such as a smartphone or connected device).

The French and German changes are the result of the transposition across Europe of EU Directives 2019/770 (the "Digital Content Directive", "DCD") and 2019/771 (the "Sale of Goods Directive", "SDG"). Since the source of the rules is a directive, individual Member States have been left to implement the requirements into national law, which can give rise to national variations. However, in comparison to other European directives, the risk of variations from the Directives may be limited since, according to Art. 4 DCD and Art. 4 SGD provide that the Member States shall not maintain or introduce national rules that diverge from the DCD and SGD, unless otherwise provided for in the directives.

In the United Kingdom at the end of the UK-EU transition period the legal basis on which EU-derived law applies changed. Post-transition, EU directives which were in force but not applicable before the end of the UK-EU transition period have not been implemented into law in the UK. This includes the Digital Content Directive and the Sale of Goods Directive. Therefore, the DCD and SDG rules have not been transposed into UK national consumer law. However, many of the areas covered by the DCD and the SDG are currently governed in the UK by the Consumer Rights Act 2015 ("CRA 2015") in similar but not identical terms, and the CRA 2015 will continue to apply to sales of such goods to UK consumers. Included in the table below are the equivalent CRA 2015 provisions that will apply in the UK.

Set out below is a table summarizing the principal new obligations (non-exhaustive) imposed on sellers and service providers in relation to the legal guarantee of conformity, as reflected in the national consumer laws of France and Germany, and an overview of how UK consumer law addresses the same principles. With respect to France, in particularly noteworthy are: the enhanced pre-contractual information obligations, and the extension of the protections to so-called “non-professionals”, defined in the French Consumer Code as “any legal person that is not acting for professional purposes” (toute personne morale qui n'agit pas à des fins professionnelles). German consumer law does not have the concept of “non-professional” although the law does give the traders (merchants) the option to take recourse against their suppliers. This can lead to a chain of recourse measures impacting B2B traders/suppliers.

Other differences between the regimes relate to how compliance with data protection legislation is addressed and the potential value of fines that may be imposed for non-compliance.

The changes have potential impact for digital B2B goods and services providers and all professionals should ensure that their terms of business and operations are updated to satisfy the new requirements and although the Directiveswill not have legislative effect in the UK for sales by UK businesses to UK consumers, UK traders selling to consumers in EU markets will need to comply with the Directives, as adopted in the applicable member states’ national law.