Prague, 28 January 2014Oscar ARIAS – Managing Director

Agenda

1. Presentation of DSE2. EU Consumer Legislation – Our Views

a) Current EU Legislation: comprehensive and stringent

b) Implementation and Enforcement: lagging behindi. An Example: the UCP Directiveii. A national case study: the ‘Smejdi’

c) Suggested actions aheadi. In generalii. In cross-border situations

Presentation of DSE

“…make sure that the nucleus of the European

sustainable and customer oriented direct selling industry

has a strong say in the relevant legislative process in

Brussels” (extract from constituent meeting January 2007).

DSE was created in 2007 to …

• Represent before the EU Institutions the interests of the European

Direct Selling companies with the highest ethical standards

• 15 members: 5 national associations + 10 companies

• +/- 50% of turnover in direct selling in Europe

• Members with superior customer and after sales services

• Production made in the EU

• Excellent relationship with EU legislator and consumer

organisations

DSE Core Values and Data

Members

EU Consumer Legislation - Our views

2. EU Consumer Legislation – Our Views

a) Current EU legislation is modern, comprehensive, detailed and stringent

Unfair Commercial Practices Directive (UCPD) (2005/29/EC)

Consumers Right Directive (2011/83/EU) Alternative Dispute Resolution / Online Dispute

Resolution (ADR / ODR) (2013)

2. EU Consumer Legislation – Our Views

2. EU Consumer Legislation – Our Views

b) … Implementation and Enforcement of EU Legislation is lagging behind !

…To date, serious implementation and enforcement problems:1.More than 8 years after the adoption of the UCPD, the implementation varies substantially across the EU2.Different interpretations of prohibition of pyramid schemes3.Bans and restrictions at national level not allowed by the UCPD

2. EU Consumer Legislation – Our Views

2. EU Consumer Legislation – Our Views

EU Commission should fulfill its responsibility to ensure proper implementation of EU legislation. However…1.EU Parliament Resolution Jan 2009 on transposition, implementation and enforcement of UCPD: most problems still unresolved today!2.EU Commission pre-infringement pilot-case letters sent to 26 EU MS since 20113.After 3 years of consultation with MS, only 1 MS has been brought to the EU Court of Justice

2. EU Consumer Legislation – Our Views

A national case study: ‘Smejdi’ (I/III)

The Issue1.Crook companies target vulnerable consumers (mainly elderly) through:

1. Product demonstrations excursions2. Aggressive and misleading practices (e.g. flyers,

threat, upholding personal IDs, preventing from using mobile phones, etc.)

2.Hundreds of victims, particularly in CZ and SK

2. EU Consumer Legislation – Our Views

A national case study: ‘Smejdi’ (II/III)

Actions undertaken so far in 20131.Czech Republic:

• Total fines below 1€ million• 80% of inspected events use illegal practices

(insufficient enforcement of legislation and fines)2.Slovakia:

• Total fines of circa 0.25€ million• New law, increasing the fines from current

maximum of 3.000€ to 16.000€

2. EU Consumer Legislation – Our Views

2. EU Consumer Legislation – Our Views

c) Suggested actions ahead (I/III)i. In general

1.Put correct implementation of EU legislation as a top priority for the EU Commission2.Speed-up consultations Commission-MS3.Strengthen the proactivity of the Commission in monitoring the implementation of EU legislation, particularly as regards full harmonization legislation4.Work more closely with consumers associations and business representatives ahead of non-legislative actions against a sector (e.g. sweep investigations)

2. EU Consumer Legislation – Our Views

c) Suggested actions ahead (II/III)ii. In cross-border situations

1.EU complaint system accessible online to citizens2.Additional powers for national enforcers:

Name and shame Carry out test purchases for investigation

purposes3.Common standards in CPC Regulation to overcome procedural differences amongst MS

2. EU Consumer Legislation – Our Views

c) Suggested actions ahead (III/III)ii. In cross-border situations

1.Suggested approaches for EU-wide infringements:1. Obligation for MS to notify cases of EU relevance so

to trigger joint enforcement action2. Obligation for the concerned MS to conduct a joint

enforcement action3. Obligation for MS to alert other MS when suspected

similar practices4. Single action for EU level infringements (allow EU

single + MS joint enforcement actions)

Thank you!Oscar ARIAS

Managing DirectorAv. Toison d’Or 511060 Brussels, BE

Gsm: (+32) 476 907 867Email: oa@directsellingeurope.eu