EU Balancing Consumer and Market Protection

The European Parliament has failed to pass controversial legislation that aimed to make merchants responsible for return shipping on items valued at over 40€. The proposed legislation was being considered along with a number of other potential amendments to the European Consumer Rights Directive. Fortunately, for both consumer and vendor, this legislation was strongly opposed by the UK’s IMRG and failed to win enough support to pass.

In an effort to protect the consumer by offering an “insurance policy” on returns, the EU would have set processes in motion that would have surely caused increases in pricing to be passed along to the consumer in order to cover a percentage of the returns. I don’t care what continent you’re on, insurance costs someone money. And in the case of eCommerce vendors that are legally required to offer a service that essentially offers the end consumer “free” return shipping on higher priced items, that cost would either affect the vendor’s bottom line or be passed along to the consumer. Guess which is more likely?

There is additional legislation still being considered that will give consumers the right to return items within a 14 day period instead of the current 7 day time-frame. Also, if deliveries aren’t made within 30 days, the EU plans on giving consumers the right to cancel the order. These are both positive moves that will force some less efficient online shops to get a grip on logistics and become more customer focused. These two amendments are really about placing measures on vendors who take advantage of online buyers. And that’s good.

In many ways, the EU legislation is politically similar to what is happening in the US in regard to sales tax rules for eCommerce vendors. Many states have begun to pass rules that somewhat side-step the “nexus” requirement for taxation in an effort to increase tax revenue. I’m sure this seemed like a great idea to legislators hungry to increase revenues in the midst of a global recession, but it back-fired. Amazon affiliates began to suffer from the new rules almost immediately. Colorado-based affiliates, affected by a new state law that stated they provided nexus for Amazon, were informed by Amazon that their affiliate accounts had been closed. This was followed by similar action in North Carolina and Illinois. So those states took a double hit:  They lost income tax revenue from Amazon affiliate sales and newly anticipated sales tax revenues failed to materialize.

There is a delicate balance here between protecting the consumer and allowing for healthy growth of the global eCommerce economy. Hopefully, the EU will keep things in balance and continue to build and nurture a single eCommerce economy across all member states. As mentioned in several earlier posts on the challenges with cross-border eCommerce, enabling organizations to expand their reach should be the goal. More cross-border competition benefits the consumer and finds companies focused on their home country refining their offerings to better serve the population of the much larger EU community.

One Response

  1. Dita Vyslouzilova June 23, 2011

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