Evaluation of the European Consumer Centres Network (ECC-Net ...

DG HEALTH AND CONSUMERS

Evaluation of the European Consumer Centres Network (ECC-Net) Final Report Submitted by CPEC within the Framework Contract SANCO/2008/01/055 (Lot 2: Consumer Policy) Specific Contract No17.020200/10/556529

14th February 2011

Contact person for this tender: Charu Wilkinson, GHK , Tel: +32 (0)2 2750100, email: [email protected]

CPEC Brussels contact address: Rue Royale 146, B-1000 Brussels Tel: +32 (0)2 2750100, Fax: +32 (0)2 2750109, email: [email protected]

Evaluation of the European Consumer Centres Network (ECC-Net)

Document Control Document

Final Report

Prepared by

Charu Wilkinson

Checked by

Astrid Henningsen, Nick Bozeat

Date

14 February 2011

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INDEX INDEX OF FIGURES ........................................................................................................................ I INDEX OF TABLES ......................................................................................................................... I LIST OF ACRONYMS AND GLOSSARY OF KEY TERMS ............................................................ I KEY MESSAGES ........................................................................................................................... III EXECUTIVE SUMMARY ................................................................................................................ V 1 INTRODUCTION ....................................................................................................................... 1 1.1 The Objectives and Scope of the Evaluation.......................................................................... 1 1.2 The Object of the Evaluation: The European Consumer Centres Network ............................ 2 1.3 The Context for the Evaluation: the Heterogeneity within the Network .................................. 3 1.4 Structure of the Report ........................................................................................................... 7 2 THE METHOD OF APPROACH ............................................................................................... 9 2.1 Evaluation Methodology ......................................................................................................... 9 2.2 Strengths and Limitations of the Data Collected .................................................................. 12 3 TAKING STOCK: PROGRESS AND FUNCTIONING OF THE NETWORK .......................... 16 3.1 Relevance and Impact of the ECC-Net ................................................................................ 16 3.2 Effectiveness and Coherence ............................................................................................... 51 3.3 Cost Efficiency and Delivery ................................................................................................. 74 4 UNLOCKING THE POTENTIAL OF THE NETWORK: RECOMMENDATIONS FOR IMPROVEMENT ............................................................................................................................ 83


INDEX OF FIGURES Figure 2:1 Evaluation Methodology and Work Programme............................................................. 9 Figure 3:1 Number of Information Requests, Complaints and Disputes handled by the ECC-Net, 2005 - 2009 .................................................................................................................................... 21 Figure 3:2 The Extent to which the ECC-Net Users Agree or Disagree with the following statement: ‘The ECCs provide a useful service to European Consumers’ ................................... 22 Figure 3:3 Overview of Normal Complaints Handled by the ECCs, 2008 and 2009 ..................... 23 Figure 3:4 Disputes by Closure Type, 2008 and 2009 .................................................................. 25 Figure 3:5 Percentage of Users reporting Change in Confidence as a result of contacting the ECCs .............................................................................................................................................. 26 Figure 3:6 Relationship between Intervention Logic and Objectives............................................ 31 Figure 3:7 Range of Options for Enhancing the Role of the ECC-Net .......................................... 32 Figure 3:8 Action taken by Consumers since contacting the ECC-Net ......................................... 39 Figure 3:9 Links between ECC-Net Objectives and EU Consumer Policy Objectives .................. 42 Figure 3:10 The Channels through which the Consumers first heard of the ECCs ...................... 53 Figure 3:11 ECC-Net: Medium of Contact by Users, 2009 ........................................................... 62 Figure 3:12 Adequacy of Procedures ............................................................................................ 64

INDEX OF TABLES Table 1:1 The Scope of the Evaluation Questions Addressed ........................................................ 2 Table 1:2 Differences in Global and Operating Context of the ECCs (2008 data, unless indicated otherwise) ........................................................................................................................................ 6 Table 2:1 Scope of the Case Studies ............................................................................................ 11 Table 3:1 Closed Normal Complaints by Closure Type, 2007 and 2008 ...................................... 23 Table 3:2 Time Taken to ‘Close’ Normal Complaints and Disputes Reviewed as part of Case Study Research ............................................................................................................................. 28 Table 3:3 Overview of the Options for Enhancing the Role of the ECC-Net as a Mechanism for Obtaining Redress for Consumers ................................................................................................ 33 Table 3:4 Assessment of Relevance, Adequacy and Appropriateness of the ECC-Net’s Objectives to EU Consumer Policy Objectives .............................................................................. 43 Table 3:5 User Feedback on Websites ......................................................................................... 56 Table 3:6 Results of a Qualitative Review of the ECC websites ................................................... 57 Table 3:7 Number of Contact and Cases Handled per FTE in 2009 ............................................. 65 Table 3:8 Suggested Indicators for Benchmarking the Performance of the ECCs ....................... 80


LIST OF ACRONYMS AND GLOSSARY OF KEY TERMS ADR

Alternative Dispute Resolution mechanisms dealing with consumer complaints without involving the traditional court system

CPC Network

Consumer Protection Cooperation Network is an EU-wide network linking up national enforcement authorities and enabling them to take co-ordinated action against rogue traders who abuse the freedom of the EU's Internal Market in order to deceive consumers. The network facilitates information exchange and cooperation and empowers enforcement authorities to seek and obtain action from their counterparts in other Member States.

CPEC

Consumer Policy Evaluation Consortium

CPN

Consumer Policy Network (CPN) of senior consumer officials and of Directors General from Member States.

Dispute

A referral of a consumer complaint to an out-of-court body

ECC

European Consumer Centres

ECC-Net

European Consumer Centres Network

EEJ-Net

European Extra-Judicial Network

EEA

European Economic Area

EFTA

European Free Trade Area

FAQs

Frequently Asked Questions

FIN-NET

FIN-NET is a financial dispute resolution network of national out-of-court complaint schemes in the European Economic Area countries (the European Union Member States plus Iceland, Liechtenstein and Norway) that are responsible for handling disputes between consumers and financial services providers, i.e. banks, insurance companies, investment firms and others. If a consumer in one country has a dispute with a financial services provider from another country, FIN-NET members will put the consumer in touch with the relevant out-of court complaint scheme and provide the necessary information about it.

NEB

National Enforcement Bodies responsible for dealing with air passenger 1 2 complaints according to Regulations 261/2004 and 1107/2006 . Moreover, NEBs can sanction air carriers both on the basis of infringements

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Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No 295/91

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Regulation (EC) No 1107/2006 of the European Parliament and of the Council of 5 July 2006 concerning the rights of disabled persons and persons with reduced mobility when travelling by air

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regarding individual cases and on the basis of collective interest of consumers. Passengers can complain to these bodies about an alleged infringement of these regulations. NEB-Net

Network of NEBs

Normal complaint

A statement of dissatisfaction by a consumer concerning a cross border transaction with a seller or a supplier

ODR

Online Dispute Resolution

Simple complaint

A complaint that has been dealt with by an ECC in a one-step operation without any follow-up (typically an e-mail or telephone answer to a consumer inquiry about a complaint where the consumer is informed about his/her rights and advised on how to approach the trader in order to solve the issue directly with the trader

SOLVIT

SOLVIT is an on-line problem solving network in which EU Member States work together to solve problems caused by the misapplication of Internal Market law by public authorities (without recourse to legal proceedings). There is a SOLVIT centre in every European Union Member State (as well as in Norway, Iceland and Liechtenstein). SOLVIT Centres can help with handling complaints from both citizens and businesses. They are part of the national administration and are committed to providing real solutions to problems within ten weeks. Using SOLVIT is free of charge.

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KEY MESSAGES In February 2010, the Directorate-General for Health and Consumers (DG SANCO) appointed Consumer Policy Evaluation Consortium (CPEC) to evaluate the functioning of the European Consumer Centres Network (ECC-Net); and, to develop recommendations for improvement and future orientation of the Network. The main messages of the evaluation are as follows:

The unrealised potential of the internal market is estimated to be in the order of EUR 194 billion (or 3% of the entire B2C market). Giving consumers clear information about their rights and assuring them that they can obtain effective redress in the event of a problem, will improve their confidence and help unlock the full economic potential of the internal market.

The services provided by the ECC-Net are thus highly relevant to the needs of the European consumers. The evidence points to growing demand for the services offered by the Network. The number of consumer enquiries (information requests, complaints and disputes) handled by the Network rose by 25% over the period 2005 to 2009. Moreover, 87% of the respondents to the user survey (conducted as part of the evaluation), consider that the ECCs provide a useful service to consumers.

The direct financial benefit accruing to consumers as a result of the ECCs’ actions outweighs the cost to the tax payer of supporting the ECCs. The Network delivered direct financial benefits to consumers of at least 1.77 times its cost to the taxpayer during 2010. Additionally, there are significant non-quantifiable benefits such as consumer detriment avoided and increased confidence in cross border shopping attributable to ECCs’ activities.

Nonetheless, the scale of the challenge facing the ECCs is huge. Overall, 79% of EU citizens do not know where to get information and advice about cross-border shopping in the EU.

And, while most users (74%) are satisfied with the quality of the service they receive from the Network, the ECCs’ actions are having a limited impact on consumer confidence in cross border shopping. Only 29% of the respondents to the user survey reported an increase in confidence as a result of contacting the ECCs; while 19% reported a fall in confidence.

This is because a significant proportion of the cases handled by the ECCs are closed without any solution each year (27% in 2008 and 39% in 2009) or transferred to other organisations (11% in 2008 and 13% in 2009). The ECC-Net’s ability to facilitate access to redress is constrained by a number of external and internal factors.

The main external constraints to delivery are: lack of a well functioning ADR system across Europe; and lack of willingness on the part of some traders to engage with the ECCs in resolution of consumer complaints. Internal weaknesses include: lack of effective case handling protocols; limited resources spread too thinly across a range of activities; and, lack of effective performance management tools.

The overall impact of the Network can be improved by leveraging its strengths and addressing its weaknesses, most notably: 1. Strengthening cooperation between the ECCs and enforcement bodies (and where applicable, with ADR bodies) through the establishment of formal protocols and

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procedures. Such protocols should reflect some basic common principles across the Network; but, they should be tailored at the level of each centre to reflect national specificities. The protocols should cover issues such as sharing of information and evidence about specific traders (with enforcement bodies), the prioritisation of enforcement action taking account of complaints from non domestic consumers and joint sector studies (where the potential of cross border trade is high) to identify causes of problems other than the unfair behaviour of national traders. It should be mandatory for the Trader ECC to report an infringement (actual or suspected) to the relevant enforcement body. 2. Streamlining the objectives of the ECC-Net. Specifically, the ADR development function should be made optional rather than mandatory for the ECCs 3. Facilitating access to redress via the most appropriate channel which includes: direct complaint to the trader; ADR mechanism; European Small Claims Procedure; and, other judicial mechanisms (as a measure of last resort). Presently, the fourth vademecum objective (assisting consumers with a dispute) refers to out-of-court mechanisms only. However, the ECCs could provide assistance to consumers with dispute resolution via court based procedures in certain cases. For example, the ECCs could provide basic legal advice on judicial options available to consumers for obtaining redress. 4. Maintaining efforts to improve case handling procedures by introducing common minimum standards of service across the Network. 5. Managing consumer expectations from the first point of contact by informing them of the role and competences of the Network. 6. Placing greater emphasis on consumer and business awareness campaigns of a preventative nature; and, consumer education initiatives to equip consumers with the skills and knowledge to participate in the internal market with confidence. Such campaigns could usefully be linked to developments in EU consumer policy. Moreover, the ECCs should systematically coordinate their promotional activities with relevant European and national stakeholders on topics of common interest in order to benefit from economies of scale and to ensure delivery of consistent messages to consumers/ businesses. 7. Conducting regular market research (including research via media monitoring) to identify goods and services where price differentials remain high and making this information available to policy makers and consumers. 8. Making the IT-tool more user-friendly and enhancing its functionality with respect to statistical analysis. 9. Improving the results orientation of the Network by introducing measurable performance benchmarks and performance based incentives. The European Commission should consider making the continuation of funding conditional upon individual ECCs demonstrating a positive benefits-cost ratio (i.e. the financial benefits delivered to consumers should be greater than the ECC’s cost to the taxpayer). 10. Ensuring that activities of individual centres particularly promotional activities, networking and feedback functions (where the ECCs actions don’t deliver easily measurable/ concrete outcomes for the consumers) are underpinned by a clear intervention logic in order to justify support. 11. Finally, the European Commission should consider replacing the current system of annual grants with a system of framework partnership agreements.

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EXECUTIVE SUMMARY BACKGROUND AND CONTEXT The European Consumer Centres Network (ECC-Net) was created in 2005 by merging two previously existing networks: the Euroguichets and the European Extra-Judicial Network (EEJNet). The Network comprises 29 centres which deal with cross-border business-to-consumer (B2C) issues in 27 EU Member States plus Iceland and Norway. The overall aim of the ECC-Net is to promote consumer confidence in the internal market. To this end, the European Commission has specified six ‘vademecum objectives’ for the ECCs to deliver. These are as follows: (i) to undertake promotional activities such as information campaigns, events etc. to raise awareness of the Network and consumer rights; (ii) to respond to specific consumer enquiries about their rights when shopping across borders; (iii) to assist consumers with complaints; (iv) to assist consumers with disputes; (v) to contribute to the development of Alternative Dispute Resolution (ADR) schemes in their host country; and, (vi) to engage in networking and feedback i.e. information sharing and contributing to policy-making. The overall responsibility for the management of the ECC-Net lies with the Directorate-General for Health and Consumers (DG SANCO). However, financial management of the ECC-Net has recently been delegated to the Executive Agency for Health and Consumers. The Network is co-financed by the European Commission, the EU Member States, Norway and Iceland. The EU grant allocation to the ECCs for the year 2010 was EUR 4.5 million. The ECCs are hosted by public bodies or non-profitmaking organisations which have been designated by the relevant competent authority in each of the participating countries and approved by the European Commission. In February 2010, DG SANCO commissioned CPEC to evaluate the functioning of the Network; and, to develop recommendations for improvement and future orientation of the Network. The evaluation was both summative i.e. taking stock of progress and achievements to date; and formative i.e. a basis for drawing lessons for the future. To achieve this, quantitative and qualitative evidence was drawn from a number of sources: desk research; an online survey of ECCs; an online survey of ECC-Net users; case study research which included a series of consultations with a range of stakeholder groups in ten Member States; and, a mystery shopping exercise. RESULTS OF THE EVALUATION: FUNCTIONING OF THE NETWORK The main conclusions of the evaluation are as follows: The relevance and impact of the ECC-Net 3

The current size of the B2C market in the EU is estimated to be EUR 6.7 trillion , which represents 57% of the EU GDP (2009). It is estimated that cross-border shopping accounts for 4 approximately 1.2% of the entire B2C market . Assuming that 0.53% of cross-border shopping (by value) gives rise to consumer dissatisfaction or problems, then the monetary value of the

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Estimate of consumer expenditure in the EU. Source: Eurostat [nama_co2_c-Final consumption expenditure of households by consumption purpose - COICOP 2 digit - aggregates at current prices] 4

Based on the 423 million consumers in the EU (i.e. population aged over 15, Eurostat) X proportion of EU population engaging in cross border shopping (25% as per Special EB 298) X average amount spent by cross-border shopper in the EU per year on these purchases (EUR 797 as per Special EB 298). The total amount spent by consumers on cross-border shopping is estimated to have been EUR 84 billion in 2008 which represents 1.2% of the total final consumption expenditure of households in 2008 (EUR 7,048 billion, source: Eurostat)

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losses experienced by cross-border shoppers is estimated to be around EUR 425 million per 5 annum . Lack of Information on the advantages and/or disadvantages of cross-border shopping as well as concerns that it might be difficult for them to obtain effective redress across borders (in the event of a problem) are some of the main issues that prevent a number of consumers from engaging in cross-border shopping. As a result, consumers are failing to reap the full benefits of the internal market, most notably they are missing out on greater choice and lower prices. The unrealised 6 potential of the EU B2C Internal Market is estimated to be EUR 194 billion . The ECC-Net plays a dual role in this context:

Reducing the detriment experienced by consumers who have encountered problems with their cross border purchases by providing them with assistance in the resolution of their individual cross border complaints; and,

Improving consumer welfare (through access to greater choice and lower prices) by providing then with information and advice on their rights (so that they can participate with confidence in the internal market).

The extent to which it achieves these aims is extremely difficult to measure. Monetary redress secured by consumers following ECC action is estimated to be over EUR 14 million for the period January to November 2010 (around 10% of the value of problematic transactions). However, it is reasonable to assume that the recovery of average detriment in monetary terms is relatively low as compared to the financial benefits that would accrue to consumers through greater participation in cross border markets. For example, if the presence and activities of the ECC-Net increased the confidence of consumers to engage in cross-border shopping, so that just 1% of the unrealised benefits of the internal market were achieved, then the wider impact of the Network would be in the order of EUR 2 billion. Both of the above impacts are plausible in the light of the evidence of this evaluation. In the future, more robust estimates should be possible. These impacts significantly outweigh the costs of running the ECC-Net of EUR 8 to 9 million per annum (these costs include EU grants and national co-financing). The consumer policy strategy for 2007-2013, foresees the ECC-Net as an important instrument ‘to promote consumer confidence by advising citizens on their rights as consumers and providing easy access to redress in cross border cases’. However, in its current form, the ECC-Net is only partially meeting these objectives. A significant proportion of the complaints dealt with by ECCs are closed without any solution (27% in 2008 and 39% in 2009) or transferred to other organisations (11% in 2008 and 13% in 2009); and so far, the Network has had a limited impact on the confidence of the consumers who have used its services (only 29% of the respondents to the user survey reported an increase in confidence as a result of contacting the ECCs; while 19% reported a fall in confidence). This is mainly because the ECCs lack the mandate and the authority to secure redress for consumers. In such a context, the ability of the Network to facilitate access to redress depends on the existence of a well functioning ADR system across Europe; and the willingness on part of concerned traders to engage with the ECCs in reaching an 5

A recent study estimated that the losses incurred by European consumers through problems with purchased goods or services amounted to 0.3% of Europe's GDP (which as a percentage of household consumption expenditure is 0.53%) Source: COM(2010) 608 final/2, p. 32. Available at: http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0608:REV1:EN:PDF#page=2. 6

This estimate was made in the preparatory study for the Impact Assessment on proposals for the Consumer Rights Directive based on price differentials for goods that were suitable for cross border trading.

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amicable settlement. However, both these external dependencies (lack of ADR mechanism and trader cooperation) are currently hindering the effective functioning of the Network. Nevertheless, the Network is playing an important role in empowering consumers. A majority of the consumers (74%) who have used the ECC-Net have benefitted from the information, advice and support received and in the process they have enhanced their knowledge and have taken action that demonstrates a certain level of empowerment. For example, following advice received from the ECCs, a majority of the ECC-Net users (67%) have either resolved the issue directly with the trader, used the European Small Claims procedure or pursued further action by contacting another organisation (e.g. bodies responsible for policy, enforcement or ADR). It has not been possible to assess the effects of the ECCs on consumer empowerment and confidence, more generally (i.e. beyond the users of the Network). However, given the gradual growth in cross border trading and the importance given to promotional activities by the ECCs, some positive impact is likely to have accrued. On the basis of the evaluation evidence collected, it can also be concluded that the ECCs have made a positive contribution to the achievement of EU consumer policy goals. Their ‘on the ground’ presence and comprehensive national coverage enables the ECCs to collect and feed back to the European Commission, vital evidence on issues facing the consumers and on the functioning of the markets. The consumer complaints data and intelligence collected by the ECCs is particularly useful in this respect. At an EU level, the ECCs systematically respond to all consultations launched by the European Commission on consumer affairs (e.g. Air Passenger Rights Regulation, Consumer Rights Directive and the Timeshare Directive). Moreover, the ECCNet complaints data is regularly used for policy making and market monitoring purposes (e.g. the forthcoming Impact Assessment on possible initiatives in the field of collective redress, EU 7 Consumer Market Scoreboards and reports on e-commerce ). The ECCs have also contributed to national policy making in consumer affairs. However, the extent of this influence is limited and varies across the Network depending upon the national institutional framework and where the particular ECC sits within it. According to a majority of the ECCs and national stakeholders, the ECC-Net does not have a mandate to actively engage in national policy making; and, its involvement in national policy making should be limited to sharing data and intelligence on the nature and incidence of complaints arising from cross border and the means through which these can best be resolved. The coherence and effectiveness of the ECC-Net The implementation arrangements for the ECC-Net are coherent and there is evidence of them being effective. Overall, a vast majority of the consumers contacting the ECCs (74%) are satisfied with the quality of the service they receive. The minority (14%) who were not satisfied typically stressed the prolonged time taken in case handing and/or that their particular complaint was not resolved to their satisfaction. The inability of the ECCs to secure redress is a source of disappointment for many unsatisfied users. The results of the user survey indicate that the replies and assistance provided by the ECCs are considered to be relevant, tailored and useful by approximately 80% of the users. Case study analysis and mystery shopping results however, suggest that some ECCs could provide more tailored responses to customer enquiries.

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A summary and analysis of e-commerce related complaints reported by consumers to the ECCs. So far, the ECC-Net has published five reports highlighting the main problems that consumers face when engaging in cross-border e-commerce. The latest report was published in 2010 and it was based on an analysis of ecommerce related complaints handled by the ECCs during 2008 and 2009.

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Collaboration on specific cases between the ECC in the country of the consumer (‘Consumer ECC’) and the ECC in the country of the trader (‘Trader ECC’) is a critical aspect of the ECC-Net and one that generally works well. However, some problems have been noted, for example, inconsistencies in working practices such as response times (although the Case Handling Protocol is starting to make a difference in this regard); and, differences in the quality of the case handlers across the centres. Overall, there is scope to improve collaboration within the Network by addressing the weaknesses highlight above. Only a tiny proportion of cases (< 2%) dealt with by the ECCs are referred to national consumer organisations. Signposting of cases between the ECC-Net and other EU networks (about 0.2% of the cases) and between the ECCs and enforcement bodies is also very limited (2% of the cases). In most cases, there are no procedures at a national level for the follow up of cases transferred from the ECCs to the enforcement bodies. This is an area where further action is needed such as the establishment of formal mechanisms to facilitate cooperation between the ECCs and enforcement bodies. Cooperation with and the development of ADR bodies is an important component of the work of the ECCs. Cooperation with ADR bodies is typically informal and the extent of collaboration with ADRs is affected by the existence (or not) of appropriate ADR schemes in each country. The extent to which the ECCs directly assist in ADR development varies markedly between national contexts. Constraints which prevent the ECCs from assisting national authorities in the development of new ADR schemes include: lack of supportive legislative framework and political will at a national level; and, lack of resources at the level of the individual centres. A number of ECCs do not consider it within their remit to get actively involved in ADR development in their national contexts. In fact, 17 ECCs were of the opinion that the vademecum objective relating to ADR development is unnecessary as this function falls within the remit of their national authorities. Apart from dealing with specific cases, cooperation between the ECCs within the Network is a source of added value. Most ECCs participate in joint projects which are undertaken to investigate specific sectors or issues where consumers are experiencing particular difficulties. Participation in joint projects is normally voluntary and ECCs become involved by indicating their interest in a given topic. There have been issues with the quality of some joint projects (such as use of unreliable data and delay in publication of results) which have undermined their utility. ECCs involved in joint projects should put in place effective quality control and quality assurance measures to avoid such issues from recurring. The mentoring of newer ECCs by more experienced ECCs and study visits between ECCs that routinely cooperate on cases are considered to be particularly useful and effective in facilitating cooperation and knowledge sharing between the Network members. It is not an explicit objective of the ECCs that they should raise their own visibility. However, it is clearly useful if consumers who have experienced difficulties as a result of cross border shopping become aware of the services offered by the ECCs and can access them. Overall, 79% of EU citizens do not know where to get information and advice about cross-border shopping in the EU. The evidence therefore points to the need for further action in the area of proactive information provision. The ECCs are generally easy to access. Over 75% of the users stated the ECC was either ‘very easy’ or ‘somewhat easy’ to find. Less than one-tenth of users stated the ECC had been ‘very difficult’ or ‘difficult’ to find (7%). Furthermore, the mystery shopping results confirm that the ECCs are easily accessible via email and telephone and that the ECCs reply promptly to enquires.

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Although only a small proportion of the users (7%) contacted the ECCs in person in 2009; case studies highlight the importance of maintaining physical presence in participating countries as it enables grass root linkages and contact with local stakeholders and institutions (ADR schemes, enforcement bodies and national consumer protection organisations) which in turn helps the ECCs to stay informed of national policy and institutional developments; and allows for effective signposting and cross-referral of cases between different organisations active in the field of consumer protection. Proximity to traders also makes it easier for the ECCs to contact and communicate with them. The ECC websites are an important means of introducing the ECC to potential users. Majority of the users are satisfied with the quality (76%), content (76%) and layout (71%) of the ECC websites. However, relevant internet searches do not identify the sites as well as they might and there is scope to improve the quality of the websites of some ECCs. There may be merit in the ECC websites having common structures (for example, the availability of a web form for contact, up to date information, FAQs etc.). The overall visibility of the ECCs among general population is low. Only 15% of European 8 citizens (and 20% of the cross-border shoppers) have heard of the ECCs . However, this is not necessarily an issue where the ECCs have good linkages with relevant stakeholders (such as national consumer, enforcement and ADR bodies) that allow effective signposting of consumers and cross-referral of cases. It is also noted that the ECC-Net is comparatively more visible than other EU networks. According to available evidence, 11% of EU25 citizens had heard of the 9 ECCs in 2006; whereas the visibility of other EU networks ranged from 2% - 6% . Moreover, a survey conducted by the Commission (which was addressed toEU networks) suggests that the ECCs are ‘quite well known’ as compared to other EU networks. The main targets for the ECC-Net’s promotional activities are consumers in the middle to higher income class, who tend to travel and/or have use of the internet. These are the groups that are most likely to engage in cross-border shopping either when travelling or through distance purchases. The ECCs also reach out to young consumers and school pupils. The ECCs engage in a range of promotional activities that seek to inform and educate consumers about their rights and other issues of concern (e.g. information leaflets on renting a car, buying festival tickets, scam awareness, buying on the internet – a prevention campaign aimed at young people; Howard shopping assistant which provides general tips and advice on how to become a better online shopper and makes it easier to find international online shops etc.). The promotional activities of the ECCs reach hundreds of thousands of consumers across Europe each year. However, there is currently no means to accurately assess the impact of ECC’s promotional activities on raising consumer awareness levels. The extent of cooperation for promotional purposes with other stakeholders involved in the field of consumer protection varies across the EU depending upon national context. The main promotional activities undertaken by the ECCs are normally not coordinated with other EU networks as the focus of such activities tends to be on ‘consumer’ issues rather than ‘EU’ issues; although some examples of common promotional activities can be found in countries like Latvia, Slovenia and Germany. As regards cooperation with national stakeholders (e.g. host organisation, enforcement bodies etc.), the need for cooperation is strongest when promotional activities cover topics of common interest. This is already happening, albeit to a limited extent (e.g. Luxembourg). Systematic coordination of promotional activity with other stakeholders by the

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Proportion of consumers who have heard of ECCs/ Euroguichets at least once in the last 12 months; Source: Special Eurobarometer 298 (2008) p.96 9

Special Eurobarometer 254 (2006), p.88

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ECCs could be a source of economies of scale and would ensure delivery of consistent messages. Value for money The direct financial benefit accruing to consumers as a result of the ECCs’ actions outweighs the cost to the tax payer of supporting the ECCs. The Network delivered direct financial benefits to consumers of at least 1.77 times its cost to the taxpayer during 2010. Additionally, there are significant non-quantifiable benefits associated with consumer detriment avoided and increased confidence in cross border shopping attributable to ECCs’ activities. Efficiency and delivery Some ECCs are adequately resourced; while others are not (particularly those hosted by NGOs). According to the results of the ECC survey, 52% (or 15 out of 29 ECCs) are of the opinion that they are adequately resourced; compared to 48% (or 14 ECCs) who think otherwise. Moreover, a vast majority of the ECCs (24 ECCs) indicate that they have little or no margin to deal with a sudden increase in the level of enquiries; and their present level of funding is too little to deliver additional promotional activity or an increased volume of consumer enquiries. A number of ECCs have experienced financial constraints and uncertainty (particularly those hosted by NGOs) as a result of the system of annual funding and uncertainties with respect to national co-financing. These pressures can be expected to worsen in the coming years as EU and national budgets come under increasing pressure and scrutiny. This makes it all the more important for the ECCs to demonstrate clear improvements in consumer welfare, attributable to their actions in order to justify public financial support. Overall, there is scope for improving efficiency and delivery by: improving the results orientation of the Network; ensuring that all actions of the ECCs are underpinned by a clear intervention logic; and, addressing specific inefficiencies in case handling procedures. In this context, the European Commission should also consider replacing the current system of annual grants with forms of multi annual funding (e.g. framework partnership agreements). The evaluation however, did not find conclusive evidence to suggest that the introduction of a legal basis would enhance the functioning of the Network. On the one hand, a legal base would give the Network an official status which might enable the ECCs to have greater leverage over traders (although this cannot be asserted with certainty as in absence of any statutory/ legal authority, the traders are not obliged to cooperate with the ECCs); on the other hand, creating a legal basis for the Network does not address the more fundamental issues with the consumer protection environment such as inadequate ADR coverage; weak enforcement of consumer protection legislation; and, differences in consumer legislation across Member States. Nonetheless, this issue deserves further consideration of the type typically required by a Commission Impact Assessment should a legislative proposal be put forward. RECOMMENDATIONS FOR IMPROVEMENT AND FUTURE ORIENTATIONS OF THE NETWORK Scope of the Network Much of the evaluation evidence points to limited resources being spread thinly across too many ‘objectives’ and the stakeholders emphasising the need for the ECCs to focus on resolution of cross-border issues. On balance, there is scope for streamlining the objectives of the Network. There is a case for defining the key objectives of the Network as follows:

To increase consumer confidence in the internal market;

To increase consumers’ awareness of their rights on cross-border issues; and,

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To protect the rights of the consumers shopping cross internal border.

Whilst all of the vademecum activities are potentially relevant to achieving these objectives, the impact of the ECC-Net would be greater if it concentrated its limited resources on the resolution of cross border cases. As such, the ADR development function (objective 5 of the vademecum) should be made an optional rather than mandatory objective for the ECCs. Moreover, the role of the Network could be further strengthened by:

Improving cooperation with enforcement bodies (and where applicable, with ADR bodies) through the establishment of formal protocols and procedures. Such protocols should reflect some basic common principles across the Network; but they should be tailored at the level of each centre to reflect national specificities. The protocols should cover issues such as sharing of information and evidence about specific traders (with enforcement bodies), the prioritisation of enforcement action taking account of complaints from non domestic consumers and joint sector studies (where the potential of cross border trade is high) to identify causes of problems other than the unfair behaviour of national traders. It should be mandatory for the Trader ECC to report an infringement (actual or suspected) to the relevant enforcement body.

Facilitating access to redress via the most appropriate channel which includes: direct complaint to the trader; ADR mechanism; European Small Claims Procedure and other judicial mechanisms (as a measure of last resort). Presently, the fourth vademecum objective (assisting consumers with a dispute) refers to out-of-court mechanisms only. However, the ECCs could provide assistance to consumers with dispute resolution via court based procedures in certain cases. For example, the ECCs could provide basic legal advice on judicial options available to consumers for obtaining redress. As resources are limited, the effort put in by the ECCs in assisting consumers with individual disputes should be proportionate to the expected societal benefits, for example: changes in trader’s behaviour; the deterrence effect of ECC’s actions on other traders; and potential impact on consumer confidence in the internal market. Several relevant criteria could be used for prioritising effort; the ECCs should have some discretion in applying them. These criteria could be: the scale of immediate detriment to the consumer complaining; the frequency of similar complaints (both with respect to the particular trader and sector); the knock on effects to ‘national reputation’ (for example, if the complaint related to tourism and/or a major export industry); and, the link with wider consumer confidence in cross border shopping.

Efficiency and delivery

Maintaining efforts to improve case handling procedures. The case handling protocol which was ‘road tested’ over the period 1st July 2010 to 31st of December 2010 should be finalised on the basis of the experience gained and lessons learned from its trial. The ECC-Net case handling protocol should specify the minimum standards of service, for example: deadlines for acknowledgement of complaint (and standard text to be used for the purpose. This text should outline the competencies of the ECCs and the limitations of their role and it could be modelled on the Danish example); and, deadlines for responding to communication received from other centres, traders and consumers.

DG SANCO should continue to improve the functionality of the IT tool by making it more user-friendly and by enhancing its analytical capability.

Improving the results orientation of the Network by introducing measurable performance benchmarks and performance based incentives designed to reward good performance. The European Commission should consider making the continuation of EU funding conditional upon individual ECCs demonstrating a positive benefits-cost ratio i.e. the

xi


financial benefits delivered to consumers should be greater than its cost to the taxpayer. At the same time, there should be incentives such as additional resources available for good performance (for example, where an ECC achieves a benefits-costs ratio above a pre-determined threshold).

Making it mandatory for the ECCs to routinely measure user satisfaction using a standardised feedback questionnaire.

Ensuring that activities of individual centres particularly promotional activities, networking and feedback functions (where the ECCs actions don’t deliver easily measurable/ concrete outcomes for the consumers) are underpinned by a clear intervention logic in order to justify support.

DG SANCO should consider replacing the current system of annual grants with a framework partnership agreement.

Coherence and synergies with other EU and national networks

The ECCs should develop internal guidance (in conjunction with the Commission and other stakeholders) explaining the roles and responsibilities of and the services provided by ADR schemes, NEBs, and members of European networks (FIN-Net, SOLVIT, CPC Network etc.).

Contribution to policy making

The ECCs and data on their activities are important sources of evidence to inform policy at both EU and national levels. The ECCs should conduct regular market research to identify goods and services where price differentials remain high and make this information available to policy makers and consumers.

In conducting their core business (i.e. assisting consumers with complaints and disputes), the ECCs are well placed to observe any negative effects arising from differences/ fragmentation in consumer protection legislation across Member States and weaknesses in national enforcement systems. Such intelligence should be shared with national policy makers.

The Network’s contribution to EU policy making could be optimised by encouraging ECC Directors to provide independent (and potentially critical) views on proposals for EU legislation in the field of consumer protection; and, giving advance notice to ECCs regarding forthcoming consultations or enquiries in order for them to include sufficient working days in their annual work programmes.

The ECCs should be encouraged, particularly where there is a strong measure of agreement, to submit a single coordinated response on EU consultations on relevant policy matters.

Visibility and awareness

Placing greater emphasis on consumer and business awareness raising campaigns of a 10 preventative nature ; and, consumer education initiatives to equip consumers with the skills and knowledge to participate in the internal market with confidence. Such campaigns could usefully be linked to developments in EU consumer policy. Moreover, the ECCs should systematically coordinate their promotional activities with relevant European and national stakeholders in furthering consumer and business understanding

10

for example, how to avoid cross-border disputes, scam awareness and myth buster campaigns; information to businesses on consumer protection laws and consumer rights; the consequences of breaching consumer protection laws etc.

xii


of how to avoid cross-border disputes, of dispute resolution and redress mechanisms available to consumers, and of where and how consumers can file complaints; and other topics of common interest such as e-commerce. Coordination of promotional activity with other stakeholders could potentially yield economies of scale and would ensure delivery of consistent messages to consumers/ businesses.

The ECC-Net should proactively disseminate information on its achievements and statistical analysis of evidence on aspects of cross border shopping giving rise to consumer detriment to national policy makers and relevant DGs within the Commission as well as other EU networks (e.g. FIN-NET, CPC Network).

xiii


1

INTRODUCTION This is the Final Report of the external evaluation of the European Consumer Centres Network (ECC-Net). The external evaluation was commissioned by the Directorate General for Health and Consumers (DG SANCO) in February 2010, within the auspices of the Framework Contract for ‘Evaluation, Impact Assessment and Related 11 Services’, Lot 2 (Consumer Policy) . The work was undertaken by the Consumer Policy Evaluation Consortium (CPEC) which comprises GHK Consulting, Civic Consulting and van Dijk Management Consultants. This evaluation was designed to be both summative i.e. taking stock of progress and achievements to date; and formative i.e. providing a basis for drawing lessons for the future. To achieve this, quantitative and qualitative evidence was drawn from a number of sources: in-depth desk research; a series of interviews with relevant Commission officials; an online survey of the ECCs; an online survey of the ECC-Net users; case study research (which included consultations with a range of stakeholders in ten Member States); and, a mystery shopping exercise covering ten Member States. The Final Report details the work undertaken and the evidence collected within the framework of this evaluation. It also sets out the conclusions reached in response to each evaluation question contained in the Terms of Reference for the evaluation; and provides a series of recommendations to improve the design and delivery of the Network going forward.

1.1

The Objectives and Scope of the Evaluation The ECC-Net has been operating, in its current format, for over five years. The timing of the evaluation therefore provides an excellent opportunity to take stock of its implementation and to inform the future orientations of the Network. Accordingly, the evaluation had two main objectives:

Objective One: To assess the functioning of the Network; and,

Objective Two: To develop recommendations for improvement.

In support of these objectives, the Terms of Reference outlined 45 evaluation questions grouped as indicated in Table 1:1. As regards the scope of the evaluation, it should be noted that:

11

The main purpose of the evaluation was to examine the Network as a whole. Its aim was not to assess the work or performance of individual ECCs.

The evaluation covered the operations of the Network over the period 2005 to 2009.

SANCO/2008/01/055 Lot 2

1


Table 1:1 The Scope of the Evaluation Questions Addressed Evaluation Objective

Objective One: To assess the functioning of the Network (summative)

Objective Two: To develop recommendations for improvement and future orientation of the Network (formative) 1.2

Evaluation Criteria

No. of Evaluation Questions

Relevance and impact

6

Effectiveness and coherence

22

Efficiency and delivery

4

General issues

4

Coherence and synergies

2

Policy making

5

Visibility and awareness

2

The Object of the Evaluation: The European Consumer Centres Network The ECC-Net is a pan-European network which was established with the overall aim of promoting consumer confidence in the internal market. It consists of 29 centres located in 27 EU Member States plus Iceland and Norway. These centres deal only with business-to-consumer (B2C) issues, delivering a range of services to consumers such as: advising them on their rights when shopping cross-border (within the territories of the EU, Iceland and Norway); supporting and assisting consumers with their complaints; and, providing consumers with information and access to an appropriate Alternative Dispute Resolution (ADR) scheme in the event of a dispute. The Network was created in 2005 by merging two previously existing networks:

The European Consumer Centres or ‘Euroguichets’, which provided information and assistance to consumers on cross-border issues; and,

The European Extra-Judicial Network (EEJ-Net) which helped consumers to resolve their disputes through ADR schemes using mediators or arbitrators.

There is no specific legal basis establishing the Network; it is foreseen as part of action 10.2 of European Parliament and Council Decision 1926/2006/EC establishing a 12 programme for Community action in the field of Consumer Policy (2007-2013) : Action 10.2: Financial contributions for joint actions with public or non-profit bodies constituting Community networks which provide information and assistance to consumers to help them exercise their rights and obtain access to appropriate dispute resolution (the European Consumer Centres Network). In the absence of a legal basis, the activities of the Network are governed by a ‘vademecum’ which specifies six categories of tasks (or operational objectives) for the ECCs: 1. Promotional activities (Proactive): to raise awareness of the Network and consumer rights by organising communication campaigns, seminars, workshops 12

DECISION No 1926/2006/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 18 December 2006 establishing a programme of Community action in the field of consumer policy (2007-2013). http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:404:0039:0045:EN:PDF

2


and conferences etc.; and, to cooperate with other EU-networks (e.g. SOLVIT FIN-NET); 2. Provision of information (Reactive): to respond to specific consumer enquiries about their rights when shopping across borders; 3. Assistance with complaints: to give advice and support to any consumer with a complaint related to a cross-border purchase; 4. Assistance with disputes: to provide easy access to ADR-bodies in situations where it has not been possible to resolve a cross-border consumer complaint amicably and to assist in this process; 5. ADR development: to collect information on national ADR schemes; and to assist the national authorities in the promotion and development of new out-ofcourt schemes; and, 6. Networking and feedback: to share information, problems and best practices with other centres in the Network; and to contribute to national and EU policy making processes. The overall responsibility for the management of the ECC-Net lies with DG SANCO. However, certain parts of the management of the ECC-Net have recently been 13 delegated to the Executive Agency for Health and Consumers (the Agency) . Specifically, the Agency is responsible for financial management of the ECC-Net which inter alia includes the following functions: preparation and publication of calls for proposals; evaluation of proposals in conjunction with DG SANCO; award of grants and preparation of grant agreements; monitoring the implementation of grant agreements; assessment of the performance of the individual centres; ex post publicity; and, implementation of financial controls. The Network is co-financed by the European Commission, the EU Member States, Norway and Iceland. The ECC host organisations are awarded grants on the basis of 14 15 an annual call for proposals launched by the Agency . Each year, the EU Member States and EFTA/ EEA countries are invited to participate in the call for proposals, as part of which they also have to designate a host organisation for the ECC in their respective countries. The host organisations must be a public body or a non-profitmaking body designated by the Member State (or by a competent authority in Iceland and Norway) and agreed by the European Commission. 1.3

The Context for the Evaluation: the Heterogeneity within the Network A consideration of wider context is important from an evaluation perspective, because an intervention does not operate in a vacuum. Contextual influences can act positively or negatively in relation to the problems that the intervention has been designed to address; as well as influence its functioning over time. Moreover, there are huge differences in the national contexts in which the ECCs operate in terms of the policy

13

COMMISSION DECISION C(2008) 4943 final of 9/09/2008 delegating powers to the Executive Agency for Health and Consumers with a view to performance of tasks linked to implementation of the Public Health Programme 2003-2008 as adopted by Decision 1786/2002/EC, the Public Health Programme 2008-2013 as adopted by Decision 1350/2007/EC, the Consumer Programme 2007-2013 as adopted by Decision 1926/2006/EC and the food safety training measures covered by Regulation (EC) No 882/2004 and Directive 2000/29/EC. http://ec.europa.eu/health/archive/ph_programme/agency/docs/c2008_4943_en.pdf 14

The calls were bi-annual in 2007-2008

15

Prior to 2009, the calls were launched by the Commission.

3


landscape, institutional environment, consumer portfolio expenses and their crossborder shopping patterns, consumer behaviour and their attitudes. These differences in national context have a significant bearing on the business model and the operation of the individual centres. For example, the number of cases handled by an ECC is a function of many variables such as the population size of the country concerned; number of cross border transactions of the resident population (which in turn depends inter alia on willingness to engage in e-commerce and other forms of distance shopping, number of trips abroad, purchasing power etc); number of problematic transactions, propensity to complain when things go wrong; awareness of where to go for cross border advice and the accessibility of the ECC. Recognition of these contextual differences has been an important consideration in designing the evaluation, interpreting the evidence collected and formulating recommendations for the future. It has called for a more nuanced approach to conducting the analysis and has meant that a ‘one size fits all’ approach cannot be applied across the Network when considering its future orientations. Table 1:2, illustrates some of the key differences in contextual factors. This wider contextual understanding helps explain a number of differences between the ECCs with respect to their involvement in national policy making, the number of cases handled and so on. Key points to note are as follows:

Consumer spending varies significantly between countries. France, Germany, Spain and UK are the largest consumer markets in the EU; a significant proportion of consumers in these countries engage in cross-border shopping and demonstrate relatively high levels of awareness of where to go for 16 information and advice about cross-border shopping in the EU . Yet, the visibility of the ECCs is relatively low in most of these countries (notably, Spain, France and the UK). Moreover, the relative through-put of the ECCs (number of contacts made by consumers as a proportion of the estimated number of consumers engaged in cross-border shopping) is also quite low (0.02% to 0.04%) in these countries.

The visibility of the ECCs differs considerably across the EU. More than one in four persons have heard of the ECCs in Malta, Luxembourg, Poland and Slovenia; however, less than one in ten persons has heard of the ECCs in Greece, the Netherlands, Portugal, Romania and the UK. Generally speaking, there is a positive correlation between the visibility of the ECC in a particular country and the information requests and complaints/ disputes it receives.

There are marked variations in consumers’ propensity to complain across the EU. It ranges from 4% in Bulgaria to 34% in Sweden. The willingness to complain depends on traditions in consumer protection, the levels of consumer empowerment and perceptions of the likelihood of the complaint leading to redress in a country. A priori it would be reasonable to expect that the number of complaints handled by an ECC will be relatively low in countries where consumers’ propensity to complain is also low.

There are large differences in the relative throughput of each ECC . It is the highest for the ECC in Luxembourg (1.01 per cent or 10.5 persons per 1,000

17

16

Cross-border shopping is any purchase made by consumers from retailers or providers located in an EU country other than the (EU) country in which a particular consumer is resident 17

Relative throughput has been calculated as follows: the numbers of information requests and cases dealt with by the ECC divided by the estimated numbers of cross border shoppers in the country.

4


cross border shoppers) followed by Malta (0.50 per cent or 5.3 persons per 1,000 cross border shoppers); and the lowest in Romania (0.005 per cent) and Czech Republic (0.012 per cent) with fewer than 1 contact per annum per 1,000 crossborder shoppers.

The existence and use of ADR schemes varies between the countries participating in ECC-Net. Based on the number of reported ADR cases per 1,000 inhabitants in 2007 (the year for which the most complete data set on the number of reported ADR cases is available), ADR is clearly more common in Belgium, UK, Spain, Sweden, Austria, Ireland, the Netherlands, Denmark, and Malta than in other EU countries. Belgium and the UK registered the highest numbers with 4.73 and 2.47 ADR cases per 1,000 inhabitants respectively. In contrast, in the majority of EU countries the number of cases per 1,000 inhabitants was much lower and below the average of 0.99 cases per 1,000 inhabitants. The ECCs rely on a well functioning ADR system (where both consumers and traders are willing to engage in the ADR process; and where ADR coverage is adequate) to help resolve consumer disputes. However, the effectiveness of the ECCs is constrained in countries where the possibility of forwarding a complaint to a competent ADR-body does not exist and where traders and/or consumers are not willing to participate in the ADR mechanism.

There are differences in host structure. Currently, more than half of the ECCs (16 out of 29 centres) are hosted by government organisations, while 11 out of the 29 centres are hosted by NGOs and another two (Ireland and Luxembourg) are hosted by independent organisations. The nature of the host structure, among other things, can have an impact on the ‘level of independence’ of an ECC and its ability to provide impartial feedback to the European Commission and national policy makers.

These and other contextual differences have been taken into account throughout the analytical phase of the evaluation (i.e. when conducting analysis and drawing conclusions) and where relevant, have been explicitly highlighted in the Report.

5

AT BE BG CY CZ DE DK EE ES FI FR GR HU IE IS IT LT LU LV MT NL NO PL PT RO SE SI SK UK Total/Avg

MS

1

148,849 179,130 23,256 11,593 73,519 1,409,710 114,161 8,989 622,810 95,574 1,114,137 173,280 56,983 91,010 : 928,758 20,969 12,741 14,324 3,626 272,457 : 223,571 110,686 89,849 152,563 19,580 36,648 1,165,933 7,174,708

(millions)

Consumer Spending

Indicators relating to operation of ECCs

2.1% 2.5% 0.3% 0.2% 1.0% 19.6% 1.6% 0.1% 8.7% 1.3% 15.5% 2.4% 0.8% 1.3% : 12.9% 0.3% 0.2% 0.2% 0.1% 3.8% : 3.1% 1.5% 1.3% 2.1% 0.3% 0.5% 16.3%

7,041,081 8,866,411 6,616,829 651,567 8,904,207 70,936,141 4,465,874 1,142,232 38,663,723 4,405,894 52,172,985 9,612,985 8,536,599 3,496,233 249,480 51,252,247 2,849,359 395,980 1,958,585 343,702 13,469,675 3,829,794 32,214,763 8,988,723 18,249,385 7,641,194 1,729,872 4,549,954 50,440,761 423,676,235

1.7% 2.1% 1.6% 0.2% 2.1% 16.7% 1.1% 0.3% 9.1% 1.0% 12.3% 2.3% 2.0% 0.8% 0.1% 12.1% 0.7% 0.1% 0.5% 0.1% 3.2% 0.9% 7.6% 2.1% 4.3% 1.8% 0.4% 1.1% 11.9%

53% 36% 6% 34% 33% 27% 56% 37% 17% 51% 24% 10% 14% 33% : 13% 17% 68% 31% 36% 47% : 16% 9% 13% 59% 40% 27% 35% 25%

3,731,773 3,191,908 397,010 221,533 2,938,388 19,152,758 2,500,889 422,626 6,572,833 2,247,006 12,521,516 961,299 1,195,124 1,153,757 : 6,662,792 484,391 269,266 607,161 123,733 6,330,747 : 5,154,362 808,985 2,372,420 4,508,304 691,949 1,228,488 17,654,266 104,105,285

16% 14% 4% 10% 11% 24% 22% 8% 11% 23% 11% 9% 11% 13% : 9% 6% 8% 5% 17% 25% : 16% 5% 6% 34% 13% 14% 24% 16%

26% 24% 12% 38% 23% 25% 35% 28% 18% 30% 20% 30% 9% 24% : 20% 25% 49% 22% 42% 26% : 16% 21% 20% 34% 39% 17% 21% 21%

22 38 3 1 5 247 21 2 76 3 35 3 20 15 3* 129 5 6 3 4 4 19* 24 13 2 16 6 3 43 772 0.87 0.04 0.66 0.86 1.73 1.02 : 0.21 0.46 : 1.11 0.03 0.04 2.47 0.99

1.46 4.73 : : 0.01 0.49 1.25 0.15 1.52 0.78 0.49 0.12 0.38 1.52 :

23% 19% 10% 17% 13% 20% 12% 16% 10% 14% 11% 7% 18% 12% : 18% 15% 30% 13% 38% 9% : 27% 0% 8% 11% 28% 16% 9% 15%

NGO NGO G G G NGO G G G G NGO G NGO I NGO NGO G I G G NGO G G G NGO G NGO G NGO

5,691 4,775 193 351 414 5,920 1,747 263 2,115 1,129 4,372 603 463 3,610 78 7,941 605 2,851 504 655 1,452 1,035 2,288 1,104 131 2,937 949 345 8,048 55396*

6

0.15% 0.15% 0.05% 0.16% 0.01% 0.03% 0.07% 0.06% 0.03% 0.05% 0.03% 0.06% 0.04% 0.31% : 0.12% 0.12% 1.06% 0.08% 0.53% 0.02% : 0.04% 0.14% 0.01% 0.07% 0.14% 0.03% 0.05% 0.05%

Awareness ADR Cases No. of Contacts as No. of ADR Incidence of Estimated No. Propensity Share of total Share of cross border per 1000 Awareness - ECC Host Information % of CrossNo. of Schemes to cross-border of Cross-border EU Total 2 9 10 shopping Requests border inhabitants Consumers ECC Structure 4 5 7 Consumption Consumers shopping (%) 3 (2009) Shoppers complain 6 8 11 12 advice and Cases shoppers (2007)

Contextual Indicators

Table 1:2 Differences in Global and Operating Context of the ECCs (2008 data, unless indicated otherwise)



Notes to Table 1:2 ‘:’ Data not available 1-

Household and NPISH final consumption expenditure (S-070989-table: nama_fcs_c - Final consumption aggregates - Current prices); Source: Eurostat

2-

Total Population aged 15 years and above; Source: Eurostat

3-

Proportion of consumers who have made at least one cross-border purchase in the past year; Source: Special Eurobarometer 298 (2008) p.5

4-

Estimated as follows: [Population] X [Incidence of cross-border shopping]

5-

Proportion of consumers who have made a formal complaint; Source: Eurobarometer 298 (2008) p.51

6-

Proportion of consumers who know where to get information and advice about cross-border shopping in the EU; Source: Special Eurobarometer 298 (2008) p.94

7-

Source: DG SANCO (2009) Study on the use of Alternative Dispute Resolution in the EU; p.12

Special

(Note:* Data available for notified schemes only) 8-

Source: DG SANCO (2009) Study on the use of Alternative Dispute Resolution in the EU; p.44/45

9-

Proportion of consumers who have heard of ECCs/ Euroguichets at least once in the last 12 months; Source: Special Eurobarometer 298 (2008) p.96. Please note that according to the Eurobarometer survey, no one has heard of the ECCs in Portugal. However, ECC-Net statistics show that ECC-PT handled 1,104 contacts in 2008. To note that Eurobarometer survey results (which are based on a sample of 1,000 interviews) need to be interpreted with caution as they provide rough estimations and not precise measures of visibility.

10- Host Organisation: NGO- Non Governmental Organisation; G - Governmental; I Independent; Source: ECC-Net Annual Report for 2008 11- Source: ECC-Net Statistics, 2008 (2008-EXT-015-ECC Cases and Info requests by ECC.pdf) ; *shared cases have been deducted to arrive at the total for the Network 12- Calculated as follows: [No. of Information Requests and Cases] / [Estimated No. of Crossborder shoppers]; total excludes IS and NO as data on number of cross border shoppers is not available for these countries

1.4

Structure of the Report The remainder of the report is structured as follows:

Section 2 describes the overall methodological approach to the evaluation and the research tasks undertaken within the framework of this evaluation; it also discusses the strengths and limitations of the evidence collected from various sources.

Section 3 provides a synthesis of the evidence in response to each evaluation question;

Section 4 sets out the key conclusions of the evaluation and recommendations for future orientations and delivery of the Network.

The main report is supplemented by a technical annex which contains the detailed evidence base for the evaluation. It is structured as follows:

Annex 1 sets out the evaluation matrix which summarises the overall analytical framework for the evaluation;

Annex 2 elaborates the intervention logic for the ECC-Net;

7


Annex 3 presents the results of the ECC survey;

Annex 4 presents the ten case study reports;

Annex 5 details the findings of the mystery shopping exercise;

Annex 6 describes the results of the user survey;

Annex 7 provides a list of references and documentary sources of information; and, the list of stakeholders interviewed for this evaluation.

8


2

THE METHOD OF APPROACH This section of the report describes the method of approach used to address the aims and objectives of the evaluation (set out in section 1.1).

2.1

Evaluation Methodology The evaluation methodology was based on a structured and systematic approach to collecting, analysing and presenting evidence. The overall approach to the evaluation was based on making the best use of a limited evaluation budget. Figure 2:1 illustrates the work programme of the evaluation. It is followed by a description of the individual tasks undertaken.

Figure 2:1 Evaluation Methodology and Work Programme

PHASE I INCEPTION AND SCOPING

PHASE Task 3: III ANALYSIS AND REPORTING

Reporting &

Task 1.1 Kick-off Meeting

Task 2.1 ECC Survey

Task 1.2 Desk Research

Task 2.2 Case Studies

Disseminatio Task 3.1 Synthesis and Analysis

Task 1.3 First Interviews

Task 2.3 Mystery Shopping

Task 3.2 Conclusions and Recommendations

Task 2.4 User Survey

Task 3.3 Draft Final Report and Meeting

Task 1.4 Fine-tuning of the Methodological Approach Task 1.5 Inception Report and Meeting

2.1.1

PHASE II DATA COLLECTION

Task 2.5 Interim Report and Meeting

Task 3.4 Final Report

Phase 1: Inception (February to June 2010) This initial phase laid the groundwork for primary data collection and subsequent analysis. The following tasks were completed as part of the inception phase of the study: rd

Task 1.1 Kick off Meeting: A kick-off meeting was held in Brussels on 23 February 2010 to confirm the focus and scope of the evaluation. Task 1.2 Desk Research: Following kick-off, all key documentation and data relating to the ECC-Net were assembled, mapped and reviewed. The purpose of this in-depth desk review was to deepen the study team’s understanding of the operation and functioning of the ECCNet as well as to determine the scale and scope of the information available for the evaluation. A thorough desk research meant that the second phase of the evaluation could focus on filling known gaps in evidence and on verifying the findings presented in the available material. Task 1.3 First Interviews: A series of eleven first interviews was conducted with relevant Commission officials. The purpose of these exploratory interviews was to gauge the views of Commission officials on the relevance, functioning and performance of the ECC-Net and its coherence and synergies with other EU networks. Task 1.4 Fine-tuning of the Methodological Approach: Following Kick-off and scoping, the evaluation methodology was amended to reflect the specific requirements of DG SANCO.

9


Task 1.5 Inception Report and Meeting: Upon completion of this work, an inception report th was submitted to the Steering Group on 24 March 2010. The inception report specified the work programme for the evaluation, elaborated the intervention logic for the ECC-Net and described the methodological and empirical approaches to be adopted. It also included the following research instruments: survey questionnaires; case study template; interview th guides and the mystery shopping feedback form. An inception meeting took place on 8 April 2010 to discuss the inception report. The comments made by the Steering Group were, to the extent possible, taken into account. After several iterations, the inception report th was accepted by DG SANCO on 15 June 2010. The two key outputs of the inception phase were the evaluation matrix summarising the overall analytical framework for the evaluation (presented in Annex 1) and the intervention logic for the ECC-Net (Annex 2). 2.1.2

Phase 2: Data Collection (June to October 2010) This phase involved primary and secondary data collection. The following research methods were used to collect quantitative and qualitative evidence for the evaluation: Task 2.1 ECC Survey: A survey of the ECCs was carried out over the period June 2010 to July 2010. The survey was hosted online; although respondents were also given the opportunity to complete a ‘Word’ questionnaire and submit it via email. Responses were received from all 29 ECCs. A descriptive analysis of the survey results is presented in Annex 3. Task 2.2 Case Studies: Ten case studies were developed to review and analyse the activities of the ECCs with respect to the following vademecum objectives: case handling i.e. assistance with complaints and disputes; networking and feedback; promotional activities; and, ADR development. Three vademecum objectives were selected for detailed review for each case study ECC (to note that case handling was reviewed in all cases). To better understand the case handling processes of the ECCs, three complaints/ disputes were randomly selected and examined in detail. The case studies were based on a detailed desk review of ECC documentation (such as final reports and annual reports), ECC websites, contextual data and policy documentation; an on-site visit; and, semi-structured interviews with a range of stakeholders such as: ECC staff, host organisation, co-financing organisation, National Enforcement Body (NEB), ADR body, consumer organisation; members of the Consumer Policy Network (CPN) and the 18 Consumer Protection Cooperation Committee (CPC Committee) , and, national representatives of other EU networks such as FIN-NET and SOLVIT. Table 2:1 shows for each case study country, the vademecum objectives covered and the stakeholder groups consulted.

18

It should be noted that the CPC Committee members have two roles: an enforcement authority and a Committee member. The interviews conducted with these individuals were designed to obtain both their perspectives (i.e. those of an enforcement body as well as a Committee member)

10


Table 2:1 Scope of the Case Studies

ADR Body

Consumer Org

FIN-NET

SOLVIT

X

X

X

X

X

X

X X X X

X

X

X

X X X

X

X

X

X

X

X

X

X

X

X

X X X X X

X X X X X

X

X

Bulgaria

1

2

3

X

X

2.

Denmark

1

2

3

X

3.

Germany

1

2

4.

Latvia

1

2

5.

Luxembourg

1

2

3

X

6.

Malta

1

2

3

X

7.

Poland

1

2

3

X

8.

Spain

1

3

X

X

9.

Slovenia

1

2

X

X

1

2

X

X

10. UK

Promotional Activities

1.

Case Study Country

3

X 3

2 3

3

CPC

X

Host / cofinancing CPN

X

ECC Staff

X

ADR Development

NEB

Stakeholder Groups Consulted

Networking & Feedback

Case Handling

Vademecum Objectives

X X

X

X

X X

X

X X

X X

* X X

X

X

X X

X

X X

X

*same as the host / co-financing organisation A total of 93 stakeholders (including ECC staff) were interviewed in the countries covered by the case studies. The ten case study reports can be found in Annex 4. Task 2.3 Mystery Shopping: A mystery shopping exercise was carried out to assess the efficiency and quality of the services delivered by the Network; and, to check the consistency of services across the Network. Mystery shopping was carried out in ten Member States: Cyprus; Czech Republic; France; Hungary; Ireland; Italy; Netherlands; Portugal; Romania; and, Sweden. The detailed results of the mystery shopping exercise are available in Annex 5. nd

Task 2.4 User Survey: An online survey of ECC-Net users was launched on 2 June st 2010. It was promoted for a period of two months (until 1 August 2010). The survey was conducted in 22 languages and consisted of 20 questions. It was designed to collect direct feedback from the users on the relevance and utility of the services delivered by the ECCs; and their satisfaction with the information and assistance that they had received. A total of 462 users responded to the survey. Annex 6 provides an analysis of the results of the user survey. th

Task 2.5 Interim Report and Meeting: A draft interim report was submitted on 17 August th 2010 and discussed with the Commission on 6 September 2010. A revised interim report taking into account the comments received from the Commission on the draft was th st submitted on 15 September 2010 and signed off by the Steering Committee on 1 October 2010. 2.1.3

Phase 3: Analysis and Reporting (October 2010 to February 2011) The final phase of the evaluation comprised the following tasks:

11


Task 3.1 Synthesis and Analysis: The quantitative and qualitative evidence collected during the earlier phases of the study was systematically analysed to derive welltriangulated answers to the evaluation questions. Task 3.2 Conclusions and Recommendations: This task involved the formulation of judgements regarding the relevance, efficiency, effectiveness, coherence and impact of the Network on the basis of explicit criteria and benchmarks (see Evaluation Matrix in Annex 1). An internal brainstorming session was organised to facilitate the process. th

Task 3.3 Draft Final Report: A Draft Final Report was submitted on 20 October 2010. It th was followed by a Steering Group meeting on 15 November to discuss the Report. Written feedback was also provided by the Steering Group. Revised drafts were submitted to the th th Commission on 30 November 2010 and 4 January 2011. Task 3.4 Final Report: This report constitutes the Final Report 2.2

Strengths and Limitations of the Data Collected This section critically assesses the information sources used and the validity of the data collected as part of this evaluation. While each method has its strengths and limitations, the various methods taken together complement each other by enriching the evidence base and providing the basis for cross-validation.

2.2.1

Desk Research The following existing documentation and data have been used for this evaluation:

Contextual data compiled from a variety of sources such as Consumer Markets Scoreboard, Eurobarometer reports, Eurostat etc.

Theoretical literature on causes and consequences of consumer detriment;

Existing studies and reports on the potential of the internal market;

Consumer policy documentation;

Previous evaluation of the ECC-Net;

Results of the joint projects implemented by the ECCs;

ECC-Net annual reports;

Final reports submitted by the ECCs each year which provide detailed information on the expenditure and activities of each ECC; and,

ECC-Net statistics generated by the case-handling IT tool.

While the above sources provide detailed information on the context in which the ECC-Net operates and the activities of the ECCs, very little information is available (from existing sources) on the impact of the ECC-Net activities, in particular the financial and non-financial benefits accruing to EU consumers as a result of the ECC-Net activities. Moreover, reliable ECC-Net statistics are only available from 2007 onwards (since the introduction of the IT tool). This limits the ability to carry out trends analysis of the nature and number of consumer complaints and disputes handled by the ECCs. Finally, it has only recently (since 2010) been made mandatory for the ECCs to collect the 19 following data to measure financial detriment :

For normal complaints: price of the good/service, claimed compensation, value of the settlement from a normal complaint and the value of the settlement or compromise from an ADR case; and,

19

Prior to 2010, the IT-tool contained the following fields for normal complaints: price of the good/service and claimed compensation. It was however, not mandatory for the ECCs to collect this data from users. 12


For simple complaints: price of the good/service.

Comprehensive data on financial detriment suffered and remedied is therefore only available for 2010. However, these data do not permit a comprehensive and accurate measure of consumer detriment as the following information is lacking:

Incidental or out-of pocket costs incurred by consumers in putting things right at their own expense (e.g. telephone costs, legal costs etc.);

Replacement costs;

Cost of knock-on damages or inconvenience caused (e.g. consequential losses such as damage caused due to leakage from faulty washing machine); and,

Psychological and welfare effects.

This makes it difficult to accurately estimate the detriment suffered by consumers who have experienced a problem when shopping across borders; and the extent of detriment directly remedied/ offset as a result of ECCs’ intervention. Another major limitation of the evaluation is that the ECCs do not collect any evidence on the results and outcomes of their promotional activity (e.g. change in levels of awareness, knowledge, behaviour). They only monitor ‘outputs’ such as the number of publications distributed, number of events organised, consumer reach and press coverage. Given the limited budget for the evaluation, it has not been possible to collect much primary data to address this gap in the evidence base. Although some evidence has been collected through stakeholder interviews and the ECC survey, there were no means at the disposal of the evaluators to independently measure the impact of the ECCs’ promotional activities. 2.2.2

ECC Survey The ECC survey collected qualitative and quantitative data on various aspects of the functioning of the Network. As responses were received from all the ECCs, the survey results can be reliably used to represent the collective views of the ECCs. Moreover, the use of close-ended questions has produced standardised responses which have been aggregated and compared across the Network. The use of a limited number of open-ended questions has facilitated the collection of additional information and provided for the clarification of remarks. However, a key limitation of the ECC survey is that it did not generate descriptive or explanatory information and, therefore, does not offer insights into contextual and causeand-effect relationships.

2.2.3

Case Studies To address the shortcomings of the survey approach, a series of case studies were developed to examine the delivery of three vademecum objectives in different contexts. The case study research also included a detailed reviewed of three randomly selected complaints and/or disputes per ECC. The use of case study approach has allowed a detailed examination of the complexity and diversity characterising ECCs. By closely examining the functioning of a limited a number of ECCs, and comparing and contrasting them, it has been possible to understand how the ECCs work ‘on the ground’ under different circumstances and contexts. The case studies have generated the information needed for:

A more accurate reflection of the complex reality and recognition of multiple layers of effects;

A better understanding of processes and phenomena; and,

A better understanding of the quantitative results of the study.

13


However, while the case study approach has been useful to study ‘complexity’; the main downside of this approach is that empirical generalisations cannot be drawn from ‘studied’ to ‘unstudied’ cases due to the risk of high and unknown levels of error. In the context of this evaluation, the case studies have therefore been used to complement the other research methods and to enrich the overall analysis. 2.2.4

Mystery Shopping Mystery shopping is used to measure both the tangible and intangible elements of customer service. In the context of this assignment, the mystery shopping exercise has produced independent and unbiased data on the quality, efficiency and effectiveness of the information service delivered by the ECC through various communication channels – telephone, email, and website. There are of course some limitations:

2.2.5

Mystery shopping was undertaken with the communication means available. To the extent possible, it was carried out though three means: telephone, email and webform. In some cases however, a web form for information requests was not available (ECCs in France, Cyprus, Hungary, Netherlands and Romania)20. In some cases, the ECC could not be contacted via email as this option was not available (ECCs in Sweden and Ireland).

The questions raised were agreed with DG SANCO. Each question was, to the extent possible, raised in a personalised and authentic manner. However many questions remained fairly general and hypothetical - and the replies provided were accordingly, fairly general.

The mystery shoppers did not use contact means such as letter, fax or face-to-face due to the limited availability of resources for conducting the mystery shopping exercise;

The mystery shopping exclusively tested information provision. Complaints and disputes were not tested through mystery shopping for ethical and practical reasons (instead the handling of complaints and disputes by ECCs was reviewed as part of the case study research).

User Survey The user survey collected feedback directly from the users. It sheds light on the opinions and perceptions of the users regarding the relevance, effectiveness and efficiency of the services delivered by the ECCs to consumers. However, some important caveats must be noted. The survey was administered online and was only available to users having internet access. The sample of ECC-Net users included in the survey may not necessarily be representative of all ECC-Net users i.e. the composition of the sample may differ from that of the underlying population of ECC-Net users in terms of the country of origin, age, professional and social status of the user, etc. It is not possible to determine whether this 21 has resulted in any non-response bias as data are not available to allow a comparison between the key characteristics of the overall population of ECC-Net users with those of survey respondents. Moreover, participants were not randomly chosen; the survey was self-administered, which may potentially have resulted in participant selection bias (it is possible that users who had more time or were more eager to express their opinion were more likely to participate). There were no instruments available to the study team to verify and gauge the potential

20

In these cases, web forms were only available for complaints and disputes

21

Non-response bias occurs when a significant number of people in the population or sample fail to respond and have relevant characteristics that differ from those who do respond. 14


selection bias described above. For the purpose of estimating confidence intervals, it has been assumed that the auto selection process was random i.e. all users had an equal opportunity of being selected into the sample; and that consequently, there is no systematic selection bias in the overall results Assessment of statistical reliability: Drawing conclusions from the overall results of the survey is safe... The overall sample size is at least 350 for all questions. The margin of error for this sample – calculated with the usual confidence level of 5% - lies within acceptable limits (+/- 5.22%). ... but limited scope to draw country-level conclusions However, the country-level analysis has to be viewed with caution. The number of respondents per country was very small: 15 countries had less than 10 respondents. Even for a sample of 35 respondents, the margin of error (with the usual assumptions) would reach +/- 16.56%. This means that, unless country results are extremely different, it cannot be said with reliability that observed differences in the survey results reflect genuine differences between countries, or are merely a product of a non-systematic bias from random sampling. The country-level results therefore need to be interpreted with caution as they do not provide the basis for drawing generalisations. No differences between the answers of the respondents from “old and new Member States” To overcome the above limitation with country level responses, countries were grouped into “old and new Member States” and to test if patterns of responses differed between the two groups. No statistically significant differences were observed.

15


3

TAKING STOCK: PROGRESS AND FUNCTIONING OF THE NETWORK This section of the Report addresses the questions relating to the first objective of the evaluation i.e. to assess the functioning of the Network. The findings have been organised around the three sets of issues raised in the terms of reference i.e. relevance and impact; effectiveness and coherence; cost efficiency and delivery; and within these, the specific evaluation questions set by DG SANCO.

3.1

Relevance and Impact of the ECC-Net

3.1.1

Q.1 To what extent does the ECC-Net meet the real needs of EU consumers seeking to exercise their rights in the Internal Market? The internal market offers the opportunity to EU consumers to increase their overall welfare by shopping across borders. There is concrete evidence to demonstrate that cross-border shopping can enhance welfare by offering consumers a wider choice of products and lower prices; and, at the same time businesses can benefit from access to a larger and more diverse market:

22

Size of the market: The internal market comprises almost 500 million consumers 22 and 20 million firms; consumer spending represents 57% of the EU GDP (EUR 23 6.7 trillion in 2009) .

Wider choice for consumers: 73% of EU citizens think that the internal market 24 25 has contributed positively to the range of products on offer . An evaluation carried out on behalf of the European Commission shows that for many countries, cross-border shopping represents the only alternative when products are not available in domestic shops. The results of product searches conducted by Yougov showed that consumers in Cyprus, Malta, Luxembourg, Lithuania, Latvia, Ireland, Belgium, Estonia, Portugal, Finland, Romania and Greece could not find domestic online offers for at least half the products that they searched for.

Lower prices: Households can reduce their expenditure by making purchases at the lowest prices available within the internal market. It is estimated that European consumers, on average, pay 13% more by purchasing goods domestically (which could potentially have been bought cross-border at lower 26 prices) . Even if goods and services representing a quarter of the consumer expenditure of EUR 6.7 trillion were purchased cross border at 13% lower prices, 27 the potential savings would be in the order of EUR 194 billion . This represents 3% of the total EU private consumption expenditure.

Source: Eurostat; GDP and main components - Current prices [nama_gdp_c]

23

Source: Eurostat; Final consumption expenditure of households by consumption purpose - COICOP 2 digit aggregates at current prices [nama_co2_c] 24

DG Internal Market website - How the EU Single Market benefits you, http://ec.europa.eu/internal_market/top_layer/benefits_en.htm [Accessed on 12.09.2010] 25

YouGov Psychonomics (2009) Mystery Shopping Evaluation of Cross-Border E-Commerce in the EU, a study conducted on behalf of the European Commission, Health and Consumers Directorate-General

26

GHK (2008) Preparatory study for the Impact Assessment on the Review of the Consumer Acquis, A study conducted for DG SANCO

27

It is estimated that a quarter of the consumer spending (worth EUR 1 .8 trillion i.e. 25% of EUR 6.7 trillion) represents goods and services which could be bought cross border at lower prices . Consumers are in effect spending 13% more than necessary on these purchases which in monetary units works out to 194 billion euro 16


Greater competition and innovation: Empirical evidence demonstrates that greater competition can be a driving force for innovation leading to productivity 28 improvements and economy-wide benefits . 29

However, over twenty years after the Cecchini Report (1988) highlighted the “Costs of non-Europe”, the full potential of the internal market is far from being realised by consumers and traders alike:

There remain significant price differentials across the EU in case of many goods and services (particularly internet service provision, tooth filling (dental services), 30 vacuum cleaners, microwaves and irons) .

Roughly 7 in 10 (71%) of EU retailers do not sell products or services to 31 customers in other EU countries through distance-selling channels for various reasons such as: regulatory barriers (fragmentation of consumer protection rules, VAT rules, selective distribution law etc.); language barriers; logistical concerns; and, broadband penetration issues.

The overall level of cross border shopping remains low; only one in four EU consumers engaged in cross border shopping in 2008. The incidence of cross32 border shopping varies from 6% in Bulgaria to 79% in Luxembourg .

79% of the EU citizens don’t know where to get information and advice about 33 cross-border shopping in the EU .

The cross-border potential of e-commerce is not being fully exploited by consumers. The increase in e-commerce in recent years has not translated into a corresponding increase in online cross border sales. Almost half (48%) of EU consumers who have access to the internet at home made a distance purchase from a seller/provider located in their country of residence in 2009; whereas, only 11% bought goods or services via the internet from a seller/provider located in another EU Member State. And, there are large variations between countries, with the level of cross border internet purchases ranging from only 3% of 34 consumers with internet access in Romania to 47% in Luxembourg .

Although, language is often cited as a barrier to cross-border shopping by 35 consumers ; it is one that consumers are willing to overcome. 47% of the EU consumers who have an internet connection at home, would consider buying in 36 another EU language; however, only 11% actually do so , suggesting that there are other (more fundamental) barriers preventing consumers from engaging in

28

There is a considerable body of theoretical and empirical literature that demonstrates a positive relationship between competitive intensity and innovation. See Andrew Sharpe and Ian Currie (2008) Competitive Intensity as Driver of Innovation and Productivity Growth: A Synthesis of the Literature. 29

A report on the gains expected as a result of the ‘1992’ programme for unifying the European Community's internal market. The report was published in 1988 as The European Challenge, 1992 Available on: http://aei.pitt.edu/3813/01/000209_1.pdf 30

The Consumer Markets Scoreboard: Making Markets Work For Consumers, 4th edition – October 2010

31

Flash Eurobarometer 278 (2009) , p.5

32

Percentage of respondents who have made at least one cross-border purchase in the past 12 months; Source: Special Eurobarometer No. 298 (2008), p.5

33

Special Eurobarometer No. 298 (2008), p.94

34

Flash Eurobarometer 282 (2009), p.11

35

61% of the respondents to a Eurobarometer poll stated that language was a barrier to cross-border shopping. Source: Special Eurobarometer No. 298 (2008), p.92

36

Special Eurobarometer No. 298 (2008), p.93 17


cross-border shopping in greater numbers, particularly via the internet. For example, lack of information is perceived as a barrier to cross-border shopping by 37 a vast majority of EU consumers (69%). Consumers’ willingness and ability to participate in a particular market depends, to a large extent, on the confidence they have in that market. The relatively low level of market participation is thus indicative of low levels of consumer confidence in the internal market. Roughly one-third of the European citizens believe that they are more likely to experience difficulties when resolving problems such as complaints and returns of faulty products when they purchase products in another country; and they are more likely to experience problems when returning a product they bought at a distance within the coolingoff period if they purchased the product in another EU country rather than from a domestic 38 seller-producer . The Yougov evaluation cited earlier, also confirms that cross-border payment and shipment is more cumbersome for consumers as compared to domestic shopping. From the consumers’ point of view, conditions vary dramatically from one country to another. For example, most payment options are not readily available to consumers for cross-border transactions and cross-border shipment potentially takes longer, costs more, and is sometimes impossible to the specified destination. Moreover, available evidence demonstrates that the obstacles to receiving swift and inexpensive resolution of low value disputes are even greater in cross-border context as compared to the domestic context. The costs involved in pursuing a case against a business located in another country are often prohibitively high for the average consumer and are complicated by different languages and unfamiliar legal systems. In addition to the financial and practical obstacles, there are often significant legal barriers to resorting to 39 courts in disputes resulting from cross-border or online interactions . The intermediate evaluation of Euroguichets

40

found that:

In the case of after-sales-conflicts with foreign sellers the existing national consumer advice or arbitrage institutions were usually not very helpful, lacking the necessary familiarity with the legal and judicial structures in the countries concerned;

Information on the advantages and/or disadvantages of cross-border shopping and transactions in certain business areas was difficult to find. When existing, its scope was not at all comparable with corresponding information systems at the national level, such as comparative testing, personal consumer advice etc. As a result, it was difficult to convince consumers that individual cross-border activities might improve the purchasing power of their money and enlarge their possibilities of choice.

Furthermore, according to economic theory, confidence to participate in a market can be adversely affected by the existence of market failures which can arise from incomplete or asymmetric information and/or systematic biases in consumer behaviour; and lead consumers to make sub-optimal choices. These market failures are briefly discussed below. Imperfect information: 41

There is a sizeable literature demonstrating that consumers can suffer detriment when they don’t have access to information they need (such as information on quality and price of 37


38


39

OECD (2005) OECD Workshop on Consumer Dispute Resolution and Redress in the Global Marketplace, Background Report

40

DG SANCO (2004) Intermediate evaluation of European consumer centres’ network (Euroguichets), CIVIC Consulting 18


products, or the reliability of traders) or when (due to lack of willingness or skills) they don’t use information that is available to make informed decisions. There are two main ways in which insufficient information about their choices, rights and options can cause detriment to consumers:

They make poor choices i.e. they purchase products that do not meet their needs or they end of paying higher prices; or under- or over-estimating the quality of the purchased product. The social and economic consequences of poor choices are obvious and well documented in fields such as consumer credit and other financial products. From an economic perspective, poorly informed consumers spend too much on products that are not meeting their expectations and have less to spend on products that would improve their welfare. This leads to an inefficient allocation of resources in the economy which ends up producing a mix of goods and services that do not reflect consumers’ underlying preferences. Poor consumer choices also hinder market functioning as consumers are unable to identify and ‘punish’ rogue and inefficient traders;

They are unable to obtain effective redress the product or trader.

42

when they are dissatisfied with

Improving access to, and the use of, information thus reduces the risk that people will make poor decisions. Information Asymmetry For the most part, suppliers will have better information than consumers about the quality of the goods and services that they offer for sale. This information asymmetry increases the likelihood of consumer detriment and reduces the effectiveness of signals sent to suppliers (fraudulent or deliberately misleading supplier conduct is an extreme manifestation of information asymmetry which prevents the benefits of competition from being fully realised and undermines confidence in the market concerned). In many cases, the consequence of a poor consumer choice can be rectified by choosing a different product or seller next time. Indeed, this process of learning from mistakes made in earlier purchases is a crucial part of the information gathering process. By altering their purchasing decisions, consumers can impose penalties on those suppliers who do not conform to reasonable expectations (and by so doing precipitate the exit of those firms or changes in their behaviour). However, this adjustment process takes time during which consumers may be exposed to the risk of loss. Reliance solely on such a process can be especially problematic for costly products, or those for which design faults can result in significant harm. In such circumstances, public 41

A succinct summary of the literature can be found in European Commission (2006) An analysis of the issue of consumer detriment and the most appropriate methodologies to estimate it, Final Report for DG SANCO by Europe Economics.

Also see Hunter, J., Ioannidis, C., Iossa, E. & Skerratt, L. (2001) Measuring Consumer Detriment under conditions of Imperfect Information; and, OFT (1997) Consumer Detriment under Conditions of Imperfect Information, Prepared for the Office of Fair Trading by London Economics. 42

The European Commission does not define the concept of consumer redress. Using the OFT definition, the concept of consumer redress can be understood as a remedy for a wrong arising from a contract or other relationship between a consumer and a trader. The remedy for example, may be: an apology; financial compensation; restoration for the consumer to their position prior to the wrong doing; an acknowledgement of wrongdoing by the trader; and/or commitment to future changes in practice. This is not an exhaustive list; and any or all of these remedies may be appropriate in an individual case. Source: OFT(2010) Mapping UK consumer redress: a summary guide to dispute resolution systems. According to Mattila and Wirtz (2004) redress is the initiation of a complaint action on the aggrieved consumer's part, to rectify a problem. The consumer could be seeking a replacement, a refund, or a repair, depending on the type of dissatisfaction with a purchase. Ha and Coghill (2007) explain that redress is the provision of internal complaint handling systems and services to resolve disputes. According to OECE (2005) redress refers to compensation or economic return, whether in the form of a monetary remedy (replacement for damages, restitution, or other monetary relief) or a remedy with a restorative element (exchange of good or service, specific performance or rescission of a contract). 19


intervention in the form of information provision or remedial measures can help prevent these potential problems; or limit the actual detriment suffered by consumers. Moreover, redress mechanisms can help build consumer confidence in markets as consumers know if traders do not conform to their reasonable expectations, they can seek compensation and/or other forms of redress. With redress mechanisms in place, incentives for traders to renege on quality and other promises are reduced - since traders know that if they fail to provide the quality stated, they will risk incurring ‘redress cost’, for example having to compensate the consumer. It should be noted that ineffective redress, on the other hand, could have negative consequences: a) consumers who have experienced a problem will not be able to obtain a remedy for the detriment they have suffered; b) ineffective redress will deter consumers from pursuing it and thus will exert less pressure on traders to provide the stated quality; c) traders are less likely to face ‘redress costs’ for reneging on their promises; d) it will undermine consumer confidence more generally (when consumers directly experience ineffective redress they might be put off from trusting the problem trader in future and might also lose trust in markets more generally). Systematic Biases 43

Behavioural economics theories suggest that decision making by an individual is more complicated than is represented in traditional economic models based on assumptions of rational self interest; and that among other things, the manner in which information is presented and the way that choices are framed can significantly influence market place choices, sometimes in ways that are not in the best interest of consumers. People often use proxies or shortcuts (heuristics) to deal with inadequate access to, or a lack of ability to use, information; and rely on a simplified set of principles in processing complex information. Natural biases can also lead to decisions that are not fully ‘rational’. These shortcuts and biases could lead consumers to choose products or traders that do not meet their expectations (e.g. irrational loyalty to some brands or traders). Moreover, shortcuts in decision making may be so ingrained that consumers do not even realise that they are making poor choices (e.g. decisions relating to purchase of financial products). Again, improving access to, and the use of, information can reduce the risk that people will make sub-optimal decisions. The above discussion demonstrates that the ‘real’ needs of consumers are twofold:

Access to information on their rights and specific matters relating to cross border shopping to enable them to make well-informed purchases; and,

Access to effective redress when things go wrong i.e. remedies that do not impose a cost, delay and burden disproportionate to the economic value at stake.

Giving consumers clear information about their rights and assuring them that they can obtain effective redress in the event of a problem will increase confidence and help unlock the full economic potential of the internal market. The intervention logic presented in Annex 2 identifies a clear and logical link between the above needs of the consumers and the activities of the ECC-Net. However, the evaluation evidence presented below demonstrates that in reality, the ECC-Net is only partially meeting the needs of the consumers.

43

For a detailed discussion on heuristics and biases see Gilovich, T., Griffin, D. & Kahneman, D. (2002) Heuristics and Biases: The Psychology of Intuitive Judgement, Cambridge University Press. Kahneman, D. & Tversky, A. (2000) Choices, Values and Frames, Cambridge University Press. For an easily digestible summary of the literature on this subject, see Sustein R., Thaler, R. (2008) Nudge: Improving decisions on health, wealth and happiness, Carvan Books. 20


There is a demand for the ECC-Net Services.... There has been a gradual increase in demand among consumers for the services delivered by the ECC-Net. The number of consumer enquiries (information requests, complaints and disputes) handled by the Network rose by 25% over a five year period from 42,795 in 2005 to 52,825 in 2009 (Figure 3:1). However, consumers contacting the ECC-Net represent only 44 a small proportion of the cross-border shoppers in the EU (0.05% as shown Table 1:2) . Figure 3:1 Number of Information Requests, Complaints and Disputes handled by the ECC-Net, 2005 - 2009 60,000 26,463

50,000

21,536

26,950

24,847 40,000

22,229

30,000 30,155

28,933 25,875

20,000

22,288

20,566

10,000

0 2005*

2006** Inf ormation Requests

2007***

2008

2009

Complaints and Disputes

*Figures correspond to the 24 centres that were in operation during the year; shared cases have not been deducted from complaints and disputes data **Figures should be interpreted with caution because centres’ case handling procedures and reporting methods differed in 2006; shared cases are estimated (not based on actuals) ***In 2007 the opening of ECCs in RO + BG was pending. Cases where the consumer or trader was in RO or BG were therefore handled by another member of the Network. Source: ECC-Net Statistics; Files: 2005-Numbers inforeq-complaints-disputes.xls; 2006 Statistics ECCNET.xls; 007-EXT-015-ECC Cases and Info requests by ECC.xls; 2008-EXT-015-ECC Cases and Info requests by ECC.xls; 2009-EXT-015-Cases and Info requests by ECC.xls Years 2007, 2008, 2009 – shared cases have been deducted to arrive at Network totals

...it provides a useful service to European consumers.... A vast majority of the consumers (87%) who have used the ECC-Net services believe that the ECCs provide a useful service (Figure 3:2).

44

Of course, not all cross-border shoppers are expected to contact the ECC-Net to seek information, advice or assistance - the demand for the ECC-Net services crucially depends on the number of cross-border shoppers having problematic transactions and their willingness to seek redress. These factors are however, difficult to assess without undertaking large-scale primary research which was beyond the scope of this assignment. 21


Figure 3:2 The Extent to which the ECC-Net Users Agree or Disagree with the following statement: ‘The ECCs provide a useful service to European Consumers’

I partially disagree 3%

I f ully disagree 7%

Not applicable 3%

I partially agree 13%

I f ully agree 74%

Source: CPEC Survey of ECC-Net Users (2010); n=411

... helping consumers when things go wrong... 45

During the years 2008 and 2009, the ECCs resolved over 18,000 ‘simple’ complaints each year (18,431 in 2008 and 18,521 in 2009 to be precise). Simple complaints refer to complaints that can typically be dealt with by an ECC in a one-step operation without any follow-up (generally an e-mail or telephone answer to a consumer inquiry about a complaint where the consumer is informed about his/her rights and advised on how to approach the trader in order to solve the issue directly with the trader). However, around 30% to 40% of complaints handled by the ECCs are of a more complex nature i.e. a complaint between a consumer and a trader, where the trader is not willing to help the consumer. These are referred to as ‘normal’ complaints. In the case of a normal complaint, the ECC which receives the case from the consumer (“Consumer ECC”) shares the case with the ECC where the trader is based (“Trader ECC”), for further assistance. In recent years, the ECCs have received and handled almost 8,000 normal complaints each year. The ECC-Net closed 75% of the normal complaints it received during the years 2008 and 2009 (Figure 3:3 and Table 3:1). The ECCs were able to solve 62% of the closed cases amicably without the intervention of other organisations in 2008; this percentage was much lower in 2009 at 48%.

45

A complaint is defined as a statement of dissatisfaction by a consumer concerning a cross-border transaction with a seller or a supplier 22


Figure 3:3 Overview of Normal Complaints Handled by the ECCs, 2008 and 2009 8,000

7,716

7,987

2008

2009

7,000 6,000 5,000 4,000

3,574 2,933

3,000

2,347 1,937 1,899

2,000

1,567 629 799

1,000

9

9

0 No. of complaints received

Open cases

Amicable settlement obtained with the trader

No solution found

Transfer to another organisation

Closed as unresolved by common agreement of the ECCs

Source: 2008-EXT-017-ECC Closed Cases by Closure Type.pdf; 2009-EXT-017-ECC Closed Cases by Closure Type.pdf; 2008-EXT-015-ECC Cases and Info requests by ECC.xls; 2009-EXT-015-Cases and Info requests by ECC.xls; Note: figures have been adjusted for shared cases

Table 3:1 Closed Normal Complaints by Closure Type, 2007 and 2008

Amicable settlement obtained with the trader No solution found: lack of agreement from the trader No solution found: Claim unfounded No solution found: Lack of agreement from the consumer No solution found: unspecified Transfer to ADR body Transfer to enforcement body Transfer to court Transfer to other organisation Transfer to the police Transfer to a lawyer Transfer to another EU network Transfer to other organisation: unspecified Closed as unresolved by common agreement of the ECCs No. of compliants closed

2008 Number As % 3574 62% 1077 19% 327 6% 105 2% 58 1% 314 5% 109 2% 53 1% 92 2% 30 1% 15 0.3% 10 0.2% 6 0.1% 9 0.2% 5,779 100%

2009 Number As % 2933 48% 1591 26% 421 7% 171 3% 164 3% 402 7% 134 2% 106 2% 67 1% 54 1% 20 0.3% 11 0.2% 5 0.1% 9 0.1% 6,088 100%

Source: 2008-EXT-017-ECC Closed Cases by Closure Type.pdf; 2009-EXT-017-ECC Closed Cases by Closure Type.pdf

Evidence Box 3:1 provides some illustrative examples of how the ECCs’ interventions have helped consumers obtain redress and consequently, reduced consumer detriment.

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Evidence Box 3:1 Illustrative examples of complaints successfully handled by the ECCs In 2002, a Luxembourg consumer entered into a mortgage contract with a bank located in Belgium. In 2009, the bank suddenly increased the monthly mortgage repayments from EUR 403.33 to EUR 700. The consumer, who is a pensioner, could not afford the monthly payment of EUR 700. He contacted the bank to request them to reduce the monthly instalment of the mortgage credit to a maximum of EUR 500. When he could not resolve the issue directly with the bank, the consumer contacted ECC – Luxembourg. On receipt of the complaint, the Consumer ECC (ECC-Luxembourg) in turn contacted the Trader ECC (ECC-Belgium). The Trader ECC successfully interfaced with the bank to negotiate a reduction in the monthly instalment from EUR 700 to EUR 500. In 2009, a Bulgarian consumer entered into a contract with a van repair service in the Czech Republic. After the repair on the consumer’s van had started, the consumer decided to withdraw from the contract which was worth CZK 100,000 (about EUR 4,000). The trader demanded payment of CZK 10,600 (about EUR 418) for the work which had already been done as well as a daily fee of CZK 500 (about EUR 19) for the parking of the vehicle until pick-up. As the consumer did not pay the required amount or collect the vehicle immediately after he interrupted the contract, the total bill demanded by the trader increased dramatically. The consumer contacted ECC-Bulgaria regarding the issue claiming that he had been misled (the signed sums were much greater than the ones actually presented to the consumer). On receipt of the complaint, ECC-Bulgaria liaised with ECC-Czech Republic to find an amicable solution. The case was satisfactorily resolved from the consumer’s perspective who was able to secure the release of the van for EUR 800.

...but the actions of the ECCs don’t always result in positive outcomes for the consumers... A significant proportion of the cases are closed without any solution each year (27% in 2008 and 39% in 2009); while the remaining closed cases are transferred to other organisations (11% in 2008 and 13% in 2009). The extent to which cases are successfully closed during a particular year depends on the complexity of the cases being handled by the ECCs and more importantly, on the willingness of the traders to participate in an 46 amicable discussion with the ECCs. According to the Fifth Anniversary report (and as shown in Table 3:1), a large proportion of cases are closed unsuccessfully (19% of the closed cases in 2008 and 26% in 2009) because of the traders’ refusal to agree an amicable solution. Only a small proportion of the cases involve unfounded claims (6% to 7%) or the consumers’ refusal to accept the suggested solution (2% to 3%). When cases are transferred to other organisations, it is mainly to organisations with redress and/or enforcement capacities; and only after the ECCs have exhausted all the means at their disposal. Unfortunately, the outcomes of the cases transferred or signposted to other organisations are largely unknown to the ECCs. In 2009, the ECC-Net transferred 7% of the normal complaints to an ADR body (Figure 47 48 3:4) . By the end of the year, over half (52%) of these disputes were still open. The ADR46

DG SANCO (2010) The European Consumer Centres’ Network, Fifth Anniversary Report, 2005 – 2009. Available at: http://ec.europa.eu/consumers/ecc/docs/5th_anniversary_report_2005-2009_en.pdf 47

There is a small discrepancy in the ECC-Net Statistics. The reports on closed normal complaints by closure type show that 314 complaints were transferred to ADR bodies in 2008 and 402 in 2009. In other reports (2008EXT-015-ECC Cases and Info requests by ECC.xls; 2009-EXT-015-Cases and Info requests by ECC.xls) the number of disputes handled are recorded as 316 for 2008 and 408 for 2009. 48

Normal complaints referred to an out-of-court (ADR) body are referred to a disputes in ECC-Net terminology 24


bodies had dealt with and closed 48% of cases by the end of the year; and had decided in favour of the consumers or a compromise solution had been reached in almost half (44%) of the cases that were closed during the year. In the rest of the closed cases (57%), decisions by the ADR-bodies were not in favour of the consumer; or, the ADR had not been competent; or, it was impossible to obtain information on the ADR-decision. This clearly shows that even if cases are forwarded to appropriate ADRs there is no guarantee that the consumer will receive a decision in his/her favour. This may be due to the claim being illfounded (which although not a positive outcome from the perspective of the consumer; is a fair outcome nonetheless); but, if the decision is not in favour of the consumer for any other reasons (such as lack of independence of the ADR), then this may undermine consumer confidence in ADR mechanisms and cross-border shopping more generally. Figure 3:4 Disputes by Closure Type, 2008 and 2009 500

2008

2009

408

400 316

300 201

211

200 83

100

50

66 26

3

3

22

24

0 Disputes Open cases handled during the year

ADR decision ADR decision ADR decision No information on ADR obtained: in obtained: not in obtained: decision favour of the favour of the compromise consumer consumer

Source: 2008-EXT-004 Disputes - summary and monitoring.pdf; 2009-EXT-004 Disputes - summary and monitoring.pdf; 2008-EXT-015-ECC Cases and Info requests by ECC.xls; 2009-EXT-015-Cases and Info requests by ECC.xls

... consequently, the ECC-Net is having little impact on building consumer confidence in the internal market The ECCs actions are having a small positive impact on consumers’ confidence in cross border shopping: only 29% of the respondents to the user survey reported an increase in confidence as a result of contacting the ECCs; while 19% reported a fall in confidence (Figure 3:5).

25


Figure 3:5 Percentage of Users reporting Change in Confidence as a result of contacting the ECCs

increased 29%

stayed the same 52% decreased 19%


Qualitative responses provided by users indicate that they are frustrated by the ECCs’ lack of authority to secure redress for consumers; and, time lags in case handling. These issues are discussed below. Lack of authority to secure redress for consumers The ECCs lack the authority to secure redress (monetary redress or compensation) for consumers whose rights have been breached. They also have no authority to impose sanctions (e.g. fines and penalties) on traders found to be responsible for a breach (the issue of whether such authority should be granted to the ECCs is addressed in section 3.1.2). The ECC-Net was conceived and designed to facilitate access to out-of-court redress mechanisms; rather than to directly provide redress to consumers (there is a subtle but important difference between the two which is often not understood by the consumers). The role of the ECCs is to:

Contact the trader on behalf of the consumer with a view to reach an amicable settlement.

Advise the consumer on where to turn to for redress (ADR body, court or other organisation) if the trader refuses to cooperate or if an amicable solution is not reached.

Assist the consumer in handling a dispute via an ADR mechanism.

Evidence Box 3:2 explains this concept in more detail. Evidence Box 3:2 Role of the ECCs in Facilitating Access to Out-of-Court Redress When a consumer with a cross-border complaint fails to find an amicable settlement with the trader on their own, they should contact the ECC in their own country – the ‘Consumer ECC’ – for help and assistance. As a first step, the Consumer ECC should verify that the consumer has a valid complaint that can be mediated through the ECCs (if the consumer

26


does not have such a complaint i.e. the complaint is out of scope e.g. it relates to a domestic purchase, the Consumer ECC should signpost the consumer to another organisation that can help them). Upon acceptance of the complaint, the Consumer ECC should assist the consumer with the translation of the complaint, if necessary, and then transfer the complaint to the ECC where the trader is located i.e. the ‘Trader ECC’. The Trader ECC should find an appropriate ADR scheme which would be competent to solve the case and then forward the case to this ADR. Afterwards the competent ADR, according to its own procedures, should contact the trader to solve the case. When an amicable settlement is reached, the ADR should inform the Trader ECC about the results. The Trader ECC should forward this information to the Consumer ECC, which accordingly should inform the consumer about the ADR decision. Source: ECC-Net (2009) Cross-Border Dispute Resolution Mechanisms in Europe – Practical Reflections on the Need and Availability

However, the reality is different. As the possibility of forwarding a complaint to a competent ADR-body does not exist in case of a vast majority of complaints received by the ECC-Net, the ECCs end-up playing a more active role in trying to help the consumer solve his/her complaint (see Evidence Box 3:3). When a complaint is forwarded to the Trader ECC, the case handlers of the Trader ECC make a legal assessment of the case and try to solve it on their own as a first step. If they have not been successful in solving the case, they try to contact an appropriate ADR (where it exists). In the vast majority of cases the reason for this is that no ADR possibility exists for the complaint in question (as reflected in the fact that only 5% to 7% of the normal complaints are transferred to an ADR body).

Evidence Box 3:3 Barriers to the use of ADR schemes There are gaps in the coverage of ADR schemes both at geographical and at sectoral level in most Member States. Additional barriers include: •

On the consumer side, the most significant barrier is the lack of awareness which is an essential pre-requisite to access. Fragmentation of ADR services in larger countries, such as Germany or the UK can pose particular problems in terms of ensuring consumer awareness. Relevant barriers also include non-compliance by business with non-binding decisions of ADR schemes and refusal by business to enter the procedure, which can ultimately undermine consumer trust in such schemes, as well as the absence of ADR schemes in areas or industry sectors where they may be needed.

•

From a business perspective, the main reason that prevents businesses from using ADR is the lack of available ADR procedures in some sectors.

Source: CPEC (2009) Study on the use of Alternative Dispute Resolution in the European Union

Moreover, due to lack of any legal authority, ECCs have to rely on persuasion techniques. If a trader refuses to accept the solution proposed by the ECCs, the case is either closed without further action or transferred to another body (in fact, traders are not obliged to even acknowledge or respond to the requests of the ECC’s). In 2009, almost 1,600 normal complaints were closed as ‘no solution found: lack of agreement from the trader’ and almost 800 were transferred to another body. Collectively these represented almost 40% of the 49 closed cases . This means that a significant proportion of consumers contacting the ECC49

Of course not all consumers are reasonable when making complaints. But it is not possible to assess this without undertaking a detailed review of unresolved cases and obtaining expert judgement on the fairness of the outcome of each. 27


Net with the expectation of obtaining redress; did not actually receive redress. The feedback provided by users (in the user survey) reveals the extent of annoyance felt by 50 some consumers when the ECCs are unable to help them obtain redress : ‘Shut them down and use the wasted money that has been spent running these useless offices to refund people the money they have lost through cross border scams.’ ‘disband it’ ‘Do what you are paid to do or give the money back.’ ‘To actually be able to help people rather than saying there is nothing they can do.’ ‘Suggest you become an organisation that does something’ ‘No powers to try and sort scam traders. It appears to have been a waste of time contacting you. Still awaiting response to second email requesting further help.’ ‘The service seems, in my limited contact via emails, to have limited powers as to enforcing a judgement on an pronounced decision against a firm etc. No doubt there are legal/political reasons for this, if true. I await the outcome of my case!’ The frustration is compounded in cases where consumers do not obtain redress after weeks or months of dealing with the ECCs (see below). Time lags in case handling process Case study research highlights that it can take several weeks (or even months) for the ECCs to close a case, many times without success. On the basis of the cases reviewed (Table 3:2), it appears that the average time taken to close a case is 86 days (where as the 51 average time taken to reach a decision by an ADR body is 90 days ). Not only is this too long from a consumer’s perspective; it is often disproportionate to the financial value of the claim being made by the consumer (e.g. case 165954/09/ES which took 79 days to resolve and where the value of goods in question was EUR 21.16). Table 3:2 Time Taken to ‘Close’ Normal Complaints and Disputes Reviewed as part of Case Study Research Case Reference

Time taken to close the case

Outcome

178697/09/BG

91 days

No solution - lack of agreement

176874/09/BG

46 days


178714/09/BG

80 days


166314/09/DK

16/11/2009 - present

Open

154137/09/DK

94 days


167734/09/DK

78 days

No solution - claim unfounded

160735/09/DE

48 days

Issue resolved

174837/09/DE

12 days


175095/09/DE

37 days

Closed as unresolved

170695/09/LV

110 days


163530/09/LV

412 days


162919/09/LV

34 days


164516/09/LU

149 days


50

There were a small number of complaints of this type and it is possible that dissatisfied users more readily responded to the user survey than those that were satisfied.

51

CPEC (2009) Study on the use of Alternative Dispute Resolution in the European Union. 28


Time taken to close the case

Outcome

178354/09/LU

78 days

No solution - no response from consumer

169857/09/LU

56 days

ADR decision - favourable

160634/09/MT

42 days

No solution - consumer did not want to pursue

166274/09/MT

98 days

No solution - no response from consumer

178975/09/MT

22/12/2009 - present

open

160094/09/PL

106 days*


159755/09/PL

7/09/2009 - present

open

178444/09/PL

32 days

Transferred to ADR

168399/09/ES

107 days


165954/09/ES

79 days


169314/09/ES

116 days

Transferred to ADR

180456/09/SI

45 days


158775/09/SI

83 days

Compromise settlement obtained with the trader

172154/09/SI

40 days


172299/09/UK

131 days

Issue resolved

180434/09/UK

35 days


170356/09/UK

85 days

Transferred to ADR

Case Reference

*although case formally closed at a later date due to lack of response from the consumer Source: CPEC Case Study Research

The following views were expressed by some of the ECC users (in the survey) in relation to this issue: ‘The level of resolution is slow when dealing with cross border cases’ ‘It would be useful to know where I am in relation to attempting to resolve this dispute as I have received no follow up at all on the matter.’ ‘There needs to be a root and branch review of the service. Quality standards need to be introduced and enforced by an independent auditing body such as the Legal Services Commission.’ ‘Better knowledge/ understanding of your staff. Faster results, or explanation of other bodies that can help.’ ‘Speed up the response rate.’ Please give answers or follow-ups more rapidly to users.’ ‘Communication can sometimes be slow.’ ‘They should acknowledge and follow up with discussion - by email, letter or phone’ How quickly a complaint gets resolved depends upon many factors including completeness of supporting documentation for the complaint, the cooperation of the trader, the number and complexity of cases being handled by the Consumer and Trader ECCs; and the negotiation process itself. However, the case studies demonstrate that sometimes delays are caused by slow response on part of the ECCs. It is expected that the new case handling protocol (which was launched on 1st July 2010 for trial until 31st of December 2010; and if successful, will be adopted on a permanent basis) will reduce the time taken to close cases as it establishes deadlines for specific actions to be taken by the Consumer ECC and the Trader ECC. In this respect, it should be noted that although the case

29


handling protocol will introduce some quality standards within the Network, it will not directly influence traders’ attitude and behaviour which is the main cause of delays. Summary of response to evaluation question 1 In order to transact with confidence in the internal market, consumers need access to:

Information on their rights and specific matters relating to cross border shopping to enable them to make well-informed purchases; and,

Remedies that do not impose a cost, delay and burden disproportionate to the economic value at stake, when things go wrong.

The services provided by the ECC-Net are thus relevant to the needs of the European consumers. However, the ECC-Net is only partially meeting the abovementioned needs of the consumers. The ECC-Net has been designed to facilitate access to out-of-court redress mechanisms; it is not a redress mechanism itself. As such, the ECC-Net delivery model is dependent on the existence of a well-functioning ADR system across Europe; and on the willingness of traders to engage in a discussion with the ECCs to reach an amicable settlement on individual complaints. In absence of appropriate ADR schemes in most European countries, the ECC-Net’s ability to facilitate access to redress is severely constrained. Moreover, the average time taken by the ECC-Net to close cases is too long from the consumer’s perspective (partially due to lack of ADR schemes; but mainly due to lack of cooperation on part of some traders) and often disproportionate to the financial value of the claim being made by the consumer. 3.1.2

Q.2 Which other objectives, if any, should be added to meet the needs of consumers? The headline objective of the ECC-Net indicated in the vademecum is ‘to provide a full service to consumers from information to dispute resolution to enable them to take full advantage of the internal market, without risk to their health, safety and economic interests’. To this end, the vademecum lists the following specific objectives for the ECC-Net to deliver: 1. Promotional activities; 2. Direct provision of information; 3. Assisting consumers with a complaint; 4. Assisting consumers with a dispute; 5. ADR development; and, 6. Networking and feedback. In the ECC survey, the ECC Directors were asked for their opinion on whether any objectives should be added to or removed from the above list. The following ‘new objectives’ were suggested by the ECCs:

To strengthen enforcement arrangements: the ECCs put forward several ideas in this regard such as providing the ECC-Net with a statutory basis so that the traders would have an obligation to cooperate with the Network; assigning enforcement powers to the ECC-Net; allowing the ECCs to assist consumers with court action and execution of the European Small Claims Procedure; and, further developing cooperation with the CPC Network.

To develop the ECC-Net as a pan-European ADR/ ODR body mediating between consumers and traders (seven ECCs made this suggestion).

To ‘approve’ traders for a European-wide e-commerce ‘kitemark’ scheme.

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To ‘name and shame’ rogue traders.

Some ECCs suggested a significant expansion in the ECC-Net’s present day mandate notably, taking over role of the NEBs (i.e. to be granted the authority to act as the enforcement body responsible for dealing with air passenger complaints according to Regulations 261/2004 and 1107/2006) and/ or FIN-NET (i.e. to be appointed as the ADR body for cross-border disputes relating to financial services); or even becoming a single point of contact for consumers in relation to all cross-border issues. As regards objectives that could be removed, a majority of the ECCs (17 ECCs) were of the opinion that the objective relating to ADR development was unnecessary as they felt that this function fell within the remit of national authorities. However, 12 ECCs were of the opinion that all of the current objectives should be retained. In reaching an evaluative judgement on this question however, the following issues need to be considered: Firstly, the ECC-Net vademecum objectives are presently articulated in terms of activities (rather than goals to be achieved in terms of impact). It is suggested that going forward, the ECCs should follow a clear hierarchy of objectives which corresponds to the different levels of the intervention logic. A generalised view of this relationship is illustrated in Figure 3:6. Moreover, objectives should be defined in SMART terms (Specific, Measurable, Achievable, Relevant, Time bound). Figure 3:6 Relationship between Intervention Logic and Objectives

Source: “Evaluating EU Activities – A practical guide for the Commission services”, DG Budget

Secondly, within this hierarchy of objectives, it is important to determine whether the global objective of the ECC-Net should be an all encompassing one of promoting consumer confidence in the internal market or whether it should pursue a more limited objective of protecting the rights of the consumers engaging in cross-border shopping. If it is the former, then all the current vademecum objectives are relevant; some objectives (such as ADR development) are more relevant in some countries than others, depending on the national context. However, if the global objective of the ECC-Net were to be the latter, then there is a need to streamline ECC-Net objectives so that they focus on the ‘real’ needs of the consumers discussed in section 3.1.1. In either case, the ECC-Net should play a more active role in securing redress for consumers whose rights have been breached and contribute to better enforcement.

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Figure 3:7 illustrates the range of options for enhancing the role and authority of the ECCNet in this regard. Table 3:3 provides a brief description of each option and potential issues to consider. It should be noted that it is beyond the scope of this evaluation to fully appraise the options presented in Table 3:3 as a detailed analysis of different policy options is normally undertaken as part of an Impact Assessment process. Figure 3:7 Range of Options for Enhancing the Role of the ECC-Net

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Strengthen cooperation with enforcement bodies (nonlegislative option) and ADR schemes

Where applicable, the ECCs would establish protocols for cooperation with ADRs (setting out procedures for referral to ADRs and follow up of cases, for example). It is recognised, that it would not be feasible (nor necessary given the existing informal linkages which appear to work well) for the ECCs to do so in all Member States and in all sectors; but it makes sense to formalise cooperation arrangements with FIN-NET members (where they exist) as the financial sector represents a sector where consumer detriment is relatively common and where the potential internal market gains are 52 high .

The ECCs would provide assistance to help resolve dispute resolution via ADR and/or European Small Claims Procedure. The ECCs could also provide basic legal advice where the consumer decides to pursue a law suit.

Under this option, there would be formal protocols for cooperation between the ECCs and consumer protection agencies / enforcement bodies, particularly the NEBs and the CPC Network. Such protocols would involve agreements on sharing of information and evidence about specific traders (who have breached legislation), the prioritisation of enforcement action taking account of complaints from non domestic consumers and joint sector studies (where the potential of cross border trade is high) to identify causes of problems other than the unfair behaviour of national traders. It would be mandatory for the Trader ECC to report an infringement (actual or suspected) to the relevant enforcement body.

Description of the Option

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While consumer protection agencies / enforcement bodies have the authority to impose sanctions (including fines and penalties) on traders in case of violation of law; most do not have the authority to secure monetary compensation for consumers whose rights have been breached. In most cases, when enforcement agencies impose a financial penalty on a trader, this money goes to the public purse rather than directly to those consumers affected.

Issues to Consider

Research published by the European Commission confirms that the retail financial markets are ‘underperforming’ for the consumers. Please see the reports available at: http://ec.europa.eu/consumers/rights/fin_serv_en.htm

52

1.

Option

Table 3:3 Overview of the Options for Enhancing the Role of the ECC-Net as a Mechanism for Obtaining Redress for Consumers


Develop ECC-Net into a network of non-binding ADR bodies for cross-border B2C transactions

Develop ECC-Net into a network of binding ADR bodies for crossborder B2C transactions

2.

3.

Option

Under this option, the ECCs would have the authority to act as impartial and independent arbitrators hearing both sides of a dispute and issuing binding decisions

This would be a legislative option.

Under this option, the ECCs would have the authority to act as impartial and independent mediators or conciliators helping the parties negotiate a resolution to the dispute. The ECCs’ decisions would not be binding under this scenario.

34

This option could potentially yield poor value for money in case

There would be significant resource implications for both the EC and the Member States.

According to Commission Recommendation 98/257/EC, bodies responsible for out-of-court settlement of consumer disputes must respect the principle of independence. This condition would not be met by the ECC-Net in its current format as it represents the interests of the consumers. This option would involve a significant change in the mandate of the ECCs.

This option would entail significant legislative and administrative changes (e.g. mechanisms would need to be put in place to ensure that ECC decisions are complied with).

Overlap with activities of FIN-NET in the financial services sector.

This option could potentially yield poor value for money in case of small value purchases- dispute resolution costs are often high relative to the sums being sought which means that in such cases the costs associated with redress will substantially exceed the expected benefits associated with recovery.

There would be significant resource implications for both the EC and the Member States.

According to Commission Recommendation 98/257/EC, bodies responsible for out-of-court settlement of consumer disputes must respect the principle of independence. This condition would not be met by the ECC-Net in its current format as it represents the interests of the consumers. This option would involve a significant change in the mandate of the ECCs.

Issues to Consider



Give ECC-Net the authority to secure monetary redress for consumers

Give ECC-Net the authority to impose sanctions on ‘rogue’ traders

4.

5.

Option

Under this option, consumers would be able to submit their complaint against a business to the ECC-Net for investigation and finding. If a trader is found guilty of breach, the ECC would be able to issue fines and/or penalties

Consumers would submit their complaint against a trader to the ECC-Net for investigation and finding. If the trader is found guilty of breach, the ECC would be able to issue monetary redress orders and the consumer who suffers a loss will be able to get direct recompense from the trader.

Under this option, the ECCs would have the authority to obtain monetary redress / compensation (but not consequential losses) for the consumers whose rights have been breached.


35

Moreover, as resources are typically limited, it would not be feasible to conduct an investigation and to take enforcement action in case of each and every infringement, and a strategic decision might need to be made to not pursue certain types of cases, for example breaches where the financial loss to consumers is low.

There would be little added value in pursuing this option; giving ECCs sanctioning powers would overlap with the role of the CPC Network and, for the Passenger Rights legislation, with the NEB network.

Significant legislative and administrative changes would need to be undertaken to grant ECC-Net the authority to conduct investigations and to issue fines.

Resource implications – high costs associated with dispute resolution and for the ECC-Net to issue monetary redress orders.

Potential overlap with the European Small Claims Procedure.

This option would entail significant legislative and administrative changes (legislative changes would need be made to grant the ECC-Net such authority, the need to provide an independent appeal mechanism for review of ECCs’ decisions etc.).

Overlap with activities of FIN-NET in the financial services sector.

of small value purchases - dispute resolution costs are often high relative to the sums being sought which means that in such cases the costs associated with redress will substantially exceed the expected benefits associated with recovery.

Issues to Consider



On the basis a preliminary assessment of legal and budgetary considerations presented in Table 3:3, Option 1 appears to be the most pragmatic solution going forward. However, a proper Impact Assessment would be required in order to identify and elaborate the preferred policy option. Moving on to the third issue to consider with respect to the vademecum objectives, if consumers are to have sufficient confidence in shopping outside their own Member State and take advantage of the internal market, they need assurance that if things go wrong they have access to effective redress mechanisms. Better and easier access to both out-of-court mechanisms and courts (as a last resort) for resolving cross border disputes are therefore necessary to facilitate more effective access to redress for consumers (see Evidence Box 3:4). Under the current vademecum objectives, the fourth objective (i.e. assisting consumers with disputes) is defined rather narrowly. Presently, ECCs can only assist consumers with the resolution of disputes through ADR mechanisms. This is restrictive for two reasons: (i) a number of countries lack adequate and well functioning ADR systems (in terms of gaps in coverage of the schemes; the lack of acceptance by traders to cooperate and the independence / impartiality of the third parties involved in mediation/arbitration schemes) and; (ii) in some cases, court-based/ judicial mechanisms (e.g. European Small Claims Procedures and court proceedings) can be the only option. While the ECCs should encourage the use of ADR mechanisms; the assistance it provides to consumers (in relation to disputes) should not be limited to the use of ADR, particularly if judicial mechanisms are more relevant. Moreover, enforcement action should go hand-in-hand with redress where there has been a breach of legislation. ECCs should cooperate with enforcement bodies to pursue enforcement action against a trader who has breached consumer legislation. Evidence Box 3:4 Overview of Consumer Redress Mechanisms A consumer redress mechanism can be defined as a ‘means and process by which a consumer can seek redress from a trader for a perceived or actual wrong’ (OFT 2010, op cit). The three main complaint options open to consumers who are dissatisfied with a good or service are: Trader’s in-house complaints procedure - This could be done either directly to the trader, or through a body that helps consumers bring complaints to traders, such as a consumer organisation. Some of these bodies have been set up specifically to handle consumer complaints (e.g. Consumer Direct in the UK), while others such as the consumer action pages of newspapers and magazines assist consumers in complaining as part of a wider remit. Some bodies will represent consumers in disputes with traders; while others will just advise consumers on the options open to them. ADR - As an alternative to complaining directly to a trader or if a consumer is still dissatisfied with the outcome after complaining to the trader (access to ADR mechanism is in some cases dependent on the exhaustion of an in-house complaints procedure) they may also have the opportunity to seek alternative dispute resolution. ADR bodies are nonjudicial bodies in charge of settling consumer disputes and include: arbitrators; ombudsman; and, arbitration and conciliation bodies. Court based/ judicial redress (including small claims procedures). If a consumer cannot find sufficient redress through other channels, they may take it up with the courts. Judicial consumer redress ranges from small-claims for minor monetary losses, to general court proceedings. Filing a complaint in a small claims court (i.e. using the European Small Claims procedure in case of cross-border disputes)is a low cost, quick and informal way of settling low value disputes, which do not require the services of expensive legal professionals. Typically (though not always) there is an escalation process. A consumer would be expected to complain first to the trader and then to consider taking their complaint to an 36


ADR body or Court if they were dissatisfied with the outcome of their complaint to the trader.

ADR mechanism Can be statutory (such as an ombudsman) or voluntary scheme run by trader body or another organisation

Trader’s in-house complaints procedure Not a statutory requirement in most sectors

Court/ judicial mechanism Intended to be the last resort but can be the only option in some circumstances

Finally, given some of the market failure issues discussed in section 3.1.1, it would be logical to place greater emphasis on consumer awareness and education initiatives (which form part of the vademecum objective relating to promotional activities) going forward. Informing and educating consumers are important ‘preventative’ aspects of consumer protection. Through awareness raising campaigns and consumer education initiatives, consumers can obtain information that empowers and protects them; learn about their rights and responsibilities; and develop/ enhance skills and knowledge needed to make informed and well-reasoned choices in increasingly complex markets. Consumer awareness raising campaigns and education initiatives should be based on research into the information/educational needs of consumers. In designing awareness raising campaigns and education initiatives, special consideration should be given to the needs of disadvantaged or vulnerable consumers; and in ensuring that any new initiatives have clear added value in relation to existing initiatives such as Dolceta. Summary of response to evaluation question 2 The current vademecum objectives of the ECC-Net are defined in terms of activities to be delivered; rather than goals to be achieved. In terms of developing the Network’s objectives going forward, they should follow two basic principles: firstly, they should follow a hierarchy of objectives (which corresponds to different levels of the intervention logic); and, secondly, to the extent possible, these objectives should be Specific, Measurable, Achievable, Relevant and Time-bound. On balance, there is scope for streamlining the objectives of the Network. There is a case for defining the key objectives as follows:

To increase confidence in the Internal Market;

To reduce consumer detriment arising from cross border shopping;

To increase consumers’ awareness of their rights on cross-border issues.

Whilst all of the vademecum activities are potentially relevant to achieving these objectives, the impact of the ECC-Net would be greater if it concentrated its limited resources on the resolution of cross border cases. As such the ADR development function should be made

37


optional rather than mandatory for the ECCs. The following actions should be taken to strengthen the Network’s role with respect to the above objectives : 1.

Cooperation with enforcement bodies should be strengthened through the establishment of formal protocols and procedures. Such protocols should reflect some basic common principles across the Network; but they should be tailored at the level of each centre to reflect national specificities. The protocols should cover issues such as sharing of information and evidence about specific traders (with enforcement bodies), the prioritisation of enforcement action taking account of complaints from non domestic consumers and joint sector studies (where the potential of cross border trade is high) to identify causes of problems other than the unfair behaviour of national traders. It should be mandatory for the Trader ECC to report an infringement (actual or suspected) to the relevant enforcement body.

2.

Where applicable, the ECCs should establish protocols for cooperation with ADRs.

3.

Greater emphasis should be placed on consumer awareness and education to equip consumers with the skills and knowledge needed to transact with confidence in the internal market.

Additionally, the ECCs should assist consumers with dispute resolution via the most appropriate channel which could be: direct complaint to the trader; ADR mechanism; European Small Claims Procedure or other judicial/ court action. As resources are limited, the effort put in by the ECCs in assisting consumers with individual disputes should be proportionate to the expected societal benefits, for example: change in the trader’s behaviour; deterrence effect of ECC’s actions on other traders; and, ultimately, impact on consumer confidence in the internal market. 3.1.3

Q.3 Does ECCs' action improve consumers' empowerment/knowledge of their rights? Has the consumers' situation in the EU improved as a result of the work carried out by the ECCs? The following activities of the ECC-Net are designed to contribute to improving consumer empowerment/ knowledge of their rights:

Proactive information provision: informing consumers about their rights indirectly through the media or undertaking consumer education activities for specific groups of consumers such as students.

Consumer assistance functions: responding to consumer enquiries or offering advice and assistance to consumers facing problems.

The impact of each of these functions on consumer empowerment/ knowledge is discussed in turn below. The second part of the question (impact of ECCs on consumers’ situation) has already been addressed in response to question one. Proactive information provision (promotional activities) The ECCs carry out a wide range of promotional activities to raise consumers’ awareness and understanding of important issues (such as their rights and topics particularly relevant for cross border shoppers such as Time sharing and ecommerce):

Creation, publication and distribution of information material such as leaflets, flyers and brochures;

Distribution of promotional items such as pens, mugs etc.;

Participation in events;

Contacts with the media;

38


Development and maintenance of website.

These are described in detail in Annex 2. It is however, not possible to measure the impact of these activities on consumer knowledge/ empowerment due to lack of any results and outcomes data. The ECCs’ final reports mainly focus on describing ‘outputs’ and activities (such as promotional material distributed, number of events organised, unique visitors to websites, media coverage); none of the ECCs measure the impact of these activities on consumer empowerment. This is mainly due to the limited availability of resources for such activities as well as methodological constraints in evaluating impacts of promotional activity. While, it cannot be assumed that the delivery of outputs will automatically translate into changes in consumer knowledge or empowerment (as consumers may not retain or use the information being disseminated); however, given the gradual growth in cross border shopping and the importance given to promotional activities by the ECCs, some positive impact is likely to have accrued (although it cannot be measured or verified). Consumer assistance functions Empowered consumers not only know their rights; but also have the ability and capacity to exercise these rights effectively. The results of the user survey offer some insights on the impact of the ECCs’ action on consumer empowerment. The user survey collected data on the number of consumers taking further action since contacting the ECCs such as contacting the trader to resolve the issue, using the small claims procedure, taking legal action or seeking redress through ADR means. The results of the user survey (Figure 3:8) show that:

67% of the ECC-Net users have taken some action following contact with the ECC. After contacting the ECC, almost half of the ECC users (45%) followed the advice given by the ECC; 11% directly contacted the trader to resolve the issue; a small number of users used the European Small Claims Procedure (2%), took legal action against the trader (2%), contacted an Enforcement body (2%) or contacted an ADR body; 4% contacted another consumer organisation to gain advice.

For just over one-quarter (26%) no action was required because the case or enquiry had been resolved as a result of contacting the ECC.

Only 7% decided to take no further action.

Figure 3:8 Action taken by Consumers since contacting the ECC-Net 50%

45%

45% 40% 35% 30%

26%

25% 20% 15% 10% 5%

11% 7% 4%

2%

2%

2%

1%

0% I followed the No action was I contacted I decided to I contacted I have I have taken I used the I have advice given required as the trader to take no another contacted an legal action Small Claims contacted an by the ECC my case was resolve the further action consumer Enforcement against the Procedure ADR body resolved issue organisation body trader for advice

39



Summary of response to evaluation question 3 The majority of the consumers who have used the ECC-Net have benefitted from the information, advice and support received and in the process, they have enhanced their knowledge and have taken action that demonstrates a certain level of empowerment. It is not possible to assess the effects of the ECCs activities on consumer knowledge and empowerment more widely (i.e. beyond the users of the ECC-Net) due to non-availability of requisite monitoring data. However, given the gradual growth in cross border shopping and the importance given to promotional activities by the ECCs, some positive impact is likely to have accrued.

3.1.4

Q.4 To what extent are ECCs' objectives as specified in the vademecum (annex III to the Grant Agreement) relevant, adequate and appropriate to achieve the objectives of the EU consumers' policy and the strategic goals set out in the Commission strategy? The Consumer Policy Strategy sets out the main objectives of EU consumer policy for specific periods of time. The current strategy, Consumer Policy Strategy 2007–2013, sets out a total of six priority areas for EU consumer policy, reflecting a high degree of continuity with previous EU consumer policy goals.

Better monitoring of consumer markets and national consumer policies: The Strategy highlights the need for a “greater development of monitoring tools and indicators to assess market function in consumer terms.” Actions under this priority area include several market studies contracted by DG SANCO, e.g. in the area of financial services, the retail electricity market, and the (so far three) consumer markets scoreboards. These monitor consumer outcomes in the internal market and were welcomed by all stakeholder groups as a significant step towards a more evidence-based policy approach. The objective of the monitoring of the retail markets is to identify possible market malfunctioning of the retail sector both from the consumer’s and the supplier’s perspectives. The identification of such malfunctioning could lead to support for the development of legislative proposals and other initiatives. The monitoring of national consumer policies might assess any convergence between them as well as complementarity with EU policy, and devote some particular attention to the Member States that entered the EU in 2004 and 2007. This focus might concern e.g. enforcement of legislation, capacity building of consumer organisations, and market surveillance. Of particular importance are the issues of consumer rights and empowerment through education and information in these Member States since their tradition in consumer protection is less established.

Better consumer protection regulation: The Strategy lists the stakeholder consultation on the Green Paper on the Review of the Consumer Acquis as a major step. A large number of stakeholder comments were received in response to the consultation. The Commission adopted a proposal in 2008 for a Directive on Consumer Rights. The Directive merges four existing EU consumer directives into one set of rules, and updates existing consumer rights, at the same time aiming at eliminating inconsistencies, e.g. concerning the number of days of the cooling off period and the computation of the withdrawal period that under the current legislation varies across Directives and between Member States, etc. Better regulation addresses the issues of the quality of new proposals, of simplifying existing legislation, and of reducing administrative burdens. The

40


objective is to progress in the direction of simplification and convergence of consumer protection rules, in particular in view of the internal market.

Better enforcement and redress: The Commission is committed to consider action in the area of collective redress. It will also examine ways of improving ADR in the EU. Development of enforcement cooperation with Member States under the Consumer Protection Cooperation Regulation is in particular related to cross-border issues, to e-shopping and to unfair commercial practices, and is expected to bring enforcement and redress closer together. This means a uniform regulatory environment that is equally enforced across the European market and that effectively protects consumers.

Putting consumers at the heart of other EU policies and regulation: The Strategy aims at making “integration of consumer interests more systematic,” with a particular emphasis on services of general interest (SGI), passenger rights, and relevant policies concerned with consumer non-food safety. In the latter area, DG SANCO has, for example, contributed to addressing toy safety concerns in the Toy Safety Directive, and the EC adopted in March 2009 the Decision 2009/251/EC requiring Member States to ensure that, as of 1 May 2009, all consumer products containing DMF are banned. Beyond this, the issue concerns policy areas as diverse as enterprise, environment, financial services, transport, competition, energy, and trade. In particular where liberalisation has progressed, a particular consumer policy concern is the monitoring and assessment of whether affordable access to essential services for all is guaranteed. The objective of putting consumers at the heart of other EU policies and regulation is also reflected in the appointment of consumer liaison officers within the Commission’s DGs with a significant consumer interest.

Better informed and educated consumers, through continuing financing of the ECC- Net and a cycle of information campaigns through the Member States.

Better protection of EU consumers in international markets through greater cooperation with regulators and enforcers in third countries.

The intervention logic in Annex 2 shows that there is a clear, logical link between the ECCNet objectives and the following objectives of EU Consumer policy:

Better monitoring of consumer markets and national consumer policies;

Better consumer protection regulation;

Better enforcement and redress; and,

Better informed and educated consumers.

These links are illustrated in Figure 3:9 overleaf.

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Figure 3:9 Links between ECC-Net Objectives and EU Consumer Policy Objectives Vademecum objectives of

EU’s consumer policy

the ECC-Net:

objectives:

Promotional activities

Better monitoring of consumer markets and national consumer policies

Direct provision of information

Better consumer protection regulation

Assisting consumers with a complaint

Better enforcement and redress

Assisting consumers with a dispute

Putting consumers at the heart of other EU policies and regulation

ADR development

Better informed and educated consumers

Networking and feedback

Better protection of EU consumers in international markets

The strength of these links however, varies between objectives. In Table 3:4, the relevance, adequacy and appropriateness of ECC-Net objectives with respect to those of the EU consumer policy is considered, drawing on evaluation evidence presented in later sections of the report.

42

Better consumer protection regulation

Better monitoring of consumer markets and national consumer policies

EU’s consumer policy objectives:

+

The advent of systematic monitoring of complaints responded to by the ECCs provides important insights into developments in cross border shopping. For example, data on consumer complaints helps identify aspects of consumer detriment and areas of potential market malfunctioning. ECCs regularly collect information on national consumer policies and environment as well as on functioning of the markets which is useful for benchmarking and comparisons between Member States (e.g. study on price differentials, problems faced by consumers when engaging in ecommerce etc).

The ECC-Net indirectly contributes to consumer protection regulation through its feedback function and by providing evidence to inform policy making.

The objectives of the ECC-Net are relevant to this consumer policy objective:

+

Relevance

Where appropriate, the ECCs should ‘name and shame’ rogue traders who systematically breach legislation and cause detriment to consumers in other EU Member States. The IT-system should continue to be developed to collect data on the scale and nature consumer detriment. The Commission should regularly undertake meta-analysis of the data recorded in the IT tool to identify market mal-functioning and geographic/ sectoral areas where detriment is particularly high. Data on complaints which could not be resolved should be systematically analysed to identify areas for further improvement (e.g. if the relative proportion of unresolved complaints is particularly high in specific sectors and/or countries). Sharing of data and intelligence with other bodies with out of court mediation and sanctioning powers in charge of consumer interests in order to allow for synergies and better focussing of enforcement resources.

At an EU level, there is an obligation for the ECC to respond to every consultation or enquiry made by DG SANCO in the consumer protection field. The ECCs also usually respond to similar requests received from other DGs of the EC and from external consultants and universities.

The contribution of the ECC’s to this objective can be enhanced as follows:

Adequacy

43

The main added value of the ECCs and the Network as a whole in informing policy making arises from its ability to provide systematic evidence on the nature and incidence of complaints arising from cross border and the means through which these can best be resolved. It is not the role of the

It is appropriate for the ECCs to contribute to this objective - because of their proximity to consumers, they are in a unique position to collect information on cross-border consumer issues.

Appropriateness

Table 3:4 Assessment of Relevance, Adequacy and Appropriateness of the ECC-Net’s Objectives to EU Consumer Policy Objectives


Putting consumers at the heart of other EU policies and regulation

Better enforcement and redress


The evaluation found no evidence of the direct

+

As the ECCs assist consumers in obtaining redress for individual infringements of EU consumer protection rules, they know which companies are in breach of which legislation and can inform the national authorities responsible for enforcing EU legislation of any breach of EU rules by a company.

If consumers are to have sufficient confidence in cross border shopping, they need assurance that if things go wrong they have access to redress mechanisms that do not impose a cost, delay and burden disproportionate to the economic value at stake; and that action will be taken against rogue traders to prevent them from causing further harm.

+++

Relevance

Strengthening cooperation with enforcement bodies to ensure action is taken against traders who breach consumer legislation The ECCs should assist consumers with dispute resolution via the most appropriate mechanisms which include: direct complaint to the trader; ADR mechanism; European Small Claims Procedure; and, other judicial procedures. Presently, the fourth vademecum objective (assisting consumers with a dispute) refers to out-of-court mechanisms only. However, the ECCs could provide assistance to consumers with dispute resolution via court based procedures in certain cases. For example, the ECCs could provide basic legal advice on judicial options available to consumers for obtaining redress.

DG SANCO regularly shares intelligence gathered via the ECC-Net on impediments to the functioning

The ECC-Net’s contribution to this objective can be enhanced as follows:

It is generally considered by the ECCs and other national stakeholders that the ECC does not have a mandate to undertake such activity and that their involvement would be inappropriate.

Besides the exceptions noted in Malta and Luxembourg, case studies suggest that the ECCs are not involved in any substantial manner in the development of national consumer policies and strategies.

Adequacy

44

There is scope for the ECCs to foster engagement of consumers in EU policy debates as well as to fully utilise the

On balance, it would be better if ADR development were made an optional, rather than a mandatory function for the ECCs, depending on national context.

The appropriateness of the ADR development function of the ECCs has been questioned by 17 ECCs. However, this objective complements the ECC’s dispute handling function in its current form.

ECCs to get actively involved in policy making.

Appropriateness


The promotional activities of ECCs are relevant to informing and educating consumers; though the direct impacts are difficult to measure. The potential gains through the internal market of well informed and confident consumers are high.

+++

leverage of ECC over other EU policies and regulation (i.e. other than consumer policy). However, the activities of the ECC-Net (complaints data and market monitoring) can potentially, contribute to internal market and competition policy objectives.

Relevance

Promotional activities should be underpinned by a clear intervention logic. The rationale of some of the ECCs’ promotional activities such as the distribution of pens and mugs is questionable.

The resources currently available to ECCs for this activity are limited. However, promotional activities which have a strong preventative and educative dimension should be encouraged such as ‘watchout’ and ‘myth buster’ campaigns. The ECCs should invest more systematically in awareness raising campaigns and consumer education initiatives. Such initiatives should have clear added value in relation to existing initiatives such as Dolceta.

45

evidence available to them on consumer concerns.

Appropriateness

of the internal market with other relevant DGs

Adequacy

Strength of the links between ECC-Net objectives and EU consumer policy objectives: ‘+++’: strong; ‘++’: medium; ‘+’: weak; ‘0’: no link

Better informed and educated consumers




3.1.5

Q.5 To what extent do ECCs contribute to the achievement on the ground of the objectives of EU consumer policy? The evaluation offers mixed evidence as regards the actual contribution of the ECCs to the achievement of EU Consumer policy objectives: Better monitoring of consumer markets and national consumer policies The main contribution of the ECC-Net to this objective has been to collect data on crossborder consumer complaints (which is regularly used in the EU Consumer Market Scoreboard). Consumer complaints are a key indicator of markets failing to deliver against 53 and as such, the ECC-Net complaints data can shed light on consumers’ expectations areas for improvement. Additionally, each year a core group of ECCs coordinate joint research on topics of concern for consumers. Recent examples include:

ECC-Net Air Passenger Rights Report 2008 (forthcoming) – This report analyses the air travel related complaints lodged with the ECC-Net in 2008; identifies the main problem areas; and makes recommendations for improvement.

Joint project on ecommerce (2010) - The report presented a summary and analysis of e-commerce related complaints handled by the ECC-Net during 2008 and 2009. The purpose of this project was to highlight and analyse the main problems that consumers face when engaging in cross-border consumer transactions online.

Classification of hotel establishments within the EU (2009) - This report describes the main differences between national systems of classification of hotels and provides an overview of the situation in each Member State (including definitions of standards). The purpose of this project was to determine the state of the internal market in this sector and to collect data for the purpose of educating consumers with regard to what they should be aware of when opting for particular hotel standards. The ECC-Net also wanted to stimulate further discussion on its initiative to create a fully developed, convenient, harmonised classification system, which would also be helpful to the industry in terms of respecting consumers’ rights.

The joint project on ADR (2009) – This report provides evidence of the use made of ADR schemes in cross-border cases. It analyses the outcome of ADR cases dealt with by the ECC-Net and looks at issues such as possible barriers to ADR of cross-border complaints.

54

55

Better informed and educated consumers As illustrated in Figure 3:1, the number of information requests handled by the ECC-Net has risen from 20,566 in 2005 to 25,875 in 2009. Additionally, the ECCs engage in a range of promotional activities that seek to inform and educate consumers about their rights and other issues of concern (e.g. information leaflets on renting a car, buying festival tickets, scam awareness, buying on the internet – a prevention campaign aimed at young people, Howard shopping assistant which provides general tips and advice on how to become a better online shopper and makes it easier to find international online shops etc.). Through these activities the ECCs reach out to hundreds of thousands of consumers across Europe 53

The willingness to complain varies between countries and sectors depending on traditions in consumer protection and perceptions of the likelihood of success, so complaint levels need to be interpreted in conjunction with other indicators for policy making purposes.

54

The European Online Marketplace: Consumer Complaints 2008 – 2009

55

Cross-Border Dispute Resolution Mechanisms in Europe – Practical Reflections on the Need and Availability 46


each year (see Annex 2). The ECCs themselves do not measure the impact of their promotional activities; however, Eurobarometer survey data previously cited shows that 79% of the EU citizens don’t know where to get information and advice about cross-border 56 shopping in the EU (2008) and highlights this as one of the main factors affecting consumers’ confidence in cross-border shopping. The available evidence thus suggests that the ECCs actual contribution to this consumer policy objective is limited; although this needs to be viewed in context. The ECCs have limited budgets to spend on information campaigns which naturally constraints their ability to have much impact on the levels of consumer awareness. Better enforcement and redress Providing consumers with rights in law is not effective if those rights are not effectively enforced and if consumers cannot achieve quick and effective redress. A lack of enforcement results in widespread non-compliance with legal provisions, defeating the objectives of regulation. Concurrent with creating a legal framework that provides rules of market conduct for traders; it is also necessary to ensure that effective redress and enforcement mechanisms are in place and are easily accessible for consumers. The answer to Q.1 showed that although the ECCs are handling an increasing number of consumer complaints; their ability to facilitate access to redress is constrained by lack of adequate ADR mechanisms in most countries and lack of cooperation on part of some traders. The ECC-Net delivery model relies on a well functioning ADR system. However, according to a majority of the ECCs (72%), the ADR system is not adequate in their country. This means that the possibility of forwarding a complaint to a competent ADR-body does not exist in the vast majority of complaints received by the ECC-Net; 82% of the ECCs cited the limited availability of schemes (either in own country or the country of the Trader ECC) as the main barrier to making ADR referrals. In this context, one of the core objectives of the ECC-Net is ‘ADR development’ which includes the following actions:

To inform the Commission about changes in the contact details of notified out-ofcourt bodies;

To develop with national out-of-court bodies an efficient and effective cooperation;

To assist the national authorities in the promotion and the development of new out-of-court schemes.

Case studies suggest that the extent to which the ECCs are directly assisting in ADR development is limited and varies across the Network. While some ECCs may promote ADRs (e.g. Poland and Bulgaria) and may take initiative to facilitate cooperation between mediating bodies (for example via events and networking activities – e.g. Slovenia, Latvia and Poland); other ECCs do not consider it within their remit to engage in a more proactive role in the development of new ADR schemes in their Member States (e.g. Belgium, Denmark, Finland, Luxembourg, the Netherlands and the UK). ECCs however, may draw attention to key issues identified in the management of crossborder cases that may be of relevance to ADR development e.g. gaps in sectoral coverage. Also there are examples of the ECCs having taken an active role in the diffusion of information on good practice ADRs to their national authorities (e.g. Latvia and Slovenia). Examples of more proactive involvement are limited. For example, ECC-Germany is particularly active in this regard (see Evidence Box 3:5); ECC-Spain has been instrumental in proposing the development of a specific tourism ADR. Also, in the case of Poland, the ECC has been actively involved in the communication between key stakeholders regarding 56

Special Eurobarometer No. 298 (2008), p.94 47


the development of ADR. To this end the ADR has organised a number of events and has undertaken a study of the further development of ADR bodies in Poland. Some ECCs have been involved in the notification of existing ADR schemes (e.g. Malta). Barriers or constraints which prevent the ECCs from assisting national authorities in the development of new ADR schemes include: lack of legislative framework for ADR; lack of political will among national authorities; lack of resources; and, lack of representation at the right level to be engaged in consultation e.g. one centre felt that they were only a ‘guest’ with regards to consultation and consequently felt their input did not make a large impact. Evidence Box 3:5 Activities of the German ECC with respect to ADR development One example of strong involvement of the centre in the development of an ADR body is that of the German centre. In addition to the publication of a brochure on the German ADR system and the regular updating of the ADR database, the centre works closely with existing ADR bodies and the ministry to develop the ADR system in Germany. The centre organised an international workshop in Berlin together with ECC France on « Tourism and ADR » on the 8th of May 2009. During the workshop the following issues were discussed: strategies for the creation of new ADR bodies, common quality criteria and involvement of businesses in ADR schemes. Speakers from various backgrounds and countries were invited to facilitate a rich exchange of dialogue and ideas during the conference (e.g. Arbitral de Consumo de Andalucía, the French Syndicat National des agences de voyages and the UK Air Transport Users Council). Another workshop on “Tourism and ADR – appraisal and perspectives” took place in Berlin on 2 July 2009. This workshop provided a forum to participants (which included ADRs from other countries as well as the German NEB) for exchanging information on existing ADR schemes and potential future models and initiatives. The German ECC also took part in various ADR events in other EU countries such as the ADR conference in Romania in order to sensitize German ADR schemes on cross border issues. The centre works closely with the Federal Ministry of Justice to provide information for further notifications to the Commission as well as to inform the Federal Ministry of Justice about any gaps in existing ADR schemes. As a result of the ECC Germany’s activities, the ADR body “Der Online-Schlichter BadenWürttemberg” has been notified. The German ECC works with the Ministry of Justice on the need to develop ADR bodies in travel and ecommerce; and to promote the idea as well as the benefits of ADR among traders.

The ECCs contribute to better enforcement by informing the national authorities responsible for enforcing EU legislation of breaches of EU rules by a company. Evidence Box 3:6 provides an illustrative example of ECCs’ actions in this regard.

Evidence Box 3:6 Illustrative example of ECCs’ contribution to better enforcement th

A Spanish consumer rented a car from a Romanian trader for the period 18 July 2009 to th 4 August 2009. Although she was initially quoted a rate of EUR 20 per day plus a EUR 150 deposit for an air conditioned car; the car (a Darcia) she actually received from the

48


rental company did not have any air conditioning. Moreover, the contractual documentation was in Romanian despite the consumer’s request for it to be prepared in English. th Nonetheless, the consumer accepted the contract and the car. On 25 July, while she was driving, a stone hit the car and it started leaking oil. The consumer called the trader about the incident and was advised that the insurance would cover the damage to the car; however, she would have to pay 540 Lei (EUR 126) for the cost of the breakdown recovery vehicle. But, the breakdown driver demanded 680 Lei (EUR 159). After some negotiation, the consumer agreed to pay this amount provided that the driver gave her a receipt; but he did not do so. When the Dacia service centre contacted the car hire company, they were told that the Spanish consumer would pay for the repairs. As the consumer had no other option (and there was no replacement vehicle), she paid the full amount for the repair 1,048 Lei (EUR 245). When she returned the car, she claimed for the cost of repairs to the vehicle (EUR 245) , but the car hire company refused to reimburse her on grounds that they had already returned the EUR 150 deposit. th

The case was opened on 13 November 2009 with ECC-Spain and was shared with ECCRomania. When the trader did not respond to ECC-Romania’s communications, it forwarded the case to the Commissioner for Consumer Protection (an enforcement body) in February 2010. In March 2010, the enforcement body informed ECC-Romania that the results of their investigation concluded that the trader had infringed the law. The enforcement body imposed a fine of 1,000 Lei (EUR 234) on the trader and stopped its trading activity until the issues could be resolved. The consumer was also advised of the actions of the enforcement body. The enforcement body however, did not have the authority to secure compensation for the consumer. The consumer would have to pursue reimbursement through the courts. However, across the Network only 2% of the cases are transferred to enforcement bodies each year (see Table 3:1). Since a large proportion of cases are closed unsuccessfully because of the traders’ refusal to cooperate or accept an amicable solution (19% of the closed cases in 2008 and 26% in 2009), there is scope to strengthen the contribution of the Network to ‘better enforcement’. Specifically, cooperation with enforcement bodies should be enhanced by establishing formal protocols. This will ensure that breaches of EU consumer protection legislation (relating to cross border shopping) are systematically brought to the attention of relevant enforcement bodies. Better consumer protection regulation: A vast majority of the ECCs (86%) are of the opinion that the ECC-Net has made some contribution to identifying consumer issues which have subsequently fed into and influenced EU consumer policy. According to the ECCs, the main contributions of the ECCNet to EU policy making have been:

The ECC-Net reports and statistics providing evidence on issues facing consumers. For example, ECC-Net data will be used in the forthcoming Impact Assessment of possible initiatives in the field of collective redress;

Their inputs on the Air Passenger Rights Regulation, the Timeshare Directive and the Consumer Rights Directive.

At an EU level, there is an obligation for the ECC to respond to every consultation or enquiry made by DG SANCO in the consumer protection field. The ECCs also usually respond to similar requests received from other DGs of the EC (such as internal market, transport) and from external consultants and universities (e.g. CIVIC study on ADRs). However, some ECCs (e.g. Bulgaria, Germany) point out that the outcome of their contribution to EU policy making is not always clear and that they do not receive feedback from the Commission as to what extent their inputs have been taken into consideration in policy making.

49


At a national level, the role of ECCs in policy development is context-dependent as demonstrated by the case studies. Most ECCs do not respond directly to national consultations on consumer policy issues (e.g. Bulgaria, Denmark, Germany, Slovenia, UK). The ECCs may however, provide information based on the cases managed by them and thereby contribute to opinion formulation (on national policy proposals) by the host organisation (e.g. Slovenia). In most cases the actual impact of this information provision is however, reported to be limited (by national policy makers) on the development of policy issues in a national context. For example, except for Malta, none of the stakeholders in the case study countries could provide specific examples of policy proposals that were developed with significant inputs from the ECCs. There are some exceptions however, where ECCs have taken a more proactive role in national consultations. In the case of Luxembourg, the Ministry of Economy systematically calls upon the ECCs to offer advice on draft legislative acts in the field of consumer protection and the ECC submits a written document indicating their legal view on the Draft act. Similarly in the case of Malta, the ECC contributes its opinion on Draft legal acts. Summary of response to evaluation question 5 The actual contribution of the ECCs to the achievement of EU Consumer legislation and wider policy goals is positive albeit limited. The ability to provide systematic information on the nature and incidence of complaints arising from cross border shopping is an important added value of the ECC-Net. Other positive contributions vary according to the national and institutional context of the ECC. Within the consumer policy strategy 2007 -2013, the ECC-Net is foreseen as an important instrument ‘to promote consumer confidence by advising citizens on their rights as consumers and providing easy access to redress in cross border cases’. However, the impact of the ECCs in the latter area is weakened by the lack of a well functioning ADR system across Europe and a lack of willingness on part of some traders to amicably resolve consumer complaints. The ECC-Net could make a greater contribution to enforcement of consumer protection legislation by improving data sharing and coordination with enforcement bodies. 3.1.6

Q.6 Does ECCs' action have an impact on policy-making at EU and national levels? The answer to the preceding question (section 3.1.5) has largely covered this issue. Additionally, the results of the ECC survey show that:

According to a majority of the ECCs (86%), the Network has made some contribution to identifying consumer issues which have fed into and influenced EU consumer policy; and,

Over half of the ECCs (58%) are of the opinion that the ECC-Net is ‘effective’ or ‘very effective’ in passing feedback on consumer issues to policy-makers at the EU-level.

The most regularly cited concrete examples of ECC-Net contribution to EU policy making include:

50


ECC-Net statistics e.g. the ECC-Net data on cross-border complaints;

The ECC-Net annual reports;

Reports on ADR mechanisms in Member States;

Inputs to public consultations on Air Passenger Rights and the Timeshare Directive and the Consumer Rights Directive; and,

The Baltic Sea Meeting towards ADR development between 2005 and 2008.

According to ECC-Luxembourg, the Network’s contribution to EU policy making could be improved by encouraging the ECC Directors to provide independent and potentially critical views on proposals for EU legislation in the field of consumer protection field; and, by giving sufficient advance notice to ECCs regarding forthcoming consultations or enquiries in order for them to include the necessary working days in their annual working programme. As regards policy making at a national level, the role of ECCs in policy development is context-dependent as noted previously (section 3.1.5). Where the ECCs deal with issues relating to important sectors of the national economy (e.g. e-commerce or tourism) they are more likely to be influential. The case studies suggest that some of the ECCs hosted by government bodies are not as free as the ECCs hosted either by NGOs or by independent bodies in expressing their positions with respect to national policy making and political debates. Summary of response to evaluation question 6 The ECC-Net’s actions provide important evidence base for policy making at an EU level. Their contribution to national policy making however, is generally limited and varies across the Network. The extent of their involvement in national policy making depends on the importance of national cross border trading issues, the national institutional framework and in some cases, the level of institutional independence.

3.2

Evaluation Criteria: Effectiveness and Coherence

3.2.1

Q.7 Is the service sufficiently visible? To what extent are ECCs known to the general public and specific audiences as a service for consumers? Which are the main profiles of the current and potential users to consider for promotional purposes? How do users of ECCs get to know the service? Visibility of the ECC-Net among general public An ideal situation would be one in which all European consumers (or at least the ones engaging in cross-border shopping) are aware of the existence of the ECCs. However, according to available evidence, only 15% of European citizens (and 20% of the cross57 border shoppers) have heard of the ECCs . Moreover, there appear to be significant variations in the visibility of the ECCs at the level of individual Member States. The visibility of the ECCs in Malta (38% of consumers), Luxembourg (30% of consumers) and Poland (27% of consumers) is above the European average. On the other hand, only 7% of Greeks and 8% of Romanians have heard of the ECC-Net. Furthermore, the visibility of the ECCs is relatively low in countries like France, Spain and UK which represent some of the largest consumer markets in the EU; and where a significant proportion of consumers engage in cross-border shopping (Table 1:2 in section 1). It should however, be noted that in countries like Spain and the UK, the national authorities prefer to promote their national consumer organisations (e.g. Consumer Direct in UK and OMIC in Spain) as the first port of call for

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Proportion of consumers who have heard of ECCs/ Euroguichets at least once in the last 12 months; Source: Special Eurobarometer 298 (2008) p.96 51


consumers; and relevant enquires are routed to ECCs through these organisations. This approach is appropriate for these countries. Considering that 30% of the UK consumers are aware of Consumer Direct (UK case study); the level of awareness among consumers of where to go for cross-border information and advice (21%) is relatively high. Moreover, visibility figures need to be interpreted in the light of wider context. For example, UK consumers are generally quite empowered and only seek out external assistance when they cannot resolve issues themselves. A majority of the ECCs however, think that the ECCs are well known to consumers. As per the results of the ECC survey:

17 out of 29 ECCs ‘agree’ or ‘strongly agree’ with the statement that the ‘ECC is well known to consumers’;

16 out of 29 ECCs ‘agree’ or ‘strongly agree’ with the statement that the ‘consumers know what type of services the ECC provides’.

The remaining ECCs ‘disagree’ or ‘strongly disagree’ with the above statements. Indeed, the overall perception of the stakeholders interviewed in case study countries is that the visibility of the ECC-Net among the general population is poor. On a positive note, the steady rise in the number of consumers contacting the ECCs (the number of consumers contacting the Network rose from 42,795 in 2005 to 52,825 in 2009) demonstrates that the visibility of the ECCs is improving. Anecdotal evidence suggests that there was a ‘massive increase’ in the volume of consumers contacting the ECCs during the volcanic ash crisis earlier this year. Moreover, Eurobarometer evidence from 2006 suggests that the ECC-Net is more visible than other EU networks. 11% of EU25 citizens 58 had heard of the ECCs; whereas the visibility of other EU networks ranged from 2% - 6% . Visibility of the ECC-Net among stakeholders In all case study countries, the ECCs were known to relevant stakeholders (such as NEBs, ADR bodies, national consumer organisations etc.) to allow for effective cross-referral of cases (except for Slovenia where the NEB lacked clarity as regards the role of the ECC). Moreover, a survey conducted by the Commission (which was addressed to the EU 59 networks) suggests that the ECCs are ‘quite well known’ among other EU networks. Which are the main profiles of the current and potential users to consider for promotional purposes? None of the ECCs reported specific audiences with particularly high levels of awareness; However, some indicated that better educated and cross-border consumers tend to be more aware of their services as compared to others. In terms of target audiences for promotional activities, some ECCs appear to focus on the socially active aged between 18 and 35, whilst other centres’ focus on a wider age range specifying up to 60 years in age. Broadly speaking, ECCs target all consumers; with a focus on consumers who are middle to higher income class, mobile and internet users – as these are the groups that are most likely to engage in cross-border shopping either when travelling or through distance selling means. In certain cases, the ECCs target specific audiences with their promotional activity. For example, ECC-Luxembourg has developed promotional material (such as brochures and press releases in Portuguese) for the Portuguese community in the country. This is because the Portuguese are specifically targeted through advertisements on “credit facile” by Belgian traders. This was noticed by the centre following a large number of complaints from Portuguese consumers over recent years (i.e. Portuguese people represent 90% of their credit customers). A number of ECCs 58

Special Eurobarometer 254 (2006), p.88

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DG MARKT - Results of the surveys on transfer of enquiries between Information and Assistance services 52


(e.g. Germany, Luxembourg, Malta, Slovenia) have also undertaken specific promotional activity (mainly consumer education initiatives) aimed at young consumers as this demographic group tends to engage in e-commerce. Some ECCs (e.g. Bulgaria) are using modern communication tools such as social networking sites to reach out to the young consumers; while others are sceptical about the use of such tools due to privacy concerns (e.g. Germany). ECC Luxembourg has also developed special promotional material for the elderly (in large font) and the blind (in Braille format). In future, it should be possible to anticipate potential users based on monitoring products and services where price differentials are currently high; making consumers aware of price differentials is also likely to lead to market adjustments in price over time. Promotional activities could for example, inform consumers where they are ‘missing out’ by not shopping cross border. Such campaigns can be particularly beneficial for consumers around Christmas time. It should be added that a number of ECCs have jointly undertaken price comparison projects in the past; but ECCs themselves admit that the results of previous price comparison studies were unreliable and untimely; and therefore of little practical use. In order to be relevant to the needs of the consumers, the price comparison would need to adopt a similar model as ‘online aggregators’ (e.g. moneysupermarket.com). How do users of ECCs get to know the service? In the user survey, consumers were asked to indicate how they had heard about the services provided by the ECC (Figure 3:10). Over two-thirds of respondents (34%) had first heard about the ECC through internet search. Over one in four (27%) had heard about the ECC-Net through a referral from another consumer organisation. Just under one in ten (9%) had heard of the ECC through word of mouth, 8% through media sources and 7% through the ECC-Net website; 2% of ECC users had been referred through Ombudsmen; and the same proportion of users had learnt about the ECC through ECC-Net promotional material. Figure 3:10 The Channels through which the Consumers first heard of the ECCs Ombudsman referral ECC Net website 2% 7%

ECC-Net Promotional material 2%

Media – Television, Radio, Newspaper 8% Internet Search 34% Word of mouth 9%

Other 11%

Referral from consumer organisation 27%


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Summary of response to evaluation question 7 The overall the visibility of the ECC-Net among general population is low; although the ECCs are well known to relevant stakeholders (such as NEBs, ADR bodies, national consumer organisations and other EU networks). The ECC-Net is more visible among the general population than other EU networks. 11% of EU25 citizens had heard of the ECCs; whereas the visibility of other EU networks ranged from 2% - 6%. The ECC-Net’s promotional activities generally target all consumers; but some activities focus on consumers in the middle to higher income class, those travelling abroad and/or internet users – as these are the groups that are most likely to engage in cross-border shopping either when travelling or through distance selling means. ECCs are also reaching out to young consumers and school pupils. In future, it should be possible to anticipate potential users based on monitoring products and services where price differentials are currently high. The main access points to ECC services are internet search and referrals from another consumer organisation.

3.2.2

Q.8 Are the promotional activities (conferences, seminars, workshops) developed by the ECCs in line with the objectives of the service (including ADR)? Is the scope of action of the ECCs clear in the information material? Is the information material widely distributed? Do promotional activities/information material contribute to increase the number of users of the service? Do they effectively raise consumers' awareness of their rights? Are the promotional activities (conferences, seminars, workshops) developed by the ECCs in line with the objectives of the service (including ADR)? Promotional activities are an important function of the ECCs taking on average 23% of the staff time (on a pro-rata basis, the overall expenditure devoted to promotional activity is 60 estimated to be c. EUR 1.8 million for the entire Network) . The ECCs engage in a wide range of promotional activities and use a variety of dissemination channels for their work:

Contacts with the media;

Creation, publication and distribution of information material such as leaflets, flyers and brochures;

Distribution of promotional items such as pens, mugs etc.;

Participation in events;

Web presence;

Cooperation with other networks;

Coordination with stakeholders.

Consumers are the main target audience of almost all promotional activities undertaken by the ECCs (except for seminars and workshops); although some ECCs engage with a wider audience including consumer organisations and media; and to a lesser extent with traders, ADR bodies and NEBs.

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ECC Final Reports for 2009 54


The main objectives of the ECCs’ promotional activities are to increase the visibility of the centre; and to increase consumer awareness and knowledge. The case studies suggest that the following factors determine the focus of the ECC’s promotional activities: budget availability; and topics of interest to consumers as identified through the information requests and complaints handled. It is difficult to assess whether the ECCs promotional activities are in line with the objectives of the service or not, considering that the ECCs don’t go beyond measuring consumer reach (i.e. they don’t measure variables such as retention, change in awareness and knowledge levels, change in behaviour etc.) due to lack of resources for such monitoring. On the face of it, most of the promotional activities appear relevant; although, some promotional activities (e.g. distribution of mugs, mouse pads, pens) lack a clear intervention logic and rationale i.e. it is not clear how the distribution of promotional material such as mugs contributes to an increase in the visibility of the ECCs or consumer awareness. Is the information material widely distributed? Table 2:2 in the Technical Annex (Overview of the Promotional Activities undertaken by the ECCs in 2009) shows the reach of individual promotional activities undertaken by the ECCs. The evidence demonstrates that the material is ‘widely’ distributed to hundreds of thousands of consumers across Europe. Is the scope of action of the ECCs clear in the information material? This depends on the type of information material produced. For example, leaflets focusing on specific topics (such as scam awareness) briefly mention that the consumer can contact the ECC in case of any queries or issues; but as one would expect they do not go into the ‘nuts and bolts’ of explaining the ECC service. The ECCs websites however, provide detailed information on the scope of ECCs action. Do promotional activities/information material contribute to increasing the number of users of the service? Anecdotal evidence provided by the ECCs (e.g. the case studies for Luxembourg and Malta) suggests that the ECC typically experience an increase in consumer contacts following press releases and media campaigns although they could not offer concrete evidence to validate this. The results of the user survey however, indicate that only 2% of the users have learnt about the ECC through ECC-Net promotional material (Figure 3:10). Considering that most of the promotional material produced by the ECCs is aimed at raising consumer awareness and knowledge of their rights and important issues (such as scams to avoid) rather than ‘selling’ the ECC itself, it could be deduced that consumers exposed to such material are less likely to face problems when shopping cross border and thus less likely to contact the ECCs. Although a definitive conclusion cannot be drawn to this effect due to lack of sufficient evidence. Do they effectively raise consumers' awareness of their rights? In terms of the effectiveness of individual promotional activities in raising consumer awareness, the development, enhancement and maintenance of the website is rated most highly by the ECCs (average score = 8.8 out of a maximum of 10); followed by press releases and articles written by the ECC (average score = 8.6); and the creation and dissemination of information and promotional material (average score = 7.9). The organisation of conferences, seminars and workshops is not deemed particularly effective at raising consumer awareness, scoring 5.8 out of 10. This is due to such activity being targeted primarily at policy makers and consumer organisations, and the activity least targeted towards consumers. However, there is no means to independently measure the impact of ECCs’ promotional activities on raising the awareness levels of consumers directly exposed to these activities. The ECCs’ activities appear to have had a limited impact on awareness levels of 55


consumers more widely - 79% of the EU citizens don’t know where to get information and advice about cross-border shopping in the EU (Table 1:2). Summary of response to evaluation question 8 The ECCs engage in a wide range of promotional activities and use a variety of dissemination channels for their work. These promotional activities reach hundreds of thousands of consumers across Europe each year. The promotional activities have however, had a limited impact on increasing the number of users. There is no means to independently measure the impact of ECC’s promotional activities on the awareness levels of consumers directly targeted by these activities. The ECCs’ activities have however, had a limited impact on awareness levels of consumers more widely. Some promotional activities (e.g. distribution of mugs, mouse pads, pens) lack a clear intervention logic and rationale. Overall there is a need for the ECCs to undertake promotional activities aimed at increasing consumers' awareness of their rights and to measure the impact of their activities. 3.2.3

Q.9 Are the national ECC websites and forms sufficiently user-friendly and clear? National websites play an important role in promoting the ECCs and in providing first level of information to consumers. Accordingly, ECCs typically allocate significant resources to the development and maintenance of their websites. All ECCs have their own websites; but they also promote themselves through presence on other websites and on the web in general. All ECC websites provide information on EU as well as national consumer legislation. The websites are in the national language(s) of the ECC and English; and sometimes another language (such as Russian for the Estonian website). Survey results however also indicate that there is room for further refinement and development of the ECC websites. While users expressed overall satisfaction with the ECC websites, a significant share of users (at least one in three) also indicated that they only “partially agree” with the statements ‘the website is user friendly’ (38%), ‘the websites provide useful and relevant information’ (33%) and that they liked ‘the design and layout of the website’ (43%). Table 3:5 User Feedback on Websites

The ECC website provides relevant and useful information The ECC website is user friendly I like the design and layout of the ECC website

I fully agree

I partially agree

I partially disagree

I fully disagree

Not applicable

49%

27%

4%

3%

17%

44%

32%

6%

1%

17%

36%

35%

9%

1%

19%

Source: CPEC Survey of ECC-Net Users (2010); n=384 - 390

The diversity in quality of the websites should be noted (Table 3:6). The Commission could specify minimum basic standards/ requirements for all websites which could include for example: the availability of web contact forms, online complaint forms; external links, faqs, up to date information etc. Considering that most users typically learn about the ECC through an internet search, some of the ECCs could also improve their ‘Google’ search results.

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DE, EN EN, FR, NL BG, EN CY, EN CZ, EN, DE DK, EN EE, EN, RU FI, EN, SE FR, EN DE, EN EL, EN HU, EN IS, EN EN IT LV, EN, RU LT, PL, EN, DE FR, DE, EN EN NL, EN NO, EN, FR, ES, DE PL, EN PT, EN, FR RO, EN SK SI, EN ES, EN, DE, FR, PT SE, EN EN

Google search results using keywords: cross border shopping complaints 1 4 6 1 10 4 7 5 2 4 1 6 1 5 2 4 1 1 1 7 1 1 2 1 10 5 7 2 4 3 1 30 5 1 20 10 6 7 1 1 1 1 4 13 1 6 6 1 7 2 3 5 2 1 1 1 1 Website did not work 3 13 3 5 11 ? 1 3 2 1 4 3

ECC + country cross border concerned shopping advice

Good Good Excellent Excellent

Good Good N/A Good

Good Excellent Good Good

Navigation & Links navigation functioning professional functionality of external appearance links & clarity Good Good Good Good Good Excellent Good Good Average Good Poor Average Good Good Excellent Excellent Good Excellent Excellent Average Good Excellent Average Excellent Good Good Excellent Excellent Good Excellent Good Good Good Excellent Good Excellent Good Good Good Excellent Good Excellent Poor Good N/A Good Average Good Excellent Average Good Excellent Excellent Good Excellent Excellent Average Excellent Excellent Good Excellent Excellent N/A Average Good Good Good Excellent Good Good Good Good Good Good

Good Good Poor Average Good Excellent Good Excellent Excellent Good Average Excellent Good Excellent Poor Good Good Excellent Excellent Good Excellent Good Good Excellent

visual appeal

Design

Good Good Good Good

Average Good Excellent Good

Good Poor Good Good

Good None found Good Good

Good Good Good Good

Content User friendliness usefulness & absence of search ease of use outdated quality of facility pages content Good Good Good Good Good Good Excellent Good Good Good Poor Poor Average Good Good Average Good Average Good Good Good Average Good Good Good Good Excellent Good Good Excellent Good Average Good Good Good Good Excellent Good Good Excellent Good Excellent Good Good Good Good Excellent Good Good Good Good Good Good Poor Average Good Average Average Good Good Average Good Good None found Average Good Excellent Good Excellent Good translation did not work Average Good Good Good Average Average Average Good Average None found Average Good Good Good Good Average Excellent Good Good Good Excellent Excellent Excellent Good None found Excellent Good Good Good Good Good Good Excellent Good Excellent Good Good Excellent Good Excellent Good Good Good Average Good Good general layout

Note: the opinions expressed in this table are qualitative and highly subjective; the website review was conducted in October 2010

N/A – Not applicable

Austria Belgium Bulgaria Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Iceland Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Norway Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom

Website languages

Table 3:6 Results of a Qualitative Review of the ECC websites

No newsletter E-Bulletin No newsletter Newsletter

Newsletter in German language only No newsletter found. No newsletter found. No newsletter. No newsletter found Newsletter, test for unprofessional websites No newsletter No newsletter No newsletter No newsletter No newsletter No newsletter No newsletter Monthly newsletter english translations didn't work No newsletter No newslatter Newsletter No newsletter No newsletter No newsletter Newsletter in Polish only Newsletter No newsletter

Email lists, newsletters

Interactivity

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Summary of response to evaluation question 9 The users are generally satisfied with the quality, content and layout of the ECC websites. However, the quality of the websites of some ECCs can be improved. The Commission could specify minimum basic standards/ requirements for all websites which could include for example: the availability of web contact forms, online complaint forms; external links, FAQs, up to date information etc. Not all ECCs are making optimum use of the search engines available. 3.2.4

Q.10 Do ECCs effectively co-ordinate their promotional activities with the activities of other EU networks? Main promotional activities undertaken by the ECCs are typically not coordinated with other EU networks as the focus of such activities tends to be on ‘consumer’ issues rather than ‘EU’ issues. Nonetheless, some examples of common promotional activities can be found (e.g. Latvia, Germany, Slovenia). In these countries, cooperation with other EU networks typically takes the form of co-organisation of or contribution to events. In some cases cooperation with other networks on promotional events is an integrated and systematic activity of the ECC. This is for the example the case in Germany where the ECC regularly co-organises events with other EU networks. In other cases collaboration is limited to very specific promotional activities. For example, ECC- Luxembourg has organised a fair in cooperation with SOLVIT. ECCs typically participate in networking events organised by the EC Representation. Also some ECCs (e.g. Slovenia) have disseminated promotional material to other networks; and vice versa (e.g. Malta). However, there is no evidence available to assess the added value and impact of promotional activities coordinated with other EU networks. Summary of response to evaluation question 10 Main promotional activities undertaken by the ECCs are typically not coordinated with other EU networks as the focus of such activities tends to be on ‘consumer’ issues rather than ‘EU’ issues. Although, some examples of common promotional activities can be found across the Network; the added value and impact of such promotional activities cannot be assessed due to lack of evidence.

3.2.5

Q.11 Do ECCs effectively co-operate for promotional purposes with other stakeholders involved in the field of consumer protection? Case study evidence and ECC final reports indicate that the ECCs do cooperate with other national stakeholders in the field of consumer protection; although such cooperation is often of an ad hoc nature and the approach varies across the centres. The ECCs typically coordinate their promotional activities with their host organisation and/or national consumer association, European consumer association (BEUC), ADR bodies, enforcement bodies, chambers of commerce. Cooperation with consumer associations usually involves the ECC providing content for their publication/magazines (e.g. Luxembourg, Malta, Slovenia, UK), as well as the organisation of joint events such as seminars and workshops (e.g. Luxembourg, Poland). More recently, the ECCs cooperated with the NEBs in relation to proactive provision of information on the ash cloud. Evidence Box 3:7 Examples of Cooperation with other stakeholders ECC-Poland has developed a series of 13 public lectures at the European Information Centre on consumer rights issues. In 2009, they also organised an event for the media and other stakeholders with presentations from NEB and experts from the regulatory body for tourism (from the regional Office of the Marshall for Mazovia Voivodship) on holiday rights

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for consumers. ECC-Luxembourg makes a regular contribution (more or less 2 pages) to monthly Newsletter produced by its host organisation (ULC). The newsletter is distributed to 40,000 members of the ULC which is quite well known in the Luxembourg consumer protection landscape (as it is the only consumer organisation). In 2009, a stand was held jointly by the ECC-Luxembourg and the NEB during the “Foire du Printemps” on the package travel topic. A representative of the Insurance ADR body (i.e. Médiateur en Assurances) visits ECCLuxembourg’s premises once a week to provide consultations to consumers on issues related to general rights of consumers at a national level. ECC-Luxembourg has also organised information sessions in cooperation with ECC-Portugal for the Portuguese community based in Luxembourg. Some ECCs note that cooperation with other stakeholders has been limited so far as the focus of their promotional activities had been on developing their own identity. Some ECCs also cited the lack of resources as a reason for limited cooperation with other stakeholders. In the UK, joint promotional activities with other stakeholders are not considered appropriate due to the potential risk of creating confusion among consumers. In the case of Germany and Latvia, cooperation for promotional purposes with other stakeholders in the field of consumer protection is restricted to information exchange and participation in common events. Overall, it can be said that the need for cooperation is not strong except when promotional activities cover topics of common interest. This is already happening to some extent (e.g. Luxembourg). However, ECCs could more systematically coordinate their promotional activities with national stakeholders in furthering consumer and business understanding of how to avoid cross-border disputes, of dispute resolution and redress mechanisms available to consumers, and of where and how consumers can file complaints; and other common topics such as e-commerce. Coordination of promotion activity with national stakeholders could be a source of economies; and would ensure delivery of consistent messages to consumers and businesses. Summary of response to evaluation question 11 The extent of cooperation for promotional purposes with other stakeholders involved in the field of consumer protection varies across the Network and is context specific. The ECCs could more systematically cooperate with national stakeholders on promotional activity covering issues of common interest e.g. e-commerce, redress and dispute resolution. 3.2.6

Q.12 What are the best practices of ECCs in terms of promotion and collaboration with other networks and stakeholders? Good practice in cooperation for promotional purposes should have one or more of the following characteristics: pooling of resources and/or consistency of messages disseminated to consumers leading to greater reach and impact One such example of good practice was found in the final report of ECC Austria. In 2009, the Austrian ECC took part in one of the biggest and best known fairs in Austria, ‘the tourism and holiday fair’. With its cross-border dimension, the fair offered a good opportunity to the centre to inform consumers about their rights and obligations when travelling to another country. The centre was presented at an information table in conjunction with the consumer association, its host organisation. Such type of coordinated and highly targeted approach to promotion is likely to have generated a greater multiplier effect and impact than similar promotional activity carried out by the ECC on its own (the impact of different promotional activities cannot however be measured or compared due to

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lack of data – as mentioned earlier, the ECCs do not collect any data on results and outcomes of promotional activities). ECC Latvia in conjunction with a local NGO has developed an educational game kit on consumers’ rights intended for the use in Latvian high schools and secondary schools. The 61 board game with question cards, entitled “A trip into consumers’ rights ”, is an innovative way of promoting consumer issues among pupils. ECC- Latvia noted that there was a high demand for the game among schools, particularity commercial schools. The Club for Protection of Consumer Interests also contributed ideas for the game kit. A good practice that can be observed from some of the promotional material reviewed is that this material ‘tells’ a ‘story’ rather than ‘selling’ the ECC itself which can be particularly appealing to the consumers. As regards wider collaboration and coordination, Ireland has established a European Information Providers Exchange Group. This informal group offers the Irish offices of EU networks the opportunity to meet and exchange information and encourage the development of a common position in areas of shared interest. 3.2.7

Q.13 Are consumers satisfied with the quality of the service, in terms of content of the reply/assistance, response time, and other aspects of the service? What aspects of the service are considered most/least satisfactory? Survey results indicate that users are generally satisfied with the services delivered by the ECCs. 74% of the respondents agreed “that the ECCs provide a useful service to European consumers” and an additional 13% partially agreed with the statement. Similarly, 75% of the survey respondents indicated that they were ‘very satisfied’ or ‘satisfied’ overall with the support, information or advice received from the ECC. Views on the usefulness of the ECC service were the same across most of the ECC users. However for the UK and Spain, users had a more pessimistic view. 46% of the UK ECC users fully disagreed that the service was useful. 40% of the Spanish users held the same view and only 20% of users of these centres fully agreed that the service was useful. The survey results show a strong correlation between the extent to which the issue was resolved as a result of the ECC’s actions and overall levels of satisfaction reported by the users. As regards specific elements of the service, users generally rated very positively the service of the ECC advisors in terms of their responsiveness, understanding of the enquiry, competence and politeness. On each of these aspects, more than 85% of the survey respondents expressed satisfaction. Less than 15% expressed dissatisfaction with these aspects. Information services are generally rated positively with 81% of the users agreeing (fully or partially) that the information provided was tailored to the consumer’s needs; and 78% indicating that the information provided was useful. However, a relatively high level of dissatisfaction was noted among users in Bulgaria (31% of the Bulgarian respondents), Spain (20% of the Spanish respondents), the UK (19% of the British respondents) and Portugal (18% of the Portuguese). It should be added, that these country level results should be interpreted with caution as they do not provide the basis for drawing generalisations. The results of the mystery shopping exercise validate the above results with respect to the information provision function of the ECCs (the mystery shopping did not test complaints and disputes handling). Overall the quality of the service, in terms of accuracy, responsiveness and level of detail can be rated as average to high The ECCs ability to solve the case and the follow up of the case by the ECCs is also rated positively by a clear majority of users. Most users indicated that they feel reassured as a

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CeĜojums patērētāju tiesībās 60


result of their contact with the ECC. It should be noted, however, that dissatisfaction with the service is significantly higher and reassurance is significantly lower in Spain, Portugal and the UK. More than 40% of the UK users indicated that they did not feel reassured as a result of their contact with the ECC. Likewise, 37% of the Portuguese users, 60% of the Spanish users and 31% of the Bulgarian users also indicated that they did not feel 62 reassured as a result of their contact with the ECC . The satisfaction levels reported by the users are context and culture dependent. For example, UK consumers are generally quite demanding and less tolerant of issues such as delays or unfavourable outcomes; whereas Latvian consumers, according to the national stakeholders, generally do not mind this because the services are free and there’s no tradition of state services being terribly efficient. Where users were dissatisfied with the services delivered it was due to long delays in case handling; failure to respond to consumers and/or a lack of communication; inability to obtain a remedy and/or an unfavourable outcome to the case. Consumer frustrations with delays in case handling and the ECCs’ lack of authority to secure redress for consumers. are also evident from the complaints and disputes illustrated in the case studies and the results of the ECC survey (as detailed in section 3.1.1). However, case study analysis suggests that delays are often caused by other actors (e.g. slow response from trader or national stakeholders such as the NEB), although factors such as slow response from other centres within the Network (e.g. Danish case 154137/09/DK) and internal miscommunication (e.g. Latvia case 162919/09/LV) also contribute to delays at times. Summary of response to evaluation question 13 Overall consumers are satisfied with the quality of the service delivered by the ECCs, in terms of content of the reply/assistance, response time, and other aspects. However, the minority who are not satisfied, point to issues such as delays in case handling and the ECCs’ lack of authority to secure redress for consumers. 3.2.8

Q.14 Are the ways to contact the ECCs adequate for citizens? Are the ECCs easily accessible by interested users? ECCs may be contacted via various means – including email, telephone, face to face, fax; and in most cases in-person and web-form (at least for complaints). However, access to the Network is usually by email, post, telephone or website. In 2009, most of the consumers contacted the ECC-Net by e-mail (27%) followed by letter and phone (15% each); the least used mode of contact was fax – see Figure 3:11. However, there are differences at a country level. For example, in the UK majority of the consumers contact the ECC by phone (53%); whereas, most consumers in Estonia (74%) and France (59%) contact the ECC via email. In Finland, web enquiries are the most common form of contact (53%). And although only 7% of the consumers contacted the ECCs in person, case studies highlight the importance of maintaining physical proximity with the consumers and traders (and the need to offer a walk in service to consumers). Case studies also show that physical presence of centres in each country facilitates linkages with national stakeholders (particular ADR and enforcement bodies) which in turn helps the ECCs to stay informed of national policy and institutional developments; and allows for effective signposting and cross-referral of cases.

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As explained in section 2.2.5, country-level results need to be interpreted with caution as the sample sizes do not provide the basis for drawing generalisations 61


Figure 3:11 ECC-Net: Medium of Contact by Users, 2009 Website 12%

Email 27%

Phone 15%

Fax 1% Personal Visit 7%

Other 2%

Letter 15% No Medium Defined 21%

Source: ECC-Net Statistics (2009-EXT-021-ECC cases by region-gender-contact.pdf)

User survey results suggest that the ways to contact the ECCs are adequate for citizens and that the ECCs are easily accessible. Over two-fifths of users felt the ECC was ‘very easy’ to find (42%) and a further one-third found it ‘somewhat easy’. Less than one-tenth of users stated the ECC had been ‘very difficult’ or ‘difficult’ to find (7%) and just less than one in five (17%) were felt that it was ‘neither easy nor difficult’ to find the ECC. Although some ECCs (e.g. UK) do not entertain personal visits, no evidence was found to suggest that there are any issues with contacting the ECC though the available communication means. Furthermore, the mystery shopping results suggest that the ECCs are easily accessible via email and telephone and that the ECCs reply promptly to enquires. Summary of response to evaluation question 14 The ECCs are easily accessible and the ways to contact the ECCs are adequate for citizens. No evidence was found to suggest otherwise. 3.2.9

Q.15 What is the users' satisfaction in terms of relevance/accuracy of the replies/assistance provided? What more would consumers need? The results of the user survey indicate that the replies and assistance provided by the ECCs are relevant, tailored and useful:

81% of the users either ‘fully agreed’ (69%) or ‘partially agreed’ (12%) with the statement that the assistance provided by the ECCs is relevant i.e. tailored to their specific contexts. However, 12% of the users either ‘fully disagreed’ or ‘disagreed’ with the same statement.

78% of the users either ‘fully agreed’ (66%) or ‘partially agreed’ (12%) with the statement that the assistance delivered by the ECCs is useful. However, 13% of the users either ‘fully disagreed’ or ‘disagreed’ with the same statement.

Case study analysis and mystery shopping results suggest that some ECCs could provide more tailored responses to customer enquiries. Particularly when dealing with complaints 62


and disputes, some ECCs (e.g. Latvia) could also, in their response, explain in a more explicit and detailed manner the competences of the ECCs and other actors involved. Moreover, the case studies demonstrate that not all ECCs are equally proactive in keeping consumers informed of the progress and developments with their case. Keeping customers informed and updated is essential element of good customer service. Summary of response to evaluation question 15 Generally, the replies and assistance provided by the ECCs are relevant, tailored and useful. However, some ECCs could: a) provide more tailored responses to customer enquiries; b) explain in a more explicit and detailed manner the competences of the ECCs and other actors involved; c) maintain regular contact with consumers to keep them informed of the status of their complaint/ dispute. 3.2.10

Q.16 Where a consumer is not satisfied with the service, are the means provided for follow-up adequate? The majority of the ECCs (79%) do not collect feedback from users in a regular and systematic way. 21% of the ECCs regularly collect feedback on their services from users; while a further 12% collect feedback on an ad hoc basis. In absence of systems for obtaining regular feedback, it is not possible to identify shortcomings in the service in a proactive manner. In the survey, the ECCs stated that they rarely receive complaints with regard to their services, however where complaints are received, they are primarily dealt with through internal quality management systems. This includes the ECC Director personally making contact with the complainant, a legal advisor explaining why the ECC is unable to help and signposting consumers to other services to resolve the case. Some complaints on quality of the ECC service are directly addressed by the consumers to the Commission. DG SANCO examines these complaints on the basis of the information recorded on the IT-tool, the explanations provided by the ECCs involved and prepares a response for the consumer. It also addresses, if appropriate, relevant recommendations to the ECCs concerned. Summary of response to evaluation question 16: The majority of the ECCs do not measure consumer satisfaction in a regular and systematic way which means that any shortcomings in the service cannot be identified in a proactive manner. Any dissatisfaction or complaints brought to the attention of the ECCs (or the European Commission) by consumers are typically dealt with through internal quality management systems. This system is not adequate as the ECCs cannot take any follow-up action where a consumer has not actively brought an issue to the ECCs’ notice. The ECCs should regularly collect user feedback through standardised customer satisfaction surveys.

3.2.11

Q.17 Are the processes and procedures in place (Case Handling IT tool, other tools, human resources, workflows and organisational solutions) in line with the objectives? The majority (69%) of the ECCs believe that the procedures in place are adequate for the purpose of delivering ECC services. However, a significant minority (31%) think otherwise (Figure 3:12). According to them, the main shortcomings are:

Lack of resources and funding stability;

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Lack of consistency across the Network;

Lack of protocols for sharing cases with other organisations;

IT tool is inadequate.

The first issue relating to resources is addressed in detail in section 3.3 (in response to Q.30 regarding the adequacy of available resources). The issues relating to case handling and IT tool are further discussed here. Figure 3:12 Adequacy of Procedures

No 31%

Yes 69%

Q: Do you think that the procedures in place (case-handling IT-tool ,human resources, workflows and organisations solutions) are adequate for the purpose of delivering all your ECC services? Source: CPEC Survey of ECCs; n = 29

Lack of consistency across the Network The results of the ECC survey and the case studies, demonstrate that there are some inconsistencies in working practices and quality of service delivered across the Network. Most notably, there are variations in internal deadlines set by the ECCs across the Network. For example, ECC-Malta has set itself a deadline for accepting cases within 3 working days of receipt (when acting as a Trader ECC); In Denmark, normal complaints and disputes are allocated to a case handler within 5 working days following the submission of the complaint. An acknowledgment of receipt is sent within 7 to 8 working days following the receipt of the complaint, informing the consumer that they will get a reply to their complaint within 2 to 3 weeks. ECC-UK tries to respond to customers within 14 days of receipt of a complaint. Furthermore, some ECCs are better at managing expectations of the consumers than others. For example, ECC-Denmark clearly outlines the competence (and limitations) of the ECC’s role in its emails to consumers. ECC-UK suggested that a Service Level Agreement could be put in place to standardise service across the Network. A number of ECCs (and indeed host organisations) were of the view that some ECCs handle a disproportionate volume of cases (relative to staff capacity) which inevitably puts pressure on the service they offer. Table 3:7 shows that the number of cases (complaints and disputes) handled per FTE ranges from 21 in Romania to 720 in the UK. However, as the Commission has not set any constraints on the number of staff, it is 64


for the ECCs to plan their own staffing requirements. Although, national co-financing limitations often constrain the ability of the ECCs to recruit more staff (this issue is discussed further in section 3.3). The new case handling protocol that is being ‘road tested’ over the period 1st July 2010 to 31st of December 2010 should help address this issue (at least partly) as it establishes clear deadlines for the trader ECC and a general deadline of 10 working days for the ECCs to respond to the queries of colleagues. Although the new case handling tool could also specify the minimum frequency of updates to be provided to the consumer by the consumer ECC. The issue of quality of staff is one that needs to be monitored and addressed by ECC Directors (it does not appear to be a widespread issue requiring action at the level of the Network). Table 3:7 Number of Contact and Cases Handled per FTE in 2009 No. of Contacts Cases No. of Contacts Handled Complaints & Information FTE Posts per FTE Total per FTE Disputes Requests Austria 7 3,918 471 4,389 668 596 Belgium 5 2,233 2,271 4,504 880 436 Bulgaria 5 186 149 335 74 41 Cyprus 4 113 317 430 111 29 Czech Republic 3 370 332 702 206 109 Denmark 5 1,171 784 1,955 410 245 Estonia 2 215 383 598 266 96 Finland 3 659 202 861 263 201 France 9 2,854 1,680 4,534 529 333 Germany 11 3,189 2,249 5,438 511 300 Greece 8 318 222 540 66 39 Hungary 4 426 752 1,178 311 113 Iceland 0 58 41 99 222 130 Ireland 6 2,597 1,221 3,818 684 465 Italy 10 1,987 4,013 6,000 631 209 Latvia 4 331 305 636 157 82 Lithuania 6 358 570 928 151 58 Luxembourg 6 1,610 952 2,562 460 289 Malta 6 251 554 805 144 45 Netherlands 5 1,384 1,755 3,139 698 308 Norway* 756 352 1,108 Poland 6 910 820 1,730 283 149 Portugal 4 534 454 988 232 126 Romania 6 121 325 446 76 21 Slovakia 4 283 197 480 135 80 Slovenia 4 223 523 746 186 56 Spain 7 1,901 154 2,055 284 263 Sweden 5 1,553 1,260 2,813 526 291 United Kingdom 6 4,371 2,567 6,938 1,142 720 149 26,950 25,875 52,825 355 181 All** Source: ECC Final Report for 2009; ECC-Net Statistics (2009-EXT-015-Cases and Info requests by ECC.xls) Number of FTE posts estimated on basis of 220 working days per FTE (see Table 2: 4 in Technical Annex for more details) *Data not available for Norway **To obtain the Network total, the shared cases have to be deducted

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Lack of protocols for sharing cases with other organisations Another issue highlighted by the case studies is that a number of ECCs have not put in place formal protocols for signposting or sharing of cases with other national stakeholders such as enforcement bodies, ADRs, consumer organisations etc. There are some exceptions. For example, ECC-Belgium has signed a protocol with DG Enforcement and Mediation which determines the cooperation between the two organisations on matters such as exchange of information and mutual assistance. Some ECCs (e.g. Luxembourg, Malta) have formal protocols for case sharing with NEBs. Although where cooperation is informal, the ECCs and stakeholders generally think that it ‘works well’ and most ECCs are of the view that there is no need for formalisation of transfer/ sharing of complaints. However, it was noticed that this way of working has certain disadvantages, e.g. the NEB does not seem to be aware of the role and functions of the ECC in Slovenia, despite ECC promotional material being regularly sent to the NEB, according to the ECC Director. Moreover, much of the evaluation evidence suggests that structured cooperation between the ECCs and enforcement bodies (including the NEBs) would benefit consumers. As suggested earlier (section 3.1.2), the ECCs and enforcement bodies could establish a formal protocol for handling cases relating to individual infringements of a given piece of EU legislation and/ or notification of traders who systematically breach EU consumer legislation. The case 162919/09/LV (Latvian case study) also illustrates that the international procedures for handling cases related to the Regulation 261 are not always clear and straight forward for the ECCs as well as “external actors” (e.g. NEBs). The newly approved ECC case handling protocol could have more specific guidance with regard to how the ECCs should signpost cases related to the Regulation 261, especially considering and ensuring the “place of incident” principle enshrined in this Regulation. In this respect, the Network can use (and if necessary, adapt) the protocol for handling of airline complaints which has been developed and is being applied in Luxembourg. The protocol defines the competencies of the ECC and the NEB; it also specifies the approach to be followed depending on the place of incident. Although this might be outside the scope of the ECC-Net, the national NEBs could also be informed whether they should signpost cases relating to the Regulation to other NEBs directly or through the ECC-Net infrastructure. Since the approval of the NEB-NEB agreement in 2007, NEB have established an effective network and are dealing directly with each other. According to the German ECC, problems arise with identification and transfer of cases to appropriate bodies outside the country. According to the ECC, the 175095/09/DE illustrates perfectly the need for more clarity and internal guidance on the responsibility and services provided by ADR schemes and members of European networks (FIN-Net, SOLVIT, etc.). Moreover, when consumers are signposted or cases are referred to other organisations, the role and competencies of these bodies should be explained to consumers. Issues with the IT-tool Although the IT tool is valued by the ECCs, the general opinion is that it can be improved. The ECC staff mentioned the following issues:

The translation is not always accurate. The IT tool is based on a translation machine which is not perfect (due to technological limitations). To deal with the issue the new case handling protocol requires that problem descriptions be written by the Consumer ECC in English, unless another language is agreed between the ECCs sharing the complaint;

Limited functionality to perform searches and analysis. According to ECC Malta it would be useful to have a more detailed statistical function, so that it has access to reliable data and the same data as the EC. According to ECC Malta, at present, there are inconsistencies between the EC statistical results and the information ECC Malta can draw from the tool. The ECC therefore does not feel 66


comfortable giving figures to journalists if they ask for them. It was noted that the improvement of statistics functionality has already been discussed at the IT Tool user group. Even in the context of this evaluation, ECC-Net statistics could only be provided to the evaluators in PDF format instead of spreadsheet format (which is more useful for conducting analysis of data);

It does not allow access to detailed descriptions of the cases;

The tool is slow and the process of encoding cases is time consuming and onerous;

The trader ECC does not have access to (or the functionality to view) closed cases;

When printing a list of cases: only the first page of the list (i.e. the first 10 cases of the list) is printed;

IT Tool does not allow the possibility to extract data for a single country. As a result, ECCs have to maintain separate records to derive national statistics;

At times, it can be problematic to classify a case, as there is little scope for multiple choices. For instance, a case of delay and lost luggage cannot be classified as a single complaint;

Another common example that creates difficulties is when two or more persons could have entered the contract which is the subject of the complaint (as if often the case with time shares), but only one consumer can be encoded in the IT Tool, with the result that the overall number of consumers suffering detriment is underreported in the IT tool;

An online forum has recently been made operational by the ECC Denmark. Some ECCs find it more useful (e.g. Luxembourg) than others (e.g. Malta).

While some of the issues cited above reflect genuine limitations of the IT tool (e.g. slow speed, lack of functionality to extract country specific data, printing issues); a few issues raised by the ECCs are not valid (e.g. search and analytical facility, ability to have multiple choices, recording of complaints). Given some of the findings of this evaluation, it would also be useful for the IT-tool to have the functionality to record the number of days taken to close a case for statistical purposes. Summary of response to evaluation question 17 Although most ECCs are satisfied with the procedures in place for delivering ECC services; there is room for improving the case handling protocols (both internal and in relation to external organisations, particularly enforcement bodies) and the functionality and analytical capability of the IT tool. 3.2.12

Q.18 Are national cases effectively signposted to national consumer organisations? Most ECCs signpost out-of-scope enquiries to relevant national consumer organisations. However, they receive a very limited amount of such enquiries. ECCs generally report having close cooperation with national organisations dealing with consumer issues. They report having formal or informal cooperation with relevant national stakeholders; and case studies demonstrate a high level of mutual understanding and assistance between the ECCs and national consumer organisations. In a large number of cases signposting of national cases is facilitated by the fact that the ECCs are hosted by national consumer services/organisations responsible for addressing consumer enquires (e.g. Denmark, Latvia).

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Summary of response to evaluation question 18 The ECCs receive a very limited number of national cases. The evaluation notes a high level of mutual understanding and assistance between the ECCs and national consumer organisations which facilitates effective signposting. 3.2.13

Q.19 Are out-of scope cases effectively signposted to the appropriate EU or national services? Cooperation with other EU and national services on out of scope cases differs across the Network depends on the nature and number of incoming out of scope cases. The case studies and survey results suggest that signposting of cases to other EU networks is relatively rare. In some countries the ECCs simply don’t receive cases that may be signposted (e.g. Denmark, Malta). Across the Network as a whole, only 10 closed cases were signposted to other EU networks in 2008; the same figure for 2009 was 11 (Table 3:1). This represents 0.2% of the total closed cases (normal complaints). Similarly, incoming referrals from other EU networks are rare - only about 3% of all incoming ECC enquires are reported to have come from other EU networks. Representatives of EU networks did not highlight any issues with the arrangements for cross-referral between the ECCs and themselves. However, the ECC Directors believe that there is scope to improve signposting between EU networks and in this respect ECCs highlight that training on other networks would be useful, and so would be a system to transfer enquires directly – rather than signposting clients. Not all ECCs receive out-of-scope enquiries; where and when such enquiries are received, consumers are typically signposted to NEBs or ADRs. Moreover, such enquiries appear to be limited in number (in most cases less than 10% of the incoming enquiries) Almost all case study ECCs demonstrated high levels of awareness and understanding of national services (and vice versa) to be able to effectively signpost out-of-scope enquiries to an appropriate national service. ECC and stakeholders don't see the need for introducing formal procedures given the limited scale of cross-referrals and signposting that takes place between them. As mentioned in section 3.2.11, a notable exception was Slovenia, where the NEB did not seem to be aware of the role and functions of the ECC in Slovenia despite the ECC’s efforts. However, this would not impact upon the ability of the ECC to signpost out-of-scope enquiries to NEB (although, the NEB would of course not be able to signpost cases to ECC in such a situation). This appears to be an isolated case and one that does not point to an issue requiring action at the level of the Network. Summary of response to evaluation question 19 There is scope to improve signposting between EU networks and in this respect ECCs highlight that training on other networks would be useful, and so would be a system to transfer enquiries directly – rather than signposting clients. There is a very limited amount of signposting between the ECCs and national services. ECCs demonstrate high levels of awareness and understanding of national services (and vice versa) to allow for effective signposting out-of-scope enquiries to an appropriate national service.

3.2.14

Q.20 Does the collaboration between the ECC of the Consumer and the ECC of the Trader work properly, in an adequate way and to the satisfaction of all parties involved? The perceptions and opinions of the ECCs with respect to internal cooperation within the Network were gauged through the ECC survey. Furthermore, the collaboration between the

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consumer and trader ECCs was reviewed using real life examples of complaints and disputes handled by the Network. In the main, the collaboration between the consumer and the trader ECCs tends to work well. However, there is scope for improvement. The ECC survey and the case studies highlight some problematic areas such as lack of uniformity between the ECCs, particularly with regards to the case handling procedures; lack of consistent time frames for handling a case (although the Case Handling Protocol is starting to make a difference in this regard); and, differences in the quality of the case handlers across the centres. These issues have already been discussed in section 3.2.11. Conceptual issues such as the differences in interpretation of the definition of ‘consumers’ can also sometimes hinder cooperation. For example, some ECCs (e.g. Denmark) follow a relatively loose definition of ‘consumers’ and provide assistance to independent traders; while other ECCs provide assistance strictly to consumers. Summary of response to evaluation question 20 The collaboration between the consumer and the trader ECCs tends to work well. However, there is scope for improvement by addressing problematic areas such as lack of uniformity between the ECCs, particularly with regards to the case handling procedures; lack of consistent time frames for handling a case (although the Case Handling Protocol is starting to make a difference in this regard); and, differences in the quality of the case handlers across the centres. 3.2.15

Q.21 Are ECCs collaborating effectively with out-of-courts bodies? What procedures, if any, are in place at national level to handle, transfer and follow up cases between ECCs and ADRs? Cooperation with and development of ADR are among the core objectives of the ECC. In 2009, the ECCs handled 408 disputes of which almost half were successfully closed. An ADR decision was obtained in case of 77% of the closed disputes. For the remaining 23% of the closed disputes, either an ADR decision could not be obtained or the ADR was not competent to handle the case. Cooperation with national ADR bodies takes place in all Member States. The ECCs collaborate with existing ADRs on case referrals, information exchange and case transfers. The case studies suggest that cooperation where it takes place, works effectively or is in process of development (e.g. Bulgaria and Poland and to some extent the UK). The actual existence of ADRs and their role and powers differs significantly across the EU. In a number of Member States, ADRs with the authority to impose decisions are limited to specific sectoral areas. This is for example the case in the UK where key areas such as time share and e-commerce are not covered by ADR. Similarly, ADR schemes in Poland mainly exist in the Banking sector (FIN-NET). In Spain main areas of ADR development are e-commerce and tourism. Where ADR system is under-developed, it appears that the ECCs themselves get involved in mediation between consumers and traders. This was 63 also the conclusion of the ECC-Net report on ADRs . Cooperation with ADRs is typically informal and cases are often transferred via email. This is especially true in cases where the main ADR body is hosted by the same structure that hosts the ECC (e.g. Denmark and Latvia). Communication between the ECC and the ADRs on ongoing cases also takes place via email. In the reviewed case studies no formalised procedures were identified.

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ECC-Net (2009) Cross-Border Dispute Resolution Mechanisms in Europe – Practical Reflections on the Need and Availability 69


Summary of response to evaluation question 21 Cooperation with ADRs is typically informal. The extent of collaboration with ADRs is constrained by the limited existence of appropriate ADR schemes in a particular country. 3.2.16

Q.22 Are ECCs assisting effectively the national authorities with the development of new out-of court schemes? Which are the main hindrances, if any? The answer to Q.5 has largely covered this (section 3.1.5). Case studies suggest that the extent to which the ECCs are directly assisting in ADR development is limited. While ECCs may promote ADRs (e.g. Poland and Bulgaria) and may take initiative to facilitate cooperation between mediating bodies (for example via events and networking activities – e.g. Slovenia, Latvia and Poland); a number of ECCs do not consider it within their remit to take a more proactive role in the development of new ADR schemes in their Member States (e.g. UK, Denmark). ECCs however may draw attention to key issues identified in the management of transborder cases that may be of relevance to ADR development e.g. gaps in sectoral coverage. Also there are examples of the ECCs having taken an active role in the mediation of information from other Member States on good practice ADRs to the national authorities (e.g. Latvia and Slovenia). Examples of more proactive involvement are Germany, Spain, Poland and Malta. Section 3.1.5 provides specific examples of the activities of these ECCs with respect to ADR development. Barriers or constraints which prevent the ECCs from assisting national authorities in the development of new ADR schemes include: lack of legislative framework for ADR; lack of political will among national authorities; lack of resources; and in one case, lack of representation at the right level to be engaged in consultation e.g. one centre felt that they were only a guest with regards to consultation and consequently felt their input did not make a large impact. Summary of response to evaluation question 22 The extent to which the ECCs are directly assisting in ADR development varies hugely from country to country and is context specific. Barriers or constraints which prevent the ECCs from assisting national authorities in the development of new ADR schemes include: lack of legislative framework for ADR; lack of political will among national authorities; lack of resources.

3.2.17

Q.23 Are ECCs collaborating effectively with enforcement bodies? What procedures, if any, are in place at national level to handle, transfer and follow up cases between ECCs and enforcement bodies? The answer to Q.17 has largely covered this (section 3.2.11). Data extracted from the IT tool shows that on an annual basis, the ECCs collectively signpost 100 to 140 cases to enforcement bodies or approximately 2% of the closed cases (Table 3:1). The case studies suggest that cooperation with enforcement bodies is typically (not always) informal; and, that the enforcement bodies generally have good knowledge of the activities and functions of the ECC and vice versa. ECC-Belgium has signed a protocol with DG Enforcement and Mediation which determines the cooperation between the two organisations on matters such as exchange of information and mutual assistance. 70


ECC-Luxembourg has established a protocol for case handling of airline complaints. The protocol defines the cases where the NEB is most competent to act (i.e. in case of denied boarding, cancellation of flights and delays) and in which cases the ECC is competent (i.e. for handling complaints for lost or damaged baggage). For the cases transferred to NEB, the document specifies the approach to be followed depending on where the incident took place (in Luxembourg and outside Luxembourg). Similarly, ECC-Malta has a formal agreement with NEB on complaint-handling procedures (since 2008). The document provides clarifications on the distribution of competences on air passenger rights applied in Member States. The Latvian case 162919/09/LV (Latvian case study) however, illustrates, the international procedures for handling cases related to the Regulation 261 are not always clear and straight forward for the ECCs as well as “external actors”. The newly approved ECC case handling protocol could have more specific guidance with regard to how the ECCs should signpost cases related to the Regulation 261, especially considering and ensuring the “place of incident” principle enshrined in this Regulation. Although this might be outside the scope of the ECC-Net, also the national NEBs could be informed whether they should signpost cases in the line with the Regulation to other NEBs directly or through the ECC-Net infrastructure. According to the Commission (DG Mobility and Transport), since the approval of the NEB agreement in 2007, NEBs have established an effective network and are dealing directly with each other. Summary of response to evaluation question 23 In most cases, there are no formal procedures at a national level to handle, transfer and follow up cases between the ECCs and enforcement bodies. This is recognised as an area where further action to improve cooperation might be useful (e.g. formal protocols). 3.2.18

Q.24 Do ECCs collaborate effectively to prepare joint projects on cross border consumer issues, study visits and mentoring schemes? Cooperation between the ECCs can take several forms: the participation in joint projects on a specific theme, the study visits from one ECC to another, events organised by ECCs. Most ECCs participate in joint projects undertaken at an EU or transnational level. The participation is typically voluntary and ECCs typically get involved by indicating their interest in a given topic. In 2008, the following joint projects were carried out:

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Joint project on ecommerce - The purpose of this project was to highlight and analyse the main problems that consumers face when engaging in cross-border 64 consumer transactions online. The report , published in May 2008, presented a summary of the results and trends observed. It identified product delivery as the main problem for consumers and concluded that, if cross-border online trade is to develop to its full potential, traders must meet their obligations and consumers need to be aware of their rights.

The joint project on tourism, launched in 2007, continued throughout 2008. The purpose was to provide tourists across Europe with practical information and advice on a range of issues that affect cross-border tourists. This project produced nine leaflets in English which were translated into different languages and widely distributed to tourists.

Extension of the ‘Shopping Guide in Europe’ – This online guide available on ECC websites provides information on consumer rights in 25 EU Member States. It covers topics such as guarantees, pricing regulations, popular payment methods as well as opening hours for shops, banks and post offices

The European Online Marketplace: Consumer complaints 2007’ 71


Joint projects carried out in 2009 include:

Classification of hotel establishments within the EU - This Report describes the main differences between national systems of classification of hotels and provides an overview of the situation in each Member State (including definitions of standards). The purpose of this project was to determine the state of the Single Market in this sector and to collect data for the purpose of educating consumers with regard to what they should be aware of when opting for particular hotel standards. The ECC-Net also wanted to stimulate further discussion on its initiative to create a fully developed, convenient, harmonised classification system, which would also be helpful to the industry in terms of respecting consumers’ rights.

The joint project on ADR – This project aims to provide evidence of the use made of ADR schemes in cross-border cases. It analyses the outcome of ADR cases dealt with by the ECC-Net and looks at issues such as possible barriers to ADR of cross-border complaints.

In addition, the ECC-Net organises a number of events and campaigns. Examples of events and campaigns organised in 2008 include:

An e-commerce seminar was hosted by ECC Cyprus to inform consumers about their rights and about potential risks when shopping online.

A workshop on air passenger rights was hosted by ECC Sweden. The purpose of this workshop was to exchange experience and ideas concerning case-handling, ADR, cooperation with NEBs and contacts with air carriers.

A series of events and ‘open days’ around the theme ‘European Consumer Day’ were organised in the Member States by the ECCs in cooperation with the Commission Representations. Activities included conferences, exhibitions, celebrity information events, consumer debates, online quizzes, presentations in schools and ‘mobile info-centres’, all aiming to get across the message that consumers should ‘know their rights and use them’.

ECCs organised consumer campaign competitions at national level and selected the national participants for the final at European level.

ADR seminars and workshops - To improve awareness about out-of-court resolution schemes amongst consumers and businesses, the ECC-Net organised a series of seminars and workshops at national level plus conferences to exchange best practice at EU level.

ECC-Net cooperation activities of a more recurring nature include:

Quarterly meetings of directors;

An annual cooperation day is organised in a different Member State each year (typically hosted by the Member State holding the rotating presidency of the EU). This cooperation day provides a forum to discuss common issues;

Study visits and staff exchanges are also organised among ECCs; Mentoring of new ECC members (especially, Romania and Bulgaria); and,

Knowledge sharing activities. For example, the ECC Denmark developed the Howard tool (the online shopping assistant) which was subsequently adopted by a number of other ECCs.

According to the ECCs, they collaborate effectively to prepare joint projects on cross border consumer issues, study visits and mentoring schemes. Overall, joint projects on cross border consumer issues, study visits and mentoring schemes are considered by ECCs to be a positive aspect of working with the other ECCs. 72


Summary of response to evaluation question 24 Most ECCs participate in joint projects undertaken at an EU or transnational level. The participation is typically voluntary and ECCs typically get involved by indicating their interest in a given topic. The collaboration within the Network is effective. 3.2.19

Q.25 Do these activities effectively contribute to the achievement of the objectives of the network? Overall, joint projects are considered useful in generating intelligence and analysis for policy making. A number of ECCs (most notably, Bulgaria, Latvia and Slovenia) however, consider the relevance and added value of joint projects to be rather limited for the following reasons.

Poor reliability of data used e.g. Price comparisons project;

Topics are not always deeply connected to the ECC’s core business e.g. brochures on tourism, comparison of hotel establishments; and,

Lack of timeliness of results e.g. the third edition of the Air Passenger Rights report, which utilises 2009 data has not yet been published.

Activities such as mentoring of newer ECCs by more experienced ECCs and study visits between ECCs who routinely share cases are considered to be particularly effective in training of staff; improving working relations between different centres; and transfer of knowledge/ experience across the Network (which in turn contributes to better functioning of the Network). Summary of response to evaluation question 25 There have been issues with the quality of some joint projects (such as use of unreliable data and delay in publication of results) which have undermined their utility. ECC’s involved in joint projects should put in place effective quality control and quality assurance measures to avoid such issues from recurring. Other networking activities such as mentoring of newer ECCs by more experienced ECCs and study visits between ECCs facilitate knowledge sharing and cooperation between ECCs; and, contribute to improving the functioning of the Network. 3.2.20

Q.26 Do ECCs effectively respond to consultations on consumer policy issues, both nationally and at EU level? At an EU level, the ECCs respond to all consultations launched by the Commission on consumer affairs. The added value of their contribution is clear from examples previously cited (Air Passenger Rights Regulation, Timeshare Directive, Consumer Rights Directive). Some ECCs mentioned that it is burdensome for them to contribute to every single consultation and that it might be more efficient for the Network to provide a single, consolidated contribution in response to these consultations; as opposed to individual responses as there is likely to be a high degree of repetition across their responses (which could potentially, bias the results of the consultation). There are of course minor practical issues with this approach such as which ECC would take the lead in coordinating a consultation response; a pragmatic way to deal with this issue would be to ask for volunteers (or the lead could be the same as the country holding the rotating presidency of the EU). However, on balance there is certainly merit in pursuing this approach. At a national level, most ECCs do not respond to national consultations on consumer policy issues. They may however, provide information based on the cases managed by the ECCs and thereby contribute to opinion formulation by the host. In most cases the actual impact

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of this information provision is however reported to be limited on the development of policy issues in a national context. There are some exceptions however, where ECCs have taken a more proactive role in national consultations. In the case of Luxembourg, the Ministry of Economy systematically calls upon the ECCs to offer advice on draft legislative acts in the field of consumer protection and the ECC submits a written document indicating their legal view on the Draft act. Similarly in the case of Malta, the ECC contributes its opinion on Draft legal acts. In Germany, the ECC has been involved in the evaluation of the compliance of the German ADR schemes. Summary of response to evaluation question 26 At an EU level, the ECCs respond to all consultations launched by the Commission on consumer affairs. A single coordinated response from the Network would more efficient and effective for EU policy making. At a national level, most ECCs do not respond to national consultations on consumer policy issues. There are some exceptions however. 3.2.21

Q.27 Do ECCs' activities encourage Member States to develop national consumer policy strategies? Do ECCs' activities have an impact on the timing, scope and format of national consumer policy? Besides the exceptions noted in Malta and Luxembourg, case studies suggest that the ECCs are not involved in any substantial manner in the development of national consumer policies and strategies. It is generally considered by the ECCs and national stakeholders that the ECCs do not have a mandate to undertake such activity and that their involvement would be inappropriate. Instead it is considered that the ECCs should focus on trans-border case management and provision of information and guidance. As mentioned earlier (sections 3.1.5 and 3.1.6) the main added value of the ECCs and the Network as a whole in informing policy making arises from its ability to provide systematic evidence on the nature and incidence of complaints arising from cross border and the means through which these can best be resolved.

3.2.22

Q. 28 By collecting and analysing information on consumer cases and by organising joint projects, do ECCs effectively contribute to policy-making purposes at European level? This question has been addressed under section 3.1.5.

3.3

Evaluation Criteria: Cost Efficiency and Delivery

3.3.1

Q.29 To what extent has the Service achieved its objectives at a reasonable cost in terms of financial and human resources deployed? To answer this question, the ‘value for money’ of the ECC-Net was estimated i.e. the extent to which the benefits of the ECC-Net outweigh its costs. Cost per output indicators were not developed for two reasons:

It was not within the remit of this evaluation to assess the performance of individual ECCs;

At a Network level, cost per output indicators are of little use in arriving at an evaluative conclusion regarding cost efficiency in absence of an appropriate benchmark (i.e. an intervention that is directly comparable to the ECCs).

The benefits of ECCs activities include:

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Consumer detriment remedied following satisfactory resolution of complaint (in cases where the actions of the ECCs help secure monetary redress);

Consumer detriment avoided (in case of consumers who avoided a scam or problem as a result of ECCs’ promotional activities);

Economic benefits to consumers and traders as a result of increased participation in cross-border markets (reflecting overall activities and objectives of the Network).

However, it is extremely difficult to quantify or monetise the benefits of the ECC-Net, particularly consumer detriment avoided or the economic benefits to consumers and traders, due to lack of data. And although, the overall level of consumer detriment remedied is unknown; data available for the period January 2010 to November 2010 shows that the total value of problematic transactions (i.e. the total value of goods and services that were the subject of normal complaints) handled by the ECC-Net was c. EUR 140 million and the 65 monetary recovery of consumer claims following ECC-Net action was c. EUR 14 million (which represents 10% of the total value of problematic transactions). Additionally, ECCs helped resolve a number of simple complaints. The total value of goods and services that were the subject of the simple complaints is reported to be c. EUR 767 million. However, it should be noted that the volume and value of complaints (particularly, simple complaints) handled by the ECCs in 2010 was abnormal due to the occurrence of the volcanic ash crisis. On a conservative basis, it could be said that the direct financial benefit accruing to consumers as a direct result of the ECC’s activities during January to November 2010 was in order of magnitude of EUR 14 million. This compares favourably against the costs of the Network. The EU grant allocation to the ECCs (excluding Norway and Iceland) for the year 66 2010 is EUR 4.3 million- . Considering that the EU grant covers 50% of the total expenditure of the ECCs and that the remaining expenditure is co-financed by national governments, the total public investment in the ECCs (i.e. cost to European tax payer) is estimated to be EUR 8.6 million. On a pro-rata basis, the cost of running the ECC-Net is estimated to be c.EUR 8 million (for the period January to November 2010). The above calculations yield a cost-benefit ratio of 1:1.77 i.e. the Network delivers direct financial benefits to consumers of at least 1.77 times its cost to the taxpayer. It should be emphasised that this figure under-estimates the overall impact of the ECCs. It is reasonable to assume that the recovery of average detriment in monetary terms is relatively low as compared to the financial benefits that would accrue to consumers through greater participation in cross border markets. As shown in section 3.1.1, even if goods and services representing a quarter of the consumer expenditure of EUR 6.7 trillion were purchased cross border at 13% lower prices, the potential savings would be in the order of EUR 194 billion. Summary of response to evaluation question 29 The Network delivered direct financial benefits to consumers of at least 1.77 times its cost to the taxpayer in 2010. Additionally, there are unquantifiable albeit significant benefits associated with consumer detriment avoided and increased confidence in cross border shopping attributable to ECCs’ activities.

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Statistics provided by DG SANCO. See presentation titled ‘ECC Net: Value for money’. It is assumed that the data reported by DG SANCO is accurate and reliable. To note that these figures do not include data for Norway and Iceland.

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See Table 2.1 (EC Grant Profile) in Annex 2. 75


3.3.2

Q.30 Are financial resources from the Commission and from the Member States in line with the objectives? Are ECCs adequately resourced in terms of financing by the Commission and by national authorities? The results of the ECC survey show that 52% of the ECCs believe that they are adequately resourced compared to 48% who disagree. 5 out of the 16 ECCs hosted by a governmental body were of the opinion that the ECCs are not adequately resourced to meet their current objectives; 8 out of the 11 ECCs hosted by NGOs also think so; whereas the opinion of the 2 ECCs hosted by independent bodies is divided. This indicates that resources are seen as more of a constraint by the ECCs hosted by NGOs. Nonetheless an overwhelming majority of the ECCs (83%) stated that there is ‘little’ or ‘no margin’ to deal with to deal with a sudden increase in the level of enquiries; and that their present level of funding is ‘too little to deliver additional promotional activity or an increased volume of consumer enquiries’. Case studies further highlight the constraints faced by some of the ECCs in this regard particularly with respect to the organisation of promotional activities. Some ECCs (e.g. Bulgaria, UK, Spain) have already experienced or are facing national budget cuts as the Network is not seen to be a priority in the current economic environment where a number of Member States are facing significant fiscal constraints. ECCs were asked to indicate alternative financing options and revenue sources which could potentially finance ECC activity in their country. A number of centres stated that there was no alternative funding source available in their country of operation; however suggestions made by the remaining ECCs include:

Other DGs at the European Commission notably, DG Justice (but also DG TREN or DG Competition) which could add funding in addition to DG SANCO, particularly where ECC activity involves their specific sector;

A fund established purely for the purpose of the ECC-Net;

Reallocation of resources from other information services;

Consumers paying a share of the cost of a normal complaint or paying for the cost of the telephone call; and,

Fines imposed on businesses.

Summary of response to evaluation question 30 Some ECCs are adequately resourced; while others are not (particularly those hosted by the NGOs). Overall the evaluation evidence points to limited resources spread thinly across a range of activities. The main financing constraint is the level of co-financing available from national budgets. These pressures can only be expected to worsen in the age of fiscal austerity unless ECCs can demonstrate clear improvements in consumer welfare attributable to their actions (in the form of financial benefits accruing to consumers). In this context, there is a case for the European Commission considering a more flexible approach to its level of co-financing. 3.3.3

Q.31 How can the cost-benefit balance of the ECC-Net be improved? The overall cost-benefit ratio can be improved as follows:

All activities, particularly promotional activities, networking and feedback functions - where the ECCs actions don’t deliver easily measurable/ concrete outcomes for the consumers - should be underpinned by a clear intervention logic in order to justify support. 76


The Commission should consider making the continuation of funding conditional upon individual ECCs demonstrating a positive benefits-cost ratio i.e. the direct financial benefits delivered to consumers should be greater than its cost to the taxpayer.

The Commission should consider replacing the current system of annual grants with a system of framework partnership agreements (see Evidence Box 3:5 for a description of a framework partnership agreement). This would not only reduce administrative burden but also create employment stability for ECC staff and would provide the ECCs with the stability required to undertaken medium term forward planning. A majority (55%) of the ECCs are in favour of such an arrangement. Although 35% could not comment as they felt they lacked the information needed to offer an opinion on the subject.

Evidence Box 3:8 Framework Partnership Agreement A framework partnership agreement has two levels:

The first level is the framework partnership agreement (or framework partnership decision) which sets out the conditions governing grants to partners for carrying out actions, on the basis of an action plan and jointly agreed general objectives. This first level formalises the relationship of cooperation between the Commission and the host structure on the basis of the action plan/ proposal submitted by the latter; it however, does not constitute an obligation for the Commission to award grants.

The second level is the specific grant agreement (or specific grant decision) which formalises the award of a grant. The specific agreement is governed by the terms of the framework agreement.

The framework agreement is typically signed for a period of four years; while a specific action grant agreement is typically signed for one year. Renewal of the specific action grant agreement for the following year (within the four year-period covered by the framework agreement) depends on the positive evaluation by the Commission of the action plan or work programme submitted by the host structure. The framework partnership agreement thus avoids the need to organise an annual call for proposals (as is currently the case with the ECC-Net). 3.3.4

Q.32 What kind of quality benchmarking could be taken in account to measure performance by the ECCs? Annex VII of the ECC Grant Agreement sets out the approach to performance based evaluation and financing of individual centres. Three criteria are used to assess the performance of the ECCs:

Degree of compliance – assessed by comparing the planned case handling figures (as stated in the agreed work programme) with those actually achieved (as indicated in the Final Report)

Quality – assessed on the basis of the quantitative analysis of the outputs, and qualitative analysis of activities and operations carried out by the ECC.

Participation – based on a quantitative analysis of participation in Network meetings/activities and respect of deadlines for sending reports and for replying to requested feedback from the Commission will be measured.

According to this approach, under-performing ECCs are subject to grant deductions. Following discussions with the Network, a new performance evaluation methodology has been developed. As per the 2011 ECC-Net Quality Assessment Methodology (proposed to be used from 2012 onwards), the quality/performance of individual ECCs will be assessed 77


and scored using four criteria:(i) contractual requirements which refer to the fulfilment of the reporting obligations at the end of the project period; (ii) Communication flows between the Centres and the Executive Agency; (iii) Implementation of the Work Programme; and, (iv) Case handling i.e. number of cases handled, quality of case handling and quality of encoding on the IT-tool. The scores for all categories (except category IV. “Management of the Centre”) will be added together. The maximum number of points that a centre can receive at the end of the assessment are 63 points. Depending on the total number of points received, each Centre will be assigned one of the four different performance categories:

63 – 58: Excellent performance

57 – 47: Good performance

46 – 32: Satisfactory performance

31– 0: Unsatisfactory performance

If the performance of a centre is assessed to be “Unsatisfactory”, a deduction will be applied to EC grant as follows:

5% of the grant for the period assessed will be deducted from the final payment if the centre scores between 31 and 22 points

10% the grant for the period assessed will be deducted from the final payment if the centre scores between 21 or less than 21 points

According to some stakeholders, both the previous and proposed system are based on penalties instead of incentives; and as such, this approach introduces further uncertainty with respect to funding. While, it is still too early to judge the relative merits or de-merits of the new system; nonetheless, the issue of penalties versus incentives based approach to performance management deserves further consideration by DG SANCO. As part of the evaluation, the ECC Directors were asked to suggest metrics that could be used for quality benchmarking. Some centres could not think of additional indicators to those already used or suggested in the Quality Assessment Methodology. Other centres suggested the following indicators:

Timeframes for solving complaints including time taken for a case to be accepted/dealt with;

Frequency of contacts with traders;

Quality of files introduced to other ECCs within the Network;

Quality of information given to consumers;

Identifying why cases are successful;

Identifying why cases are not successful;

Financial savings to consumers;

Consumer satisfaction surveys which are uniform across the ECC-Net;

Co-operation with other networks and stakeholders;

Relationships with media; and,

Involvement in the Network.

One centre suggested that it might be more effective to measure the performance of the Network as a whole rather than of individual centres, particularly due to differences in the context in which the ECCs operate.

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To be effective and meaningful, quality benchmarks should follow the intervention logic of the ECC-Net. Table 3:8 provides some suggestions on the type of metrics that could be used to benchmark quality across the Network. The suggestions are based on a consideration of the following principles:

Relevance and Utility: The indicators should be clearly related to the priorities and objectives of the intervention and types of activity (indicators should have a clear purpose/ end use and not collected for the sake of it)

Quantification: To the extent possible, performance indicators should allow for quantitative measurement of results and impacts.

Availability: It should be possible to collect the data needed to populate the indicators.

Cost-Efficient: Data can be collected at costs commensurate with their value to the evaluation system.

Selectivity: The indicators chosen for quality benchmarking should be few and meaningful.

These indicators should form the basis for target setting and any interim/ final reporting. The performance of the ECCs should be judged on the basis of results achieved. They also provide the basis for aggregating the activities and performance of the Network as a whole. Furthermore, the Commission should consider using an incentives based approach as opposed to a penalties based approach to encourage high levels of quality and performance. For example, a performance reserve (representing x% of grant which does not require national co-financing) could be awarded to ECCs delivering a cost-benefit ratio above a pre-determined threshold. This threshold would need to be discussed and agreed with the ECCs.

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Case handling

No. of press releases

Multiplier effect of media coverage

No. of communication campaigns

•

•

•

Percentage of consumers engaging in cross border shopping**

Percentage of consumers who have heard of the ECC**

User feedback on website

•

No. of breaches brought to the attention of enforcement bodies as a proportion of complaints

Average value of goods & services which have been the subject of the complaint

Proportion of complaints resolved

No. of participants in events

•

No. of complaints handled as a percentage of total population

No. of events staged or attended

•

Post-campaign measurement of changes in perceptions, attitudes and behaviour e.g. retention rate; translation rate i.e. the percentage consumers exposed to campaign reporting a change in knowledge of rights/ confidence levels*

•

Percentage of satisfied users (data collected through user survey)

No. of consumers reached by promotional material (newsletters, brochures, leaflets etc.)

•

Additional information that can be collected through regular surveys:

Percentage of consumers reached through promotional activity

Result/ Outcomes Indicators

No. of information enquires handled as a percentage of total population

No. of unique visitors to websites

Common indicators to allow aggregation and across the Network e.g.:

Promotional activities

•

Output Indicators

Activity

Table 3:8 Suggested Indicators for Benchmarking the Performance of the ECCs

•

Timeliness of response

User satisfaction:

No. of cases handled per FTE

Cost per case handled

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Average time taken to close a case

Cost per consumer reached

Delivery Indicators


No. of joint projects completed within deadlines

Networking and feedback

Positive rating of study visits by participants in terms of change in knowledge levels

No. of policy/ legislative proposals using statistical evidence provided by the ECCs****

No. of schemes notified as a result of the ECC’s work

Impact on confidence in cross border shopping**

Cost-benefit ratio

Overall levels of satisfaction

•

N/A

Cost per notified scheme

Reliability of response

•

Delivery Indicators

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**** it is acknowledged that it can be logistically difficult for the ECCs to track the extent to which their inputs are used for national policy making; at an EU level, the European Commission can maintain records of statistical and consultation requests received from the various DGs and collect year-end feedback on how these were utilised.

*** data against these indicators can be self-reported by the ECCs; and subsequently validated through evaluations of this kind

**based on the assumption that these indicators can be introduced in Eurobarometer survey each year

*this can be done relatively easily and cost-effectively in case of campaigns targeting specific groups (e.g. students; or internet users); or for certain types of communication activities, which have a direct response element such as a unique phone line or URL. However, it is appreciated that the ECCs have limited budgets to devote to tracking research and therefore, proxy indicators (based on Eurobarometer surveys) might be more feasible

No. of study visits undertaken and/or hosted

No. of contributions to national policy making***

No. of contributions to EU policy making***

Specific indicators would need to be developed to reflect the work of individual ECCs in this area which could be no. of reports published or meetings/conferences organised on the topic of ADR

Average monetary recovery following the ECC’s action, €

handled by the ECC Average consumer savings following the ECC action, € (see Evidence Box 3:9)

Result/ Outcomes Indicators

Output Indicators

ADR development (where applicable)

Activity



Evidence Box 3:9 OFT’s Approach to Measuring Impact The OFT's goal is to 'make markets work well for consumers'. The OFT has a performance target agreed with HM Treasury of delivering direct financial benefits to consumers of at least five times its cost to the taxpayer. The consumer savings resulting from the advice of Consumer Direct are not assessed as part of the OFT's 5:1 target and are assessed separately against a target of delivering direct financial benefits to consumers of at least 3.5 times its cost to the taxpayer. In line with OFT’s conservative approach, the method looks only at the benefits to consumer who have directly contacted Consumer Direct. Any estimate is therefore likely to be conservative as it does not include the impact on those consumers who do not contact Consumer Direct but nevertheless may benefit from work undertaken by Consumer Direct to inform and educate consumers more generally about their rights. The main variables are: The number of unique contacts made to Consumer Direct Not all consumers who receive advice from Consumer Direct succeed in fully resolving their problem, so an adjustment factor is applied representing the percentage of contacts that had their problem fully resolved as a result of contacting Consumer Direct (The adjustment factor is based on data from the most recent Consumer Direct satisfaction survey). A further adjustment factor is then applied to reflect the proportion of consumers who having had their problem resolved said that without Consumer Direct assistance it is unlikely they would have resolved the problem. In this way the OFT is able to identify the proportion of contacts that have benefited directly from Consumer Direct advice (R) That figure is then multiplied by the estimated average benefit consumers receive from having a consumer problem resolved (X). Recent Consumer Direct Satisfaction Surveys provided evidence that the average benefit consumers receive from having their problem resolved is approximately £584. This produces an estimate for the total consumer savings delivered by the provision of advice and assistance to consumers by Consumer Direct. CS = N x R x X CS = Consumer savings N = Number of unique consumers advised and assisted R = Multiplier representing the estimated percentage of advice cases where contact with Consumer Direct led to the consumer benefiting directly from the advice (24 per cent according to recent survey work). X = Average consumer benefit from having a consumer problem resolved (£584) The ECCs collect data on monetary recovery following the ECC’s action in case of normal complaints. However, in order to estimate the financial benefit accruing to consumers from resolution of simple complaints, wider survey work would need to be undertaken to apply the above formula. A simple survey/ feedback form could be developed for use across the Network to collect data on variables ‘R’ and ‘X’. This form could be sent to all consumers who have contacted the ECCs with a simple complaint as a routine follow-up exercise. The ECCs could then apply the formula above to calculate the savings accruing to consumers who have contacted the ECCs with a simple complaint. Thus, the total financial benefit of the ECCs could be measured as follows: Monetary recovery following the ECC’s action (normal complaints) + Consumer savings following the ECC action (simple complaints).

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4

UNLOCKING THE POTENTIAL OF RECOMMENDATIONS FOR IMPROVEMENT

THE

NETWORK:

This section of the report addresses the key evaluation questions concerned with recommendations for the improvement of the ECC-Net. 4.1

Q 33. What would be the main strengths/opportunities for ECCs looking into the future? Is there scope to exploit further the ECCs potential? If so in which areas of work? The ECC-Net is a functioning EU/EEA wide network with a clear remit and raison d’etre. That is, consumers are not taking full advantage of the internal market. By shopping across borders consumers could improve their overall welfare; but they are not doing so because of lack of awareness on where to go for information and advice; and concerns that it might be difficult for them to obtain effective redress across borders (in case of problematic transactions). The ECC-Net helps address these concerns primarily by dealing with complaints and promoting awareness of consumer rights and means of dispute resolution. This strength could be further developed by:

The ECCs should strengthen cooperation with enforcement bodies through the establishment of formal protocols and procedures. Such protocols should involve agreements on sharing of information and evidence about specific traders (who have breached legislation), the prioritisation of enforcement action taking account of complaints from non domestic consumers and joint sector studies (where the potential of cross border trade is high) to identify causes of problems other than the unfair behaviour of national traders. It should be mandatory for the Trader ECC to report an infringement (actual or suspected) to the relevant enforcement body

Where applicable, the ECCs should establish protocols for cooperation with ADRs (setting out procedures for referral to ADRs and follow up of cases, for example). It is recognised, that it would not be feasible for the ECCs to do so in all Member States and in all sectors; but it makes sense to formalise cooperation arrangements with FIN-NET members for example (where they exist) as the financial services represents a sector where consumer detriment is common and where the potential internal market gains are high.

Additionally, the ECCs should assist consumers with dispute resolution via the most appropriate channel which includes: direct complaint to the trader; ADR mechanism; European Small Claims Procedure; other judicial mechanisms. As resources are limited, the effort put in by the ECCs in assisting consumers with individual disputes should be proportionate to the expected societal benefits, for example: changes in trader’s behaviour; the deterrence effect of ECC’s actions on other traders; and potential impact on consumer confidence in the internal market. Several relevant criteria could be used for prioritising effort; the ECCs should have some discretion in applying them. These criteria could be: the scale of immediate detriment to the consumer complaining; the frequency of similar complaints (both with respect to the particular trader and sector); the knock on effects to ‘national reputation’ (for example, if the complaint related to tourism and/or a major export industry); and, the link with wider consumer confidence in cross border shopping.

Maintaining efforts to improve case handling procedures. The case handling protocol which was ‘road tested’ over the period 1st July 2010 to 31st of December 2010 should be finalised on the basis of the experience gained and lessons learned from its trial. The ECC-Net case handling protocol should specify

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the minimum standards of service, for example: deadlines for acknowledgement of complaint (and standard text to be used for the purpose which outlines the competencies of the ECCs’ and the limitations of their role, this text could be modelled on the Danish example); and, deadlines for responding to communication received from other centres, traders and consumers

4.2

Placing greater emphasis on consumer awareness campaigns of a preventative nature relating to cross border issues (such as scam awareness and myth busters) and consumer education initiatives to equip consumers with the skills and knowledge to participate in the internal market with confidence. The ECCs should systematically coordinate their promotional activities with relevant European and national stakeholders in furthering consumer and business understanding of how to avoid cross-border disputes, of dispute resolution and redress mechanisms available to consumers, and of where and how c

Regular market research to identify goods and services where price differentials remain high and making this information available to policy makers and consumers.

Q 34. What would be the main weaknesses/threats for ECCs? How can these issues be addressed? The main threats and weaknesses are: 1) Limited resources spread thinly across a range of activities. 2) Lack of effective performance management tools. 3) The instability of funding. This arises in part from fiscal constraints facing many Member States. The EU annual funding is also a cause of uncertainty. 4) The difficulty of satisfactorily closing cases and obtaining effective redress for consumers (which in turn presents a greater risk of undermining the image of the Network as well as consumer trust in the internal market, more generally). 5) A vast majority (79%) of EU citizens do not know where to get information and advice about cross-border shopping in the EU. 6) Lack of consistency in the quality of services across the Network The first issue can be addressed by streamlining the objectives of the ECC-Net so that they follow a clear hierarchy corresponding to the intervention logic of the Network. Specifically, the ADR development function should be made optional rather than mandatory depending on national context. As regards the second issue, the results orientation of the Network should be improved by introducing measurable performance benchmarks and thus achieving a ‘greater return on investment’. Furthermore, the Commission should consider using an incentives based approach as opposed to a penalties based approach to encourage high levels of quality and performance across the Network. For example, a performance reserve (representing x% of grant which does not require national co-financing) could be awarded to ECCs delivering a benefits-cost ratio above a pre-determined threshold. Moreover, the ECCs should routinely measure user satisfaction using a standardised feedback questionnaire in order to collect direct feedback from users regarding the quality of service delivered by the ECCs . The user survey questionnaire developed for this evaluation can be adapted for this purpose. The third issue can be addressed by adopting a system of EU multi annual funding (though it is argued by the Commission that the current EU budgetary mechanisms constrain this possibility and where national budgets are determined on an annual basis this may be difficult to achieve). However, it would be desirable to replace the current system of annual grants with a framework partnership agreement. This would not only reduce administrative

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burden but also create employment stability for ECC staff and allow the ECCs to undertaken medium term forward planning. As regards the issue of low levels of consumer awareness, the ECC’s should: a) undertake promotional activities that are underpinned by a clear intervention logic; b) regularly measure the impact of the promotional activities; c) improve presence of ECCs on search engines (where applicable); and d) invest in proactive information provision . With respect to the issue of lack of consistency, the case handling protocol which was ‘road tested’ over the period 1st July 2010 to 31st of December 2010 should be finalised on the basis of the experience gained and lessons learned from its trial. The ECC-Net case handling protocol should specify the minimum standards of service, for example deadlines for acknowledgement of complaint (and standard text to be used for the purpose); deadlines for responding to communication received from other centres, traders and consumers. The ECCs should also develop some internal guidance (in conjunction with the Commission and other stakeholders) on the role of and services provided by ADR schemes, NEBs and members of European networks (FIN-NET, SOLVIT, CPC Network etc.). Finally, the European Commission should continue to improve the functionality of the IT tool to make it less onerous for the ECCs to add data to it and to facilitate efficient statistical analysis. 4.3

Q 35. Is the lack of a legal basis a hindrance to the development of the service? To some extent the lack of a legal basis is a problem. A legal basis would lead to more secure funding and would yield an official status to the ECCs so that they might be able to secure trader cooperation and redress more practically (although, the legal basis would have to grant the ECCs some judicial authority or other compelling means to guarantee trader cooperation) . The ECCs themselves consider the lack of authority as a constraint. However, the sort of authority that they would like and one which would help address the issue of trader non-cooperation would involve a significant legislative change (options discussed in Table 3.2). Instead of introducing a legal basis for the ECCs; it might be better to address some of the more fundamental issues which will have a more significant impact on the functioning of the internal market and on consumer protection i.e. harmonisation of consumer legislation across Member States; improving enforcement action; and, the development of more effective ADR mechanisms. Although this evaluation did not find conclusive evidence to suggest that the introduction of a legal basis would enhance the functioning of the Network; this issue deserves further consideration of the type typically required by a Commission Impact Assessment should a legislative proposal be put forward.

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4.4

Q 36. What options exist to strengthen and modernise the ECC-Net, so as to better reach its objectives and serve the needs of consumers? Each ECC needs to have a strategy that reflects its national context. The ECC-Net could be strengthened through more detailed analyses of the consumer detriment associated with cross border trading. This would require properly structured consumer (household) surveys so that account could be taken of the potentially high volume of (cross border) detriment that does not come to the attention of ECCs (see also section 4.9). Better information on the sectors and sources of this detriment and estimates of its value would be very valuable in assisting the ECC-Net modernisation process and the development of appropriate means of redress. With such information it would be possible to better deploy the ECC-Net resources to both maximise the redress made and to target consumers and traders in the sectors where detriment is largest.

4.5

Q 37. How can the focus of the network be improved? The current vademecum objectives of the ECC-Net are defined in terms of activities to be delivered; rather than goals to be achieved. In terms of developing the Network’s objectives going forward, they should follow two basic principles: firstly, they should follow a hierarchy of objectives (which corresponds to different levels of the intervention logic); and, secondly, to the extent possible, these objectives should be Specific, Measurable, Achievable, Relevant and Time-bound. The evaluation evidence points to limited resources being spread thinly across too many ‘objectives’ and the stakeholders emphasising the need for the ECCs to focus on resolution of cross-border issues. On balance, there is scope for streamlining the objectives of the Network. There is a case for defining the key objectives as follows:

To increase consumer confidence in the Internal Market

To reduce consumer detriment arising from cross border trading

To increase consumers’ awareness of their rights on cross-border issues

Whilst all of the vademecum activities are potentially relevant to achieving these objectives, the impact of the ECC-Net would be greater if it concentrated its limited resources on the resolution of cross border cases. As such, the ADR development function (currently vademecum objective 5) should be made optional rather than mandatory for the ECCs. 4.6

Q 38. How to promote synergies/foster collaboration with other networks? With which networks? As discussed above, the problems resulting from cross border trade vary between sectors and over time. Whilst the ECC-Net covers all sectors there are also EU level networks and services focussed on the needs of particular sectors such as airlines and financial services. The question over how to maximise synergies and foster collaboration between ECC-Net and others depends on a number of factors. From the consumer point of view, the collaboration should be seamless. It would clearly be useful to consumers to have a ‘one stop shop’ able to deal with complaints across all sectors, where the consumer could be indifferent to how the service is organised in practice. Similarly in order to maximise consumer confidence in cross border shopping a ‘one stop shop’ would have benefits providing of course it performed well when problems arose. However, with respect to influencing the behaviour of traders there are clear advantages in networks and services focussed on particular sectors. Given the diversity of legal and substantive issues affecting different sectors in practice specialist services are likely to be required. At the national level there is a need for the ECCs to establish appropriate but nationally specific arrangements with other networks and consumer protection organisations. The ECCs should be allowed to determine such arrangements. Given the national specificities,

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it would not be appropriate to introduce prescriptive procedures or protocols at the level of the Network; although the Commission should facilitate and encourage such cooperation arrangements by providing good practice guidance, for instance. 4.7

Q 39. How to optimise the feedback of the ECCs for policy-making purposes? The Network’s contribution to EU policy making could be optimised by: encouraging ECC Directors to provide independent and potentially critical views on proposals for EU legislation in the field of consumer protection; and, giving sufficient advance notice to ECCs regarding forthcoming consultations or enquiries in order for them to include the necessary working days in their annual working programme. In some instances a single coordinated response on EU consultations (on relevant policy matters) from the Network would be more efficient and effective than the current practice of the ECCs submitting individual responses. However, understandably in other cases, views are likely to differ because of the varying national contexts. The ECCs should be encouraged to submit coordinated responses where there is strong agreement among network members on particular issues.

4.8

Q 40. Which adaptations/modifications need to be introduced in the processes/procedures in place (including IT tool) for emerging policy-making purposes? There would be benefit in the systematic recording of both the value of the problematic transactions, and the level of detriment involved in individual cases. Account should, if possible, be taken of the wider detriment over and above the value of the goods or services in question. Close and systematic monitoring of this kind will assist in policy making. Analyses of the (staff) time taken to deal with specific simple and normal complaints would help in prioritisation and the wider activities of the ECCs and the ECC-Net as a whole. The management of the ECCs requires difficult judgements over the most effective deployment of resources given that individual cases may be resource intensive to deal with and that some of the objectives of the ECCs may be better achieved by other means. For example, awareness raising may prevent problems arising that affect large numbers of consumers but each only to a small extent.

4.9

Q 41. Which tools/ indicators can be implemented within the network to monitor consumers’ problems and provide valuable data for policy-making? The ECCs and data on their activities are important sources of evidence to inform policy at both EU and national levels. Evidence gathered by the ECCs on price differentials and the aspects of cross border trading giving rise to consumer detriment is of significant value to EU consumer policy. In conducting their core business (i.e. assisting consumers with complaints and disputes), the ECCs are well placed to observe any negative effects arising from differences/ fragmentation in consumer protection legislation across Member States and weaknesses in national enforcement systems. Such intelligence should be shared with national policy makers. Additionally, there would be merit in the undertaking of more comprehensive surveys of consumer cross border trading behaviour and associated detriment. Such household sample surveys would identify in more detail, from the perspective of consumers: the extent (in value) and nature of cross border purchases (compared with domestic purchases), and the incidence and characteristics of detriment experienced. If such surveys were undertaken in a comparable way across Member States this would help identify priority areas and sectors where detriment is prevalent. If the surveys were repeated the extent to which problems had been addressed through policy could be assessed. Such surveys could be the topics of joint projects. However, the resource implications are significant and

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there would be a case for deploying means other than the Network (such as national statistical offices, Eurobarometer surveys, Consumer Markets Scoreboard). 4.10

Q 42. Which could be the contribution of the ECC-Net to the application on the ground of EU consumer policy? The responses to questions 33, 36 and 39 have addressed this question.

4.11

Q 43. What could be the contribution of the ECCs to a knowledge-based consumer policy? This question has been to some extent addressed in the responses to questions 39, 40 and 41. In addition, it can be said that the ECCs are well placed to contribute to better informing consumers themselves. As stressed in Section 3, if consumers are properly informed it is more likely that markets will function better. There has been a considerable increase in the volume of product and services information available, in particular via the internet. This includes price comparison web sites and web sites that allow consumers to post reviews of products and services. There is scope for the ECC Net to contribute to such developments with a focus on particular aspects of cross border trade where constraints of language and access may currently be an issue. For example, if there was an apparently strong cross border trade between country X (traders) and country (Y) (consumers) for a particular type of good, but there was also evidence of frequent detriment, then the ECC in country Y could work with the ECC in country X to identify and ‘localise’ relevant consumer information internet portals.

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Q 44. Which promotional tools/actions could be developed to increase the volume of interested users? It is important that potential users of the ECCs that have engaged in cross border purchases and have experienced problems should be aware of where to go for information and advice on cross border issues. Consumer awareness (and potentially, the number of interested users) can be increased by the ECCs’ monitoring the patterns of cross border purchases (and complaints received) and ensuring that the presence of the ECC is promoted in relevant channels. Better use should also be made of Internet search engines so that the ECCs can be readily identified by consumers experiencing problems. At the same time, the ECC should promote their presence to national traders in sectors that have been the source of detriment to consumers in other countries. It is in the interest of bona fide and well performing national traders in the sectors concerned that enforcement action is taken against ‘rogue traders’ in their sector as they can be a source of wider national and sectoral reputational damage. The ECCs may be in a position to improve ‘self regulation’ within such sectors, through for example, working with industry bodies/associations that already have such processes in place. The ECCs should, where possible, inform enforcement bodies of both overall trends and specific cases in order to help target the limited resources available for enforcement effectively. Ultimately however, the objective should be to reduce the number of ‘interested users’ because consumers are buying cross border and they are getting satisfactory service from traders selling cross border.

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Q 45. In which ways can the contribution to policy-making have an impact on raising visibility to the network? Suggestions made in response to Question 41 will if implemented, contribute to enhancing the visibility of the ECC-Net among policy makers. Additionally, the visibility of the Network will be enhanced within EU institutions and national authorities if it delivers its core mandate of assisting consumers with cross border issues and its actions result in noticeable improvements in consumer confidence in the internal market. The Commission should systematically disseminate information on the achievements of the Network to policy makers. Moreover, the ECC-Net should proactively make available statistical analysis of evidence on aspects of cross border shopping giving rise to consumer detriment to national policy makers (members of the CPC Network) and relevant DGs within the Commission as well as EU networks (e.g. FIN-NET). This could be done on an annual basis or more frequently.

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