In Might 2025, the Court docket of Justice of the EU (“CJEU”) dominated on 5 circumstances making use of EU shopper safety legislation. This weblog put up offers an outline of the selections.
- Three of those circumstances relate to the EU Unfair Contract Phrases Directive (“UCTD”), which protects shoppers from unfair phrases in contracts with companies. It applies to straightforward phrases that haven’t been individually negotiated and ensures they’re clear, clear, and balanced. If a time period is discovered to be unfair, it isn’t binding on the buyer—and its use can expose companies to enforcement actions, together with fines, underneath nationwide legal guidelines.
- The fourth case pertains to the EU Directive on Deceptive and Comparative Promoting (“DMCA”), which goals to guard companies and shoppers by prohibiting promoting that misleads or distorts competitors. It additionally units out situations for permitted comparative promoting—evaluating one services or products with one other—to make sure equity and accuracy.
- The fifth case issues the EU Directive on Digital Commerce (“DEC”), which units transparency obligations for on-line business communications. Particularly, it requires that on-line promotions clearly disclose the situations for benefiting from the provide, making certain that customers are totally knowledgeable earlier than making a call.
We have now summarized these circumstances under.
Circumstances on the UCTD
- Case C‑324/23 (Myszak) – selected Might 8, 2025 – on whether or not a Member State legislation might preclude a shopper from bringing an motion searching for interim reduction of the execution of a contract that allegedly contains unfair clauses pursuant to the UCTD.
Background: on this case, the candidates (shoppers) sought interim reduction earlier than the Polish courts to droop funds underneath a credit score settlement with a financial institution on the idea that the candidates’ declare is invalid for holding unfair phrases. The important thing concern was that, underneath Polish legislation, such interim measures can’t be granted whereas the financial institution is the topic of a decision process ruled by the Financial institution Restoration and Decision Directive.
Judgement: the CJEU determined that the Polish legislation might not restrict the protections of the UCTD whereas the financial institution involved is underneath decision. Which means that the candidates ought to be capable of search interim reduction. The Polish court docket will now must resolve whether or not to grant such reduction.
- Case C-410/23 (Pielatak) – selected Might 8, 2025 – on whether or not a farmer that purchases electrical energy for his agricultural operation and for his home use is taken into account a “shopper” underneath the UCTD.
Background: this case examines a fixed-term electrical energy contract concluded by a farmer for each agricultural and family use. The important thing concern was whether or not such a dual-purpose buyer qualifies as a shopper underneath the UCTD, and whether or not the imposition of a contractual penalty for early termination is appropriate with the Electrical energy Directive, which prohibits costs for switching suppliers or terminating contracts.
Judgement: the CJEU dominated {that a} farmer could also be thought-about a “shopper” if the skilled use of an electrical energy contract is minimal in comparison with private use. It additionally discovered that nationwide legal guidelines permitting early termination penalties in mounted electrical energy contracts are permissible, offered the penalties are honest, clear, agreed prematurely, and topic to proportionality assessment underneath the UCTD.
Background: this case issues a mortgage settlement containing an acceleration clause permitting the financial institution to demand full compensation after default, with a one-month discover interval. The important thing query was whether or not such a clause could also be thought-about unfair underneath the UCTD, whether or not efficient shopper cures have to be offered by nationwide legislation or be contractually stipulated, and what constitutes an affordable interval for the buyer to keep away from acceleration.
Judgement: when assessing the equity of an acceleration clause, nationwide courts should think about whether or not the buyer had satisfactory and efficient means to keep away from early compensation or mitigate its penalties. This contains evaluating whether or not the time given to repay overdue quantities was virtually ample. The presence of comparable protections in nationwide legislation—equivalent to grace durations in comparable contracts—is a very related issue on this evaluation.
Case on the DMCA
Background: the important thing query on this case was whether or not utilizing a points-based or numerical grading system to check insurance coverage insurance policies on a web site constitutes permitted comparative promoting underneath the DMCA, and particularly if the grading displays goal, verifiable standards or deceptive, subjective assessments.
Judgement: as a result of the corporate offering the points-based and numerical grading system doesn’t compete with insurance coverage firms—that’s, it doesn’t promote the products or providers being in contrast—the idea of “comparative promoting” doesn’t apply. This holds true even when the service acts as an middleman, enabling shoppers to contract with precise sellers. Such providers function in a definite market and subsequently fall outdoors the scope of comparative promoting laws.
Case on the DEC
- Case C‑100/24 (bonprix) – selected Might 15, 2025 – on whether or not a web based commercial providing a deferred cost methodology (buy on bill) constitutes a “promotional provide” underneath the DEC.
Background: this case involved a web based commercial providing the choice to “buy on bill”, with out initially disclosing that this selection was topic to a previous creditworthiness verify. The difficulty was whether or not such a cost association qualifies as a “promotional provide” triggering transparency obligations underneath the DEC, for instance, concerning the creditworthiness verify.
Judgement: The CJEU held {that a} cost possibility, equivalent to buy on bill, can represent a “promotional provide” if it offers an goal and sure benefit—equivalent to deferred cost—that’s able to influencing shopper habits. If that’s the case, the dealer should clearly and unambiguously current the situations for benefiting from the provide (together with credit score checks) on the level the place the buyer first encounters the commercial.
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Covington & Burling commonly advises firms on all points of EU shopper safety legislation, in addition to intersections with privateness, cybersecurity, and product security legal guidelines. We carefully monitor the selections of the Court docket of Justice of the EU. We’re comfortable to help you with any inquiries associated to compliance with EU shopper safety legislation.
This weblog put up was written with the contributions of Ryoko Matsumoto.
