What can we learn from the EU consumer authorities’ common position concerning the commercial practices of Airbnb?

The European Commission and the consumer authorities of the European Union (EU) member states are scrutinizing Airbnb’s terms and conditions and the way how prices are presented at the Airbnb platform. The national authorities within the Consumer Protection Cooperation, the CPC Network, gave their common position concerning the commercial practices and the terms of service of Airbnb Ireland in June 2018 and the European Commission informed about it in its press release in July 2018. The authorities consider that Airbnb’s current presentation of prices and several of its terms do not comply with the EU rules set out in the Unfair Commercial Practices Directive 2005/29/EC (“the UCPD”) and the Directive on unfair terms in consumer contracts 93/13/EEC (the “Unfair Contract Terms Directive) as well as the Regulation on the jurisdiction in civil and commercial matters 1215/2012. The authorities have requested Airbnb to propose solutions to the authorities’ concerns by the end of August.

In addition to stating the authorities’ views in the specific case of Airbnb the common position probably gives a picture of the authorities’ more general views on certain types of commercial practices and contractual structures in consumer contracts. In this article we would like to address three points which we find to give rise to more general observations: price display, distinction of private and professional operators in environments where both are present and use of certain types of contractual structures aiming to ensure wide geographical applicability of consumer terms.

First, in the common position the consumer authorities have drawn attention to price formation and to the transparency of presentation of prices. They point out that it is not allowed to make an offer more tempting to the consumer by presenting a price that is not final. The authorities remind that Article 7(4)(c) of the UCPD requires traders to provide the total price at the very moment consumers are presented with the first invitation to purchase, or – where the nature of the service means that the price cannot be reasonably calculated in advance – the manner in which the price is calculated. Therefore, the authorities consider that all service and other applicable fees or taxes that can reasonably be calculated in advance, should be disclosed and included in the price, and the omission to do so constitutes an unfair commercial practice within the meaning of the UCPD. The authorities’ view shows that the indication of prices differs depending on the type of goods or services. On one hand, it is quite straightforward to indicate the final total price of a single, pre-defined item. On the other hand, when the product is formed of various elements that may differ e.g. depending on consumers’ choices, the price may need to be presented differently. For example, when the offered service changes according to the customer’s choices and the price depends on the criteria given by the consumer, more attention need to be paid to the way the prices are presented in order for the consumer to be able to compare the prices. The authorities point out that if the price displayed is an entry-level price, it should be characterized as such by using e.g. the expression “as from”. This means that for example accommodation prices should be presented “as from (price) per night” to show that additional fees apply. This view is in line with the Finnish Consumer Ombudsman’s guidelines on interpretation of the Finnish price indication provisions.

Second, the common position addresses the distinction of private and professional operators on service platforms where both are allowed to offer their goods or services. A contractual relationship is governed by different rules depending on whether the consumer’s contracting party is another consumer or a trader. Therefore, the terms of service should be clear on whether the consumer protection laws are applicable to the transaction. The authorities note that under the UCPD a commercial practice is misleading if it is likely to deceive consumers on the nature and identity of the trader or if it omits such type of characterizations. Their view is that collaborative economy platforms should prevent third party traders from offering services on the platform without clearly disclosing their professional motives and, as a minimum, enable relevant third party traders to indicate to users that they are traders. The authorities’ position indicates that whenever a platform may be used by both private and professional parties a distinction has to be made between private individuals and professional traders. As the distinction has implications for the question of whether the transaction is governed by consumer protection regulations or not, the parties must be informed about which terms are applied when the consumer’s counterparty in a transaction is another consumer and when it is a trader.

Third, the authorities point out that the Unfair Contract Terms Directive requires that standard terms and conditions do not create a significant imbalance between the parties’ rights and obligations, to the detriment of the consumer. Moreover, the Directive requires that terms are drafted in plain and intelligible language so that consumers are informed about their rights in a clear and understandable manner. With this regard the consumer authorities have brought attention to several very similar contractual structures that they consider to be problematic or misleading from the consumer’s point of view because they are likely to create a misleading impression of consumers’ rights in the contractual relationship. These terms include e.g. limitations of liability, restrictions to legal remedies and forum selection clauses that seem to deviate from mandatory provisions of law to the detriment of consumers. However, these terms also include provision that overturns the rest of their language by stating e.g. that the clauses do not impact the consumer’s rights deriving from the consumer protection regulations of their country of residence or that the terms will apply only to the maximum permitted by applicable law. In our experience this type of contractual structure seems to be quite common in consumer terms that companies intend to use in several jurisdictions. The common position adopted by the authorities indicates that use of this kind of a contractual structure entails a risk of triggering reactions from consumer authorities. Thus, companies willing to avoid this risk should carefully review their consumer terms, and consider if they give the right impression of the consumers’ rights in light of mandatory consumer protection rules.

Author

Juhani Sinkkonen 
Senior Associate
Helsinki
Verna Syrjänen 
Associate
Helsinki