Prague, 28 January 2014 Oscar ARIAS – Managing Director

1. Prague, 28 January 2014 Oscar ARIAS – Managing Director

2. Agenda • Presentation of DSE • EU Consumer Legislation – Our Views • Current EU Legislation: comprehensive and stringent • Implementation and Enforcement: lagging behind • An Example: the UCP Directive • A national case study: the ‘Smejdi’ • Suggested actions ahead • In general • In cross-border situations

3. Presentation of DSE

4. DSE was created in 2007 to … • “…make sure that the nucleus of the European sustainable and customer oriented direct selling industry has a strong say in the relevant legislative process in Brussels” (extract from constituent meeting January 2007).

5. DSE Core Values and Data • Represent before the EU Institutions the interests of the European Direct Selling companies with the highest ethical standards • 15 members: 5 national associations + 10 companies • +/- 50% of turnover in direct selling in Europe • Members with superior customer and after sales services • Production made in the EU • Excellent relationship with EU legislator and consumer organisations

6. Members

7. EU Consumer Legislation - Our views

8. 2. EU Consumer Legislation – Our Views • a) Current EU legislation is modern, comprehensive, detailed and stringent • Unfair Commercial Practices Directive (UCPD) (2005/29/EC) • Consumers Right Directive (2011/83/EU) • Alternative Dispute Resolution / Online Dispute Resolution (ADR / ODR) (2013)

9. 2. EU Consumer Legislation – Our Views • An example: the Unfair Commercial Practices Directive (UCPD, 2005/29/EC) • Modern approach with maximum harmonisation for the protection of consumers • Increases consumer choice • Provides new business opportunities for SMEs across the EU • Highest rights for EU consumers + highest legal certainty for business • However…

10. 2. EU Consumer Legislation – Our Views b) … Implementation and Enforcement of EU Legislation is lagging behind ! …To date, serious implementation and enforcement problems: More than 8 years after the adoption of the UCPD, the implementation varies substantially across the EU Different interpretations of prohibition of pyramid schemes Bans and restrictions at national level not allowed by the UCPD

11. 2. EU Consumer Legislation – Our Views …Some examples of EU MS with restrictions beyond the UCPD Czech Republic: local authorities allowed to ban certain off-premises selling methods (art 18.30 of Act 455/1991) Denmark: national ban on door to door sales (section 6 of the Consumer Agreement Act (9 June 2004) Belgium: national ban against off-premises sales of products over 250€

12. 2. EU Consumer Legislation – Our Views EU Commission should fulfill its responsibility to ensure proper implementation of EU legislation. However… EU Parliament Resolution Jan 2009 on transposition, implementation and enforcement of UCPD: most problems still unresolved today! EU Commission pre-infringement pilot-case letters sent to 26 EU MS since 2011 After 3 years of consultation with MS, only 1 MS has been brought to the EU Court of Justice

13. 2. EU Consumer Legislation – Our Views • A national case study: ‘Smejdi’ (I/III) • The Issue • Crook companies target vulnerable consumers (mainly elderly) through: • Product demonstrations excursions • Aggressive and misleading practices (e.g. flyers, threat, upholding personal IDs, preventing from using mobile phones, etc.) • Hundreds of victims, particularly in CZ and SK

14. 2. EU Consumer Legislation – Our Views • A national case study: ‘Smejdi’ (II/III) • Actions undertaken so far in 2013 • Czech Republic: • Total fines below 1€ million • 80% of inspected events use illegal practices (insufficient enforcement of legislation and fines) • Slovakia: • Total fines of circa 0.25€ million • New law, increasing the fines from current maximum of 3.000€ to 16.000€

15. 2. EU Consumer Legislation – Our Views A national case study: ‘Smejdi’ (III/III) ‘Smejdi’ actions (aggressive and misleading practices) are already forbidden by EU law => enforcement problem! Sustainable and ethical companies are most interested in fighting against crooks Suggested actions ahead More and better awareness raising campaigns Increase the number of inspections Amend the national legislation to strengthen the fines considerably Strengthen the national legislation beyond EU UCPD (e.g. though local/regional bans, etc.)

16. 2. EU Consumer Legislation – Our Views • c) Suggested actions ahead (I/III) • In general • Put correct implementation of EU legislation as a top priority for the EU Commission • Speed-up consultations Commission-MS • Strengthen the proactivity of the Commission in monitoring the implementation of EU legislation, particularly as regards full harmonization legislation • Work more closely with consumers associations and business representatives ahead of non-legislative actions against a sector (e.g. sweep investigations)

17. 2. EU Consumer Legislation – Our Views • c) Suggested actions ahead (II/III) • In cross-border situations • EU complaint system accessible online to citizens • Additional powers for national enforcers: • Name and shame • Carry out test purchases for investigation purposes • Common standards in CPC Regulation to overcome procedural differences amongst MS

18. 2. EU Consumer Legislation – Our Views • c) Suggested actions ahead (III/III) • In cross-border situations • Suggested approaches for EU-wide infringements: • Obligation for MS to notify cases of EU relevance so to trigger joint enforcement action • Obligation for the concerned MS to conduct a joint enforcement action • Obligation for MS to alert other MS when suspected similar practices • Single action for EU level infringements (allow EU single + MS joint enforcement actions)

19. Thank you! Oscar ARIAS Managing Director Av. Toison d’Or 51 1060 Brussels, BE Gsm: (+32) 476 907 867 Email: oa@directsellingeurope.eu