In today’s digital economy consumer data has become the raw material that companies use to boost adverting-based business models.
Some say data is the new oil. Well, if that is true, then companies are drilling for it at the expense of consumers.
It is a fallacy to believe that consumers get digital services for free. Consumers accessing social media platforms and search engines are giving, very often unconsciously, their data away. In the small print companies explain in complicated but vague legal jargon what they do, could do in the future, or what third parties might do with their customers’ data.
Not only do consumers give away their data for free. They currently do not have any rights in case the service they have accessed in exchange of their data malfunctions or is of poor quality. Thus, data protection rights need to be complemented by consumer rights. The European Commission’s from 2015 proposal for a Digital Content Directive is a step in the right direction.
Consumers deserve rights in return
To date, when consumers subscribe to a digital service, think Facebook or LinkedIn, or purchase a digital product, for instance an online game, the provider uses the consumers’ data for personalised advertising or other ways to make money. This economic reality, according to industry figures, amounts to over 30% of the revenues generated online.
This economic fact creates an imbalance because the consumer who provides his or her data is deprived from any protection which would be normal in a contractual relationship based on the exchange of money. This can no longer be ignored by the EU legislator.
And consumer law is the appropriate means to address this economic imbalance. While data protection laws provide the legal grounds for the collection and processing of personal data and implement the fundamental right to privacy, consumer law is about providing benchmarks for fairness in markets and more particularly in business-to-consumer contracts.
The Digital Content Directive would introduce rights for consumers in case for example an online game or music subscription malfunctions or doesn’t meet consumers justified expectations. Such rights are currently absent at EU level.
One of the features of the proposed law is to give consumers the possibility to retrieve their data after the contract has been terminated.
This right already exists under current data protection laws, but only for personal data. The Digital Content Directive provides the next step by covering other consumer data such as pictures, home-video’s, reviews or playlists.
Consumers have a real interest in recovering this data, for example when they switch services. They might want to remove the images they posted on a social media app or move their reviews to another comparison website. Under current consumer legislation this isn’t that easy. The law today only recognises rights when there has been a monetary payment. But today we are playing a different ballgame.
The authorities need rules to enforce the law
The lack of regulation around data-based transactions does not make the live of consumer protection authorities easier. Recognising data as a counter-performance in consumer law such as the Digital Content Directive Proposal is necessary for a fairer and more trustworthy online ecosystem for consumers.
Regulating data-based consumer transactions will bring the legal certainty that market players expect from legislators. Companies cannot innovate if they don’t know which consumer rights to apply if there’s a problem with their digital product or service. Authorities cannot fulfil their public mandate if they do not have clear rules to enforce.
And finally, consumers will only trust digital services if they have control over their data and know they can get redress if things go wrong.
As we speak, EU legislators are still debating the details of the proposed Digital Content Directive and the jury is still out. But it will be the first regulatory endeavor to bring together two areas of law data protection and consumer law in a complementary manner ensuring EU rules work seamlessly together to make consumers’ data count for them in the digital economy and to protect them where needed.