Procedural fairness and structural power

As pointed out above, the average consumer is the main instrument for assessing the unfairness of commercial practices – including the provision of contractual terms. This assessment focuses mainly on what has been characterised as procedural fairness, namely the fairness related to how consumers may take specific decisions. For example, the goal of the UCPD is to make possible the formation of an informed decision – no matter the consequences of such a decision – while the UTD also aims at ensuring procedural fairness, in the meaning that the economic consequences for the consumers have to be made apparent before entering a contract.

According to the UCPD, procedural fairness can be achieved either by providing to consumers the information needed in order to take an informed transactional decision or by avoiding

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aggressive practices that affect the decision of consumers.[50] When it comes to payments with data, many scholars and authorities have claimed that a number of practices targeting consumers may unduly influence consumers, while some other practices mislead consumers to take decisions they would otherwise not have taken.[51]

Starting with the matter of undue influence, it is interesting to examine first how the CJEU has interpreted the provisions of the UCPD on undue influence. It is true that there are very few cases on undue influence in order to generalise[52] but, nevertheless, these few cases brought in front of the Court have shown that the main consideration has been how the trader acted in a specific case, or to put it differently the Court has taken a relational approach that lays weigh on how the trader acted in a specific situation with the consumers.

More specifically, in Wind Tre, the Court examining the practice of promoting SIM cards with pre-installed and pre-activated services found that such a practice is to be regarded as inertia selling under No 29 of the Annex I of the UCPD. However, interestingly enough, the Court proceeded to a full-scale assessment of the unfairness of this practice. The Court related the aggressiveness of this practice to the lack of information provided by the trader, implying therefore that in case the information was provided differently, the outcome could be different.

However, in the specific situation the trader acted in a way that was considered unfair.

Similarly, in Purely Creative, the Court again argued that it is the information provided to consumers that is of importance. The case was about No31 of Annex I of the UCPD and even though the Court actually stated that the question of what impression is created to the consumer is irrelevant it nevertheless argued that information related to the description of a prize is important. Therefore, stating that the prize is an “entrance ticket” creates a different expectation to consumers than a claim that the prize is the “attendance” at an event, since in the latter case the prize indicates also that it includes the transportation. It is therefore the information that defines whether there is a cost – in this case the question was whether the transportation to the event constitutes a cost – or not. Again, the assessment was based on the specific situation.

Lastly, in Orange Polska the aggressiveness of the practice was based on the fact that a courier, who was present when the consumer received some papers by the trader in order to be signed by the consumer, made specific claims that could affect the consumer. The Court did not find as aggressive the practice that the courier was waiting until the consumer would sign the documents or that the information (the standard-form contract) was not provided beforehand, but the aggressiveness was based on the claims made by the courier.

All in all, the aggressiveness has never been found by the Court to be a matter of structural power, namely whether the trader was a powerful actor in the market (as for example Orange Polska was), or whether the consumer had a de facto possibility to turn herself to other competitors. The Court even claimed that a practice where a courier asks “the consumer to take his final transactional decision without having time to study, at his convenience, the documents delivered to him by that courier” is not aggressive in itself. The problem in all cases, according to the Court’s argumentation, was the information provided to consumers by the trader. The judgments were based on how the consumer-trader relationship was developed.

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However, the arguments brought by authorities and scholars related to the application of consumer law in cases of “payments with data” focus instead on the structural power imbalances that may lead consumers to take decisions they would otherwise not have taken.

Take for example the BEUC-claim against WhatsApp. As it was clearly argued there:

“[a]lthough, in theory, users could decide to turn to other messaging apps, quitting WhatsApp would be at the expense of losing most of their contacts. For many people, leaving WhatsApp is not an option because of the strong network effects and the lack of interoperability with other messaging services. For many, WhatsApp is the main channel for staying in touch with family and friends”.[53]

The reason for finding a practice in the context of payments with data aggressiveness, such as accepting terms of a contract, is based here on the structural power traders have. Similarly, Mulders and Goanta claim that the use of social media, for example, is such ‘an integral part of an individual’s identity’ that there is in practice no possibility to freely choose which social media to use and under what terms since consumers are under the pressure of tech giants. For that reason, they end up claiming that ‘given all the uncertainty relating to the sociological and psychological effects of social media on its users, it is challenging to claim that the UCPD test on aggressive practices is met.’[54] It is the need to remain connected with co-workers, family and friends that provides the trader the possibility to force specific choices on consumers.[55]

This argumentation finds then some practices related to the processing of personal data as aggressive based now not on the specific relational power asymmetry between traders and consumers – because the trader provided some information in a way that might affected psychologically the consumer – but on the structural asymmetries that appear because of the power some traders have in the market. [56] This approach brings then a new understanding on what may constitute an aggressive practice where structural power imbalances are also to be taken into consideration as the main reason why a practice should be regarded as aggressive.

Such an approach seems also to shift the focus from the information that is provided to consumers, something that has been a matter of criticism for quite a while now,[57] to the power between the different actors and how this power may make itself apparent. This new interpretation brings then another layer of protection, where the important is not only about how the information provided may have some psychological effects to consumers but more importantly on the factual possibility of the consumer to reject dealings with a trader because of the traders’ power in a specific market.

Interestingly enough, this approach reminds somewhat of the interpretations we find in the context of the GDPR on valid consent, that I also named above. In this case, as the GDPR explicitly states, the EDPB has further clarified, and the Court has elucidated, structural power asymmetries are very important when it comes to the question whether the consent that was provided has been valid or not.[58] More specifically, if for example a data controller asks for consent but an individual cannot in effect reject this proposal, the consent that is provided is not to be considered as valid. This is normally the case when the consent is given for processing conducted by the state or by an employer, but as the EDPB has clarified, any case where there

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is a “risk of deception, intimidation, coercion or significant negative consequences (e.g.

substantial extra costs)” may deem the consent as not free.[59]

Continuing on the new interpretations on aggressive practices, another practice which until now was not considered by definition aggressive under the UCPD, namely the pre-formulated consumer choices, or as more commonly known the pre-ticked boxes, seems now to be regarded as such.[60] More specifically, the Court has not until now regarded default options as a by definition aggressive practice; as it was shown above in Wind Tre, even if the Court claimed that the practice in question there constituted inertia selling and was therefore found as unfair under No 22 of the Annex I, it was the information provided to consumers in combination with the psychological effect of such a practice that actually led to the finding that pre-installed and pre-activated SIM-cards constitute inertia selling. The only default option that has by definition been considered as unfair in consumer law is the case of additional payments, since according to Article 22 of the CRD traders are not allowed to pre-make a decision for consumers to pay additional payments; or alternatively put, in case of pre-ticked boxes for additional payments, such choices do not constitute a valid consent to the terms in question.

However, it is now claimed that, in general, pre-ticked boxes related to the processing of personal data should by definition be considered as aggressive practices.[61]

Therefore, the application of consumer law for the protection of personal data seems to bring some non-economic considerations to the notion of transparency, or alternatively some considerations that are not merely related to the rights and obligations of the parties between each other but considerations related to the fundamental rights of consumers and how the life of consumers may be impacted in the future in general.