The Singularity – On How Information Travels and Why That Matters for Consumers

6 Oct , 2014  | by:

It is October 5, and as I type this article, the entire online gadget world is craving for one of the most awaited products to launch in 2015. Yes, I am referring to the Apple Watch, pitched during the Apple even in Cupertino on September 9 earlier this year. Apple spared no marketing gimmicks in its attempts to draw global attention to next generation ‘wearable technology’. For instance, watching the Apple Watch video on their website makes me think of something Salman Khan once said in one of his Youtube videos: “If this doesn’t blow your mind, then you have no emotion.”

As a consumer, I have plenty of emotion, because the mere tease of a device so versatile and intimate that it becomes one with your body makes me firmly believe that I need it in my life, with everything it features: health tracking, taptic feedback (start conversations with your friends with the tap of a finger), digital crown (the classic watch button that Apple gave digital functionality to), but more than anything, Apple Pay, the digital wallet software.

Now apart from being a consumer, I also happen to be a lawyer (lato sensu at least), and it is from this perspective that I became rather intrigued with the idea of wearable technology (to read more about how technology is invading our bodies, see the September 10 Time issue). There are many legal implications of the general technology creep in the lives of consumers world-wide, some of which have been very accurately covered on this blog by Christoph Lutz or Luke Heemsbergen.

However, I would like to contribute to this picture with another perspective: that of a consumer purchasing goods and services using electronic devices as the Apple Watch I just wrote about. Looking at the most recent European legislative and judicial developments, one thing is clear: when it comes to internet-based contracts, law is struggling to catch up with fast-paced tech developments.

2014 happens to be year 0 for the Consumer Rights Directive that just entered into force on June 13 in all Member States of the European Union. This Directive comes to upgrade the instrument that had been governing distance contracts as of 1997, namely the Distance Selling Directive, for (among others) the fact that the latter was drafted for the technology of a different era (see for instance Annex I of the Distance Selling Directive to find the covered means of communication; one of them was the ‘videotex’, which in all honesty, I had to Google-image when I first read about). With the rise of the internet, the adoption of a new set of rules more protective for consumers and more flexible in terms of the technology they include seemed to be the right way ahead. Still, there are some concepts that the Consumer Rights Directive has difficulties with.

I will focus on one example: the notion of durable medium. According to this Directive, when you make an online purchase, the seller/supplier of the thing/service you’re buying has to comply with his notification obligations (Article 8). He must make sure you have sufficient information prior to the conclusion of the contract, such as Article 8(4) which states:

“the main characteristics of the goods or services, the identity of the trader, the total price, the right of withdrawal, the duration of the contract and, if the contract is of indeterminate duration, the conditions for terminating the contract”

but he must also confirm this information on a durable medium (Article 8(7)). Article 2(10) gives us the definition of a durable medium:

“‘durable medium’ means any instrument which enables the consumer or the trader to store information addressed personally to him in a way accessible for future reference for a period of time adequate for the purposes of the information and which allows the unchanged reproduction of the information stored;”

However, if we interpret this definition in the light of recital 23 of the Preamble, stating that

“Durable media should enable the consumer to store the information for as long as it is necessary for him to protect his interests stemming from his relationship with the trader. Such media should include in particular paper, USB sticks, CD-ROMs, DVDs, memory cards or the hard disks of computers as well as e-mails.”,

then it becomes quite reasonable to argue that what the European legislator had in mind when drafting this instrument was that if you buy an iPhone online, Apple might as well just send you a CD-ROM (!) with the information that you are entitled to have in the confirmation phase.

Given the impracticality of this option, it comes as no surprise that many retailers send this information printed on paper, or by e-mail (remember the e-mail you get after purchasing something – ‘Thank you for ordering this… Your order has the following number… You may return this …. in ….. days… etc.’. Nevertheless, not just any e-mail is acceptable in the lights of this European rule. Back in 2012, in the Content Services case, the Court of Justice of the European Union said that in case the consumer receives a link to the information rather than a standard e-mail with the information itself, a click is one click too many for the consumer to retrieve this information on his own:

“In those circumstances, it must be held that, where information found on the seller’s website is made accessible only via a link sent to the consumer, that information is neither ‘given’ to that consumer, nor ‘received’ by him, within the meaning of Article 5(1) of Directive 97/7.”

The added reason why a link is not trustworthy for confirmation purposes is because the information stored on it is not controlled by the consumer, but by the seller. While this argument is rather easy to follow, I still believe the Court could have elaborated on what then is to be considered a ‘durable medium’ in today’s web practices, because only stating that websites are either ‘ordinary’ or ‘sophisticated’ (Para 47 quoting this European Securities Markets Expert Group report (PDF) might be too simple for today’s user technology.

This is applicable law in Europe of the year 2014. Next year, when Apple Pay hits in on Apple Watch and Iphone 6 generation devices, there will be an entire segment of consumers shopping online in a new way; not with their physical wallets, but with their gadgets – and this software will have to somehow fit in the discussion over the ‘durable medium’ requirement.

“[I]t’s clear that the era of digital payments is upon us”, said eBay CEO John Donahoe, now at the center of speculations for the eBay/PayPal break-up on account of creating competition for Apple Pay . It’s also clear that wearable tech developments, or in other words, the merging of consumer and device, which I metaphorically called Singularity in the title, are likely to challenge classical consumer contracts. It will be interesting to wait and see whether practice will follow the law, or if the law will be able to adequately provide practice with a ‘durable medium’ for both business and consumer protection.

But in the meantime, I would like to take this opportunity and throw a question into the www for whoever reads this blog post and is willing to contribute to the debate: what could be, in your opinion and experience a ‘durable medium’?

Next episode on wearable tech (Oculus Rift): Virtual Reality as a Consumer Reality. Stay tuned.

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2 Responses

  1. Stefan Kulk says:

    Great post Catalina! Of course I am reading this blog ;-)!

    Maybe the following method could result in a “durable medium” that is a bit more Web x.o…

    How about an app on your phone, Google Glass, or Apple Watch, to which all the necessary info is pushed? Or a section in your device’s settings. So, whenever you buy something, the necessary info is automagically downloaded (like push email) on your device which then could also display a message like: “New information that is in conformity with Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts has been downloaded to your device”. Or something shorter. So then, whenever you buy something using your device, all the necessary info will be send and stored on your device almost instantly.

    I think that requires some standard-setting by the payment providers who need to push the info to their consumers’ devices. Maybe to prevent sellers from changing the info remotely, it would be better to use a trusted and independent third-party service. Let’s file a patent together ;-)? Or start the first iii-research project?

    • Stefan, that is great feedback! Much appreciated. I wrote something in the same lines when I first wrote about this case ( I think there’s a niche in the market with this app that you’re talking about! The only question is whether in practice companies really care about fulfilling these standards. They might when it comes to their own standards (see Zalando, that gives 100 days withdrawal rights rather than just 14), but sometimes I have the (very non-academic) feeling that practice just does not care about the law (see the entire debacle with the Apple guarantee, which is still violating European law). But yes, let’s patent something, anything 🙂

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