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News 4 Oct 2024

EU Fitness Check on Consumer Law - A Step Forward for Digital Fairness: What it Means for Lotteries

The European Commission has released the findings of its Fitness Check on EU consumer law on digital fairness. This comprehensive review aims to ensure that EU consumer protection laws are fit for the digital age. With the growing complexity of online markets, the Fitness Check evaluates three key directives — the Unfair Commercial Practices Directive, the Consumer Rights Directive, and the Unfair Contract Terms Directive — and their ability to safeguard consumer rights in increasingly digital environments.

Key findings and what they mean 

As part of the Commission’s broader initiative to promote fairness both online and offline, the main findings reveal that while the three key directives are still essential for maintaining high consumer protection levels and ensuring the effective functioning of the Digital Single Market, they face significant challenges in addressing modern consumer behaviour.

digital transformation

Several digital-specific threats were identified, including dark patterns that manipulate consumer choices, addictive features that encourage excessive use of digital services, and targeted advertising practices that exploit consumer vulnerabilities. Overall, the Fitness Check calls for stronger enforcement mechanisms and urges greater consistency across Member States. 

Relevant insights for the lotteries and gambling sector:

Highlighted below are the three main takeaways followed by EL’s position on these points: 

Gambling and Gaming Overlap

The growing overlap between gambling and gaming, particularly through mechanics like loot boxes and in-game gambling-like features. These features can mimic gambling behaviors, and pose risks, particularly to younger players. While several EU Member States have taken steps to regulate or ban loot boxes for minors, the approach is inconsistent across the EU. 

EL calls for a clear separation between gambling and gaming, emphasising that gambling regulation should remain the competence of Member States to ensure local authorities can effectively protect consumers from risks associated with gambling-like gaming mechanics.

 

Advertising and Marketing 

Concerns are raised over manipulative advertising on gambling websites and apps that exploit consumer vulnerabilities, such as financial distress and emotional issues. Deceptive tactics, such as falsely claiming low stock or high demand, are reported, particularly among frequent gamblers. Hidden influencer marketing of gambling products was also flagged. The European Consumer Organisation – BEUC is explicitly quoted as calling for a prohibition on influencer marketing in areas such as gambling directed at children.

As advertising plays a crucial role in channeling consumers towards the legal and safer offerings, EL maintains that it should be handled responsibly at national level in strict observance with the risk based approach. High-risk games should be subject to more rigorous rules than the low-risk ones (lottery games).

 

Evolving Digital Rules 

The Digital Services Act and Digital Markets Act introduce new rules for online platforms. The Fitness Check highlights uncertainty over “whether a range of digital services — including gambling — could fall within the scope of these new obligations.”

EL welcomes the provisions foreseen in the Digital Services Act, namely on content moderation and notice-and-action rules, which will be of use in the fight against illegal offerings online.

Next steps and EL’s position  

Although the Fitness Check does not recommend immediate legislative changes, it sets the stage for future initiatives, most notably the Digital Fairness Act, expected to be introduced under the next European Commission.

ursula

As per Commission President Ursula von der Leyen’s mission letter addressed to Commissioner-designate for Democracy, Justice and the Rule of Law, the Act aims to tackle unethical practices like dark patterns, addictive designs and manipulative marketing by social media influencers.

EL is actively involved in the process, providing input to public consultations and closely monitoring developments. EL and its Members calls on the Commission to consider the specificities and unique nature of lotteries as it takes forward the Digital Fairness Act.