In August 2017, the Dutch Authority for Consumers and Markets (“ACM”) issued two press releases concerning its recent intervention in the market of package travel. Package travel is a topic that is currently under scrutiny. This is partly due to the envisaged implementation of new (European) legislation during the course of 2018, leading to many changes for undertakings in the package travel market.
Rap over the knuckles for MediaMarkt and Kruidvat
MediaMarkt sells Grand Prix travel arrangements offering an all-in-one travel package to a Formula 1 Grand Prix race in any of the selected countries hosting a Formula 1 Grand Prix. The booking includes a flight, hotel accommodation and an entry-ticket for the race.
Kruidvat sold travel vouchers priced € 89,99 per person. The travel destination is unknown to the consumer at the time of sale, and will only be revealed when the consumer ‘validates’ his voucher online.
ACM reproaches MediaMarkt (on August 9, 2017) and Kruidvat (on August 23, 2017) the following:
- When booking with MediaMarkt – a seller of consumer electronics – it remained unclear to the consumer which undertaking actually organised the travel.
- MediaMarkt failed to respect certain aspects of the legally required fund that refunds consumers in case of insolvency of the travel agency.
- Kruidvat failed to offer consumers the right to cancel their order within 14 days of purchase.
- Kruidvat had to order the company offering the flights – Flywise – to improve its insolvency protection scheme.
During the coming time, ACM will closely monitor if MediaMarkt, Kruidvat and other organisers of package travels comply with the rules.
New European legislation concerning package travel
The current Dutch legal framework in this field is based on European Directive 90/314/EEC, an old Directive that urgently needs to be replaced. This Directive, introduced during the ‘90s, takes as starting point that the average consumer is booking his or her package travel in a ‘brick-and-mortar’ travel agency, browsing through a pile of printed travel brochures. However, times have changed. Nowadays, travel packages are frequently booked online, and the consumer often arranges his own travel scheme. The traditional pre-arranged package (a deal without customisation options that provides little flexibility as regards the price) is booked less and less often. Hence, ‘Europe’s’ rationale for the introduction of the new Directive 2015/2302/EU, replacing Directive 90/314/EEC, is given. The EU Member States need to transpose this Directive into national law. The proposal for legislation is currently pending in the Dutch House of Representatives.
The distinction between the different regimes under the new Directive
The new Directive increases the scope of consumer protection. It introduces three regimes of consumer protection: (1) the traditional pre-arranged package, (2) the linked online booking processes, and (3) the linked travel arrangement. The traditional pre-arranged package (regime 1) benefits from full consumer protection. This means that the travel organiser is responsible for the proper execution of all the travel services included in the travel package. When a consumer books a first travel service online, and books another travel service within 24 hours after the confirmation of the first service, the reservations will be considered a ‘linked online booking process’ (regime 2). After booking, the traders need to transmit the booking details of the consumer to each other. When this happens, a linked online booking process is formed, providing for the same protection as under regime 1, the traditional pre-arranged package. If no exchange of information between the traders takes place, only a ‘linked travel arrangement’ will be created and regime 3 applies. When regime 3 applies, the travel organiser only needs to be sufficiently protected against insolvency for all the travel services within the arrangement, and he needs to offer assistance in case of repatriation. It is therefore a lighter regime.
Extension of scope: consequences
The extension of the scope of consumer protection to also cover ‘linked online booking processes’ and ‘linked travel arrangements’ is a major change. Now that the scope of the Directive has been extended to those two new situations, the first travel organiser runs the risk of being held responsible for insolvency and repatriation, and/or for the execution of services booked during or after the first booking. Next to this, the travel organiser needs to, under the new rules, notify the consumer if he is offering a package travel or a linked travel arrangement. Those extra information requirements will add costs for the undertakings operating in the travel market.
The new Directive provides for rather complex legislation and therefore runs the risk to create confusion. It is not always clear whether a travel scheme should be qualified as a pre-arranged package, a linked booking process, or a linked travel arrangement. A direct consequence of this lack of clarity is that the involved companies do not always know how to properly inform the consumer, because they simply do not know their responsibilities or duties under the rules of the Directive. In the end, the consumer risks being incorrectly informed about his or her rights. Consequences of incorrectly informing consumers about their rights are also specified by the Directive. If the trader facilitating linked travel arrangements does not comply with all the information requirements, the linked travel arrangement will qualify as a package travel covered by the full consumer protection offered by the Directive. The firm will then be held responsible for the execution of the entire package, instead of being solely required to offer protection against insolvency and to repatriate in case necessary (as were the duties under regime 3, of the linked travel arrangement). ACM will enforce this Directive and can impose high fines on companies not complying with consumer protection legislation.Conclusion
In the Netherlands alone, around 3 million package travels are booked a year: protecting consumers that book travel packages is therefore important. On January 1, 2018, the new Directive 2015/2302/EU needs to be transposed into Dutch law. This is good news for the consumer: the Dutch Implementing Act on the Directive on Package Travels reinforces consumer protection. Undertakings however need to be aware that the new rules have an extended scope: extra obligations apply, also to undertakings who, up until now, were not covered by the Directive on package travel!