Co-legislators agree on a “withdrawal function” for all distance contracts


Last week, on 6 June, the European Parliament and the Council of the European Union reached a provisional political agreement on the Directive on the Distance Marketing of Financial Services (DMFSD). Notably, the new law will include a provision aimed at facilitating the exercise of the right of withdrawal from contracts concluded at distance through the inclusion of a ‘withdrawal function’ in the service provider’s interface. 

The extension of the “withdrawal button”

Back on 11 May 2022, the European Commission proposed to update its legislative framework by repealing the 2002 directive on distance marketing of consumer financial services and introducing new provisions for distant contracts as an additional chapter to the Consumer Rights Directive (CRD), through the Directive on the Distance Marketing of Financial Services (DMFSD). On 24 March, the General Approach adopted by the Council of the European Union moved away from the initial focus of the proposal.

Following a push by the Czech Presidency in December 2022, Member States decided to extend a “withdrawal button” to all distance contracts, and not only to financial services contracts anymore. The objective of this provision is to raise consumers’ awareness of their right to withdrawal provided under the CRD and ensure that to withdraw from a contract is less burdensome than to enter it.

At the Parliament, MEPs from the Internal Market (IMCO) Committee approved on 28 March a more flexible rewording proposed by rapporteur Arba Kokalari (S&D, Sweden) on a “withdrawal function”. They agreed that the function would have to be labelled legibly, be placed on the online interface in a prominent manner and be easily accessible to the consumer.  

Inter-institutional negotiations

Negotiations between the European Parliament and the Council of the European Union moved very fast on that file. A first Trilogue was held on 24 April followed by a second one on 6 June where a political agreement was promptly reached.

Finally, co-legislators have agreed on the technologically neutral term proposed by the Parliament, the “withdrawal function”. MEPs insisted on making the withdrawal function easily accessible, clearly visible and permanently available during the entire 14-day withdrawal period. Adding that after the consumer has submitted their request, they must receive a confirmation of the withdrawal from the trader “without undue delay”. Here are the press releases from the Council and the Parliament following the last Trilogue. 

Next steps

Ecommerce Europe welcomes the flexibility achieved in the final solution reached. This compromise will hopefully provide traders with adequate flexibility to align with the new obligations. However, concerns remain on the impact that this new function will have on e-commerce in Europe. The digital commerce sector comprises a diverse range of players with varying sizes, different business models and technical capabilities.

It remains to be seen how the withdrawal function will be implemented in practice and how it will adapt to the wide array of products and services available online. Throughout the legislative process, Ecommerce Europe has continuously voiced concerns regarding the utilization of the discussion on financial services contracts as a mean to amend the Consumer Rights Directive horizontally.

We remain convinced that the ongoing Consumer Law Fitness Check conducted by the European Commission provided for a more appropriate venue to further discuss the topic of withdrawal. Once the provisional agreement reached last week will be endorsed and formally adopted by both institutions, the final text will be published in the EU Official Journal and will enter into force 20 days later. Member states will then have 24 months to transpose the directive into national law and another 6 months to apply it.