engleski

Consumer protection issues in crowdfunding

Being an emerging alternative financing model which relies upon raising money from a large number of sources, crowdfunding may take many forms. They range from crowd sponsoring, based on collecting funds from donators in return for either gratification of a project owner, or a symbolic reward such as the possibility of appearing in a crowdfunded movie, to crowd investing and crowd lending which enable investors and lenders to gain financial profit. An important role in crowdfunding is played by various internet platforms which enable the project owners to advertise their project and allow potential contributors to inform themselves on the project and contribute money. While the advantage of this financing model is unquestionable due to the fact that a number of projects in Europe would not have a necessary source of financing without it, there are a number of issues connected to it. As a consequence of the various existing financing models which are further evolving and different parties who take part in crowdfunding, the legal framework for crowdfunding in the European Union and its Member States is not clear at this stage. One of the distinct concerns is the applicability of the EU consumer protection acquis, particularly to contracts concluded at a distance, unfair contract terms, unfair commercial practices and consumer credit. The aim of this paper is to identify the crowdfunding models which may be subject to mentioned consumer protection legislation. While assumption that some contributors could be characterised as consumers appears to be rather straightforward, such characterisation in regard to project owners is unexpected. Additional controversy is related to whether in crowd investing model, investors may enjoy protection as consumers. The analysis of legal sources will include relevant EU directives and where necessary comparative outline of Member States laws through which the directives were implemented into national legislation.

alternative funding, consumer protection, crowdfunding, European Union law

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