The year 2022 has already brought a number of noteworthy changes to the Consumer Protection Act (CPA) and the Law of Obligations Act (LOA), and there are more to come. These changes mainly result from the implementation of:
- The directive on better enforcement and modernisation of EU consumer protection, also known as the Omnibus Directive (Directive (EU) 2019/2161)
- The directive on certain aspects concerning contracts for the supply of digital content and digital services (Directive (EU) 2019/770)
- The directive on certain aspects concerning contracts for the sale of goods (Directive (EU) 2019/771)
Below is a high-level summary of the key changes related to the implementation and what should be kept in mind. Some of these changes entered into force as of 1 January 2022, but most of the changes are set to enter into force on 28 May 2022.
Merchants will have new obligations to notify the consumers about:
1) any price changes within the last 30 days, in case of discounts;
2) paid commercials which relate to a higher place in the search engine results;
3) means of verifying displayed feedback – mainly how the merchant ensures that the feedback is authentic;
From now on, the supervisory authority also has the right to demand that merchants must provide evidence for any provided data: for example, in case of information that relates to health benefits.
Prior to the conclusion of a distance contract through an online marketplace, the provider of the marketplace must notify the consumer of the following:
1) which parameters and how determine the ranking of a search result;
2) whether the third party offering the goods, services or digital content is a trader or not, on the basis of the declaration of that third party to the provider of the online marketplace;
3) if the third party is not a trader, then a notification that consumer protection laws do not apply;
4) where applicable, the division of obligations between the third party and the provider of the market place.
Unfair commercial practices
With the new regulation, there will be a number of commercial practices that will be deemed unfair, such as:
- Marketing a product as identical to another product when actually the ingredients or characteristics are vastly different (dual-quality products). Dual-quality products have been found in, for example, situations where products distributed to Eastern European countries were actually lower in quality than the same product types which were distributed to Western European countries.
- The same applies to publishing feedback that has not been verified as being feedback from actual consumers, and publishing fake feedback.
Supervisory authorities have the right to issue fines of up to EUR 400,000 and consumers have the right to file civil claims in case of unfair commercial practices.
Contracts for digital content and services
New regulations have been introduced for contracts for digital content or services. The provisions regulating these types of contracts will be relevant to all types of products or services that have a digital element, in addition to the main existing elements of sales contracts. These provisions are obligatory. For example, when a merchant sells a software update of an application to a consumer, the contract must meet the conditions of a sales contract, along with the digital content provisions.
Changes in sales contracts requirements
- In case of consumer sales, the presumption that the defect in the sold item existed at the time of delivery has been prolonged from six months to one year. This means that for one year after the sale, it will be presumed that the fault existed at the moment of the sale, unless the merchant is able to prove otherwise.
- If a customer submits an order to a merchant for the manufacture of an item, the transaction will from now on qualify as the sale of goods and no longer a provision of services, unless the customer provided most of the materials to prepare the item.
- If a merchant is required to manufacture a movable item to a consumer, the transaction will qualify as a sale of goods even if the consumer provided most of the materials to prepare the movable item. If an item with individual characteristics is manufactured for the consumer, both the sale of goods and provision of services regulations apply.
- When a seller repairs or replaces an item, the seller is liable for any lack of conformity which becomes apparent in it within two years of the delivery of the replaced or repaired item.
- The seller will be provided with a right of claim. The seller can submit claims against their transaction partners for at least two months after the claim of a consumer is satisfied. For example, a merchant will have a right of claim against a manufacturer if the merchant is liable towards a consumer due to the manufacturer’s activity or inactivity.
- Sales guarantee requirements have also been supplemented. When the conditions of an actual guarantee are less favourable for the consumer than those that were presented in an advertisement, the guarantee is deemed to have the conditions that were presented in the advertisement, unless, before the conclusion of the contract, the associated advertising was corrected to correspond with the actual guarantee.
Processing of consumers’ personal data
As a result of these new changes, submitting personal data can now be considered a form of payment in cases where the consumer submits personal data for a digital product/service or is obligated to do so. The consumer’s personal data is deemed to have an economical value to the merchant. This means that from now on, the off-premises consumer contract regulation shall also apply to consumers in cases where they do not pay the merchant in currency, but with their personal data.
Conclusions and recommendations
The changes will bring a number of new obligations for merchants, and will bring a number of new rights to consumers.
- If you sell your goods or services to consumers, make sure that your advertising and the information provided complies with the new regulations.
- Revise your existing sales agreements, general terms and conditions and the process for concluding agreements.
- Online marketplace operators and merchants should assure that all notification obligations are fulfilled.
- Personal data can be considered a form of payment.
- The presumption of a fault in an item at the time of the sale will be prolonged from six months to one year in case of consumer sales.