What changes do the new consumer protection measures ring?

Despite the stringent consumer protection legislation in place in Europe, the European Commission has decided to focus on loopholes in the legislation and will attempt to address them with the »New deal for Consumers« – a legislative bundle, which includes the due diligence and a revision of EU Directive provisions in this field.

The European Council adopted the first Directive in the frame of “The New Deal for Consumers” in November 2019. The Directive modernises consumer protection in the EU and amends Directive 2005/29/EC concerning unfair business-to-consumer commercial practices, Directive 2011/83/EU on consumer rights, Directive 93/13/EEC on unfair terms in consumer contracts and Directive 98/6/EC on consumer protection in the indication of the prices of products offered to consumers. The purpose of the Directive was particularly to bolster consumer rights on the web, to effectively implement legislation, also through granting consumer protection authorities additional powers in the area of sanctioning and prohibiting marketing projects of non-uniform quality, which misleads consumers. There are also changes to fines for breaches, which will potentially be substantially higher (should the annual turnover of the breaching party be unavailable, the maximum nominal penalty may be up to EUR 2 million, otherwise the maximum penalty which can be imposed is at least 4% of the annual turnover).

Specifically, the new EU Directive calls for, among other things, the adoption of the following measures:

• A higher degree of transparency, as it imposes an obligation on online markets to inform consumers who is the responsible retailer in the transaction. This means that consumers will need to be clearly informed when purchasing online whether they are purchasing goods / services from a retailer or a natural person, which will help them choose appropriate legal protection if something goes wrong with the sale. Consumers will also need to be informed whether the agreement concluded is subject to consumer law or, if it is not, explicitly warned that it is not.

• Greater transparency will also be possible regarding the use of online ratings and higher product ranking due to ‘paid placements’. When searching for products online, consumers will be clearly informed when a merchant pays for a search result, as well as the main parameters that determine the ranking of search results. Additionally, a key part of the rating system will be the information, whether the ratings were given by consumers who actually bought or used the products or not.

• Information for consumers will need to be clearly visible in the event of a price reduction, or the previous price will have to be indicated on each publication.

• It will no longer be possible to market a product as being equivalent to a product in other Member States if the goods are in fact substantially unjustifiably different in composition or characteristics, which will eliminate the double quality of the goods on the market.

• ‘Free’ digital services  will also be subject to consumer protection, i.e. those services for which consumers do not pay for, but store personal information, such as cloud storage, social media and email accounts.

• Online retailers will be required to provide contact information for quick and effective consumer-retailer communication.

• The consumers’ ability of enforcing individual legal remedies, due to unfair commercial practices, such as aggressive marketing.