This Saturday marks the entry into force of new consumer laws across the EU. The Better Enforcement and Modernisation Directive 2019/1161 was adopted in November 2019 to modernise consumer law. It updates the following:
- Unfair Contract Terms Directive (93/13/EEC);
- Price Indication Directive (98/6/EC);
- Unfair Commercial Practices Directive (2005/29/EC); and
- Consumer Rights Directive (2011/83/EU).
Here’s a reminder of what’s changing.
New transparency rules
New information obligations are being imposed on online traders. Consumers must be informed:
- whether the supplier is a trader or another private individual. If the supplier is not a trader, the customer must be warned that EU consumer protection rules do not apply.
- about the main criteria they use to rank search query results. This might include criteria such as price, distance, consumer ratings or a combination. Traders must also state clearly if the ranking of the search results is based on payments received from the listed traders. Failure to indicate clearly that search results have been paid for is also a blacklisted commercial practice under the Unfair Commercial Practices Directive.
- about any personalisation of the price on the basis of automated decision-making.
if consumers use “free” services such as cloud storage, they must be informed about the main characteristics of the service, the contract duration and how to end the contract. The consumer also has cancellation rights.
The new rules expressly forbid submitting, or commissioning someone to submit, fake reviews or endorsements or otherwise manipulating consumer reviews. Traders may only claim that reviews were submitted by genuine consumers if they take reasonable and proportionate steps to check this. An example might be checking that only consumers who purchased or used the goods or services are able to submit a review. Traders must also explain all this to consumers.
There is a new ban on using ticket bots to bulk buy tickets for resale.
The rules also require that, for every price reduction announcement, sellers will also need to indicate a reference price (the price applied within a period of at least 30 days before the price reduction).
There are also new rules about communications methods. There are no longer references to fax numbers. A new requirement for the trader to provide pre-contract information about online means of communication is included. If the trader uses chat bots or other technology to communicate, it must provide details of them. The consumer must be able to keep any correspondence, including the date and time of such correspondence, on a durable medium. Further, if the trader is contracting via means which provide limited time or space to communicate (for example, text message) the trader need not provide the model cancellation form via such means of communication.
Member states may take additional national measures (for example, stricter rules about cancellation rights) in relation to doorstep selling or solicited visits for home repairs. However, such measures must be justified, non-discriminatory and proportionate.
The new rules include enhanced enforcement powers. National authorities may impose “effective, proportionate and dissuasive penalties” in a coordinated manner if major cross-border infringements affect consumers in several EU member states. Fines of up to 4% of the trader’s turnover may be imposed.
Consumers also have new individual remedies, (such as ending the contract, obtaining a price reduction or financial compensation) when they are affected by unfair commercial practices, such as misleading marketing. This is already the case in the UK.
The Directive is of direct interest to our Irish readers, where the implementing Consumer Rights Bill 2022 was (belatedly) published on 22 April 2022 and is currently going through the Irish parliamentary process.
However, UK traders who target EU consumers need to take note of it as well, especially as the UK government is planning some similar changes, for example in relation to fake reviews. The new rules apply to traders targeting EU based consumers, irrespective of where the trader is located. Consequently, where the rules are different from those in the UK, UK traders need to ensure that if they trade with EU consumers they comply with the new rules, or they could be subject to large GDPR-style penalties (though not as high as under the GDPR).
The new rules…will ensure that consumers are shielded from unfair practices online as they are offline, making consumer rules fit for the digital age