You might have spotted it already: the EU is once again coming up with rules for consumer protection. Clearly, the law never stands still! Are you still keeping up with all these changes
We present to you the “Omnibus Directive”, in Latin: the directive for all. All companies active in B2C e-commerce are affected by the provisions of this directive. And that at several levels! Or see it as an omnibus (book): a collection of ‘stories’ around one theme, here: the consumer.
We will briefly highlight some of the most important changes for you.
Omnibus – all?
The nickname of the directive sums it up well; a lot of things are changing.
By the way, for those interested, the full name of the directive is: Directive (EU) 2019/2161 of the European Parliament and of the Council of 27 November 2019 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU of the European Parliament and of the Council as regards the better enforcement and modernisation of Union consumer protection rules.
A mouthful, we are aware of it.
The directive amends 4 already existing directives. They concern the following subjects:
- unlawful terms,
- indication of the prices,
- unfair commercial practices, and
- consumer rights.
But what exactly is changing?
New announcement rules for price reductions
There is a price reduction when you write “25% off” or also “EUR 5 off”. However, when you say “best/lowest prices” in your promotion, you do not fall under the rules. The latter is after all a more general marketing claim, and not a real price reduction.
When announcing a price reduction, the consumer now also has to know the prior price. So if you mention a price reduction, you will also have to mention the reference price. The reference price is the lowest price that you have applied during a period of 30 days prior to the price reduction.
Say you give a 25% discount. At that time, the item of clothing costs 60 euros in the shop, but 2 weeks ago (or anytime during the past 30 days) the price was only 50 euros. The reference price is then 50 euros, not the actual 60 euros. So you will have to apply the discount to the 50 euros. And this even with your higher current price!
So why this obligation? This rule is intended to prevent entrepreneurs from playing with their prices, for example by charging a higher price just before the sales and then offering a nice price reduction during the sales. That is deceiving your customers! And is therefore not allowed.
For new products (products that have been on the market for less than 30 days) and for progressive price reductions, slightly different rules apply. For perishable products, the rules do not apply at all.
By the way, these rules apply to all the selling channels, but they apply to all the channels separately. When you have a webshop and a physical shop, you only have to look at the specific sales channel to determine the reference price. In the case of a discount in the webshop, you do not have to take into account the prices in the physical shop.
With the upcoming summer sales (in Belgium, the summer sales start on 1 July), you will have to rethink your pricing policy!
Extra information obligations
Be prepared, because this is where the most things change.
Your webshop will now have to provide a telephone number and an e-mail address at all times. The fax has been thrown overboard, because, let’s face it, it’s not up to date anymore. In addition, other forms of online communication may also be provided, on the condition that the consumer can save this correspondence, the date and time.
Customisation of prices
You will also have to inform your consumers when you customise prices on the basis of automated decision-making.
However, real-time pricing, where the price can change rapidly according to market demand, is not customisation in this sense.
If your webshop provides a mechanism for reviews, you will have to explain this practice as well.
This includes information about whether and how you guarantee that the reviews come from consumers who have actually used or purchased the product. And also information about how those reviews are processed: has the review been paid for, are they both positive and negative reviews, etc.
A suggestion on how to implement this is to add a hyperlink in the review section to a specific information page.
Besides the obligation to provide information, an explicit prohibition is now also included in the law. Posting or instructing the posting of false reviews or recommendations by consumers is not permitted.
Online marketplaces are also affected by additional information requirements. Online marketplaces include platforms such as eBay and 2dehands, or also Bol.com. It is a service using software, including a website, managed by or on behalf of the company, which enables consumers to conclude contracts at a distance with other companies or consumers.
On your online marketplace you will:
- have to provide insight into the parameters/criteria you use to rank the search results. And this should be done in a specific section of the online interface, not hidden in your general terms and conditions!
- Have to clarify the capacity of the other party. Is the person from whom the consumer is buying a business or another consumer?
- have to indicate that when the other party is not a business, consumer rights protection does not apply.
- have to inform about the way in which the obligations are divided between yourself and the seller, so that the consumer knows who he should approach. This information should also not only be included in the general terms and conditions.
Protection rules extended to “free” digital content and services
The consumer protection rules were linked to contracts where the consumer pays a price. The scope of these consumer rights will now be extended.
Also when the consumer does not pay a pricebut provides his personal data in exchange for the digital content or digital service, he is protected. In other words, when the compensation consists of data, instead of a payment, the protection rules (including a right of withdrawal and information obligations) now also apply.
This creates consistency: whether the digital content or service is provided in exchange for the payment of a price or in exchange for personal data, the same protection applies (with some limited exceptions).
Without sanctions, rules are of little use. Therefore, there will now be some indicative criteria to determine the amount of a fine, e.g. the severity, extent and duration of the infringement, whether there have been infringements before, whether you have benefited financially from the infringement, etc.
The penalties can quickly escalate, as they can be up to 4% (sometimes even 6%!) of the total annual turnover, or up to EUR 2 million if no information is available on the annual turnover. In short, these are large sums of money!
The penalties are not only higher, but there will also be a stricter punishment for the use of unlawful terms. The mere use of a blacklisted term (without any bad faith) can now be punished with a fine of up to 10,000 euros or 4% of your annual turnover. So it’ s about time that you check your general terms and conditions again!
If you offergoods or services to consumers online, this new Omnibus Directive will have an impact on your activities. For webshops, we are thinking mainly about the rules on the announcement of price reductions, information on reviews and the obligations for online marketplaces.
The new Belgian law transposing the Omnibus Directive entered into force on 28 May 2022. Have you already adapted your working method to all these new obligations? After all, the way you were used to providing information until now, especially for webshops, will no longer suffice!
Do you need legal support with the implementation? Or do you have questions about certain aspects of this new legislation? Please do not hesitate to contact our experts via firstname.lastname@example.org.
Written by Chloë Vanderstraeten, Legal Adviser theJurists, and Kris Seyen, Partner theJurists