The coming into force of the Omnibus Directive has strengthened consumer legislation, particularly with regard to transparency requirements for online purchases. The new rules also impose heftier penalties on traders who do not comply with their legal obligations and are harming many European consumers. More specifically, the key changes concern information responsibilities on online markets, price reduction promotions, enhanced rights for consumers who subscribe to ‘free’ digital services, ranking and search results, online consumer reviews, personalised pricing, and re-sale of event tickets.
New transparency requirements for online marketplaces
Online marketplaces have become an important shopping tool for consumers. Unfortunately, when consumers shop on these platforms, they do not always know who they are purchasing the goods or services from – whether, for instance, they are buying from an individual or a professional seller. This information is important for consumers because if the seller is an individual and something goes wrong with the purchase, consumer law does not apply.
The new rules stipulate that consumers must be informed whether the seller is a trader or an individual, and must also be notified that consumer law does not apply to transactions made with individuals.
Consumers should also be informed by the marketplace that is responsible for the delivery and that will handle returns under the right of withdrawal. By law, this information must be provided to consumers before the contract of sale is concluded.
Ranking of offers and search results
While browsing online and searching for products and services, consumers must be provided with clear information about the criteria used to determine the ranking of the results – for example, whether the results are based on price, distance, consumer ratings or a combination of different criteria. Marketplaces and search engines must also disclose whether specific payments have been made to achieve a higher ranking.
Transparency about consumer reviews
Consumers’ purchase choices are often influenced by reviews posted by other consumers on a platform or a trader’s website. To ensure these reviews are genuine, the new rules expressly prohibit submitting or commissioning someone to submit fake reviews or endorsements or to manipulate consumer opinion. To claim that consumer reviews are genuine, traders must have checks in place to ensure that only consumers who bought or used the goods or services may submit a review.
Personalised pricing
While shopping online, consumers may sometimes be the target of personalised pricing. This happens when traders use algorithms based on consumer purchase history to detect any special interest in one of their goods or services, and then increase the price.
Online traders are now obliged to inform consumers whenever a price presented to them has been personalised as a result of automated decision-making and profiling of consumer behaviour. This information will ensure that consumers are aware of the risk that the asking price may have been increased specifically to them.
Enhanced rights for ‘free’ digital services
Consumers who subscribe to ‘free’ digital services by providing their personal data now have stronger rights, especially with regard to the information they must be provided with. Providers of these ‘free’ services must provide clear information about the main characteristics of the service, the contract duration and the termination conditions. The right of withdrawal also applies when subscribing to these services.
All this is required unless the personal data supplied is exclusively to be processed to supply the digital service, and thus the data is not to be processed for other purposes.
Prohibition of reselling event tickets bought through bots
The new consumer protection rules also prohibit the reselling of event tickets bought through bots and then resold at higher prices. This prevents the breaching of rules set by the primary ticket seller and gives consumers the possibility to buy event tickets at fair prices.
Price reduction claims
From now on, for every price reduction claim, sellers must indicate as a reference price the lowest price applied within a period of at least 30 days preceding the price reduction announcement. For goods that have been on the market for less than 30 days, the prior price is the lowest price applied by the trader during this period.
More effective penalties for cross-border infringements
To ensure a more effective and consistent enforcement of EU protection law, the new rules provide national authorities with the power to impose effective, proportionate and dissuasive penalties when they work together on major cross-border infringements that are affecting European consumers in at least three member states, or in at least two-thirds of the member states, accounting for at least two-thirds of the EU population.
In these cases, the fine may be up to four per cent of the trader’s turnover or up to €2 million when information on the turnover is not available.
For more information on the new rules, contact the MCCAA through the ‘Contact us’ form on the MCCAA’s website or by calling on 2395 2000.
Odette Vella is director, Information and Research Directorate, MCCAA
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