Legal & Tax Alerts

New EU rules on consumer protection providing fines up to 4 % of annual turnover

The new directive concerning the better enforcement and modernisation of Union consumer protection rules (“Directive”)[1] came into force on 7 January 2020. Member States are required to adopt and publish the measures necessary to comply with this Directive by 28 November 2021 and to apply those measures from 28 May 2022.

The Directive aims to apply consumer protection law more effectively throughout the Union by covering remaining gaps in national laws regarding penalties and insufficient individual remedies for consumers. Another goal of the Directive is to align previous legislation with the new rules on contracts for the supply of digital content and digital services provided by Directive (EU) 2019/770[2].

1. New penalties

When penalties are to be imposed in the enforcement of cross-border consumer protection laws[3], Member States shall lay down rules that include the possibility of either or both:

Imposition of fines through administrative procedures;
Initiation of legal proceedings for the imposition of fines.

The maximum amount of such fines must be at least 4 % of the seller’s or supplier’s annual turnover in the Member State or the Member States concerned. If the information on the seller’s or supplier’s annual turnover is not available, the maximum amount of the fine shall be at least EUR 2 million.

To facilitate a more consistent application of penalties, common non-exhaustive and indicative criteria for the application of penalties were included.

Amendments were brought to previous regulations setting forth that any announcement of a price reduction shall indicate the prior price applied by the trader for a determined period of time prior to the application of the price reduction. The prior price means the lowest price applied by the trader during a period of time not shorter than 30 days prior to the application of the price reduction.

2. New rules on contracts for the supply of digital content

Specific information requirements for online marketplaces were added to inform consumers about the main parameters determining the ranking of offers, and whether they enter into a contract with a trader or a non-trader, such as another consumer.

According to the new amendments, the rules shall apply both to (i) contracts concluded between a trader and a consumer where the consumer pays or undertakes to pay the price, and to (ii) contracts where the trader supplies digital content which is not supplied on a tangible medium or a digital service to the consumer, and the consumer provides personal data to the trader.

3. New unfair commercial practices

There have been added several commercial practices which are in all circumstances considered unfair:

(i) Marketing a good as identical to a good marketed in the other Member States, that has significantly different composition or characteristics shall be regarded as misleading[4].

(ii) Reselling events tickets to consumers acquired by using automated means to circumvent any limit imposed has been forbidden.[5]

(iii) Stating that reviews of a product are submitted by consumers who have actually used or purchased the product without taking reasonable and proportionate steps to check that they do.[6]

(iv) Submitting or commissioning another legal or natural person to submit false consumer reviews or endorsements, or misrepresenting consumer reviews or social endorsements, in order to promote products.[7]

 

[1] Directive (EU) 2019/2161 of the European Parliament and of the Council of 27 November 2019 amending 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 (OJ L 328/7, 18 December 2019).
[2] Directive (EU) 2019/770 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the supply of digital content and digital services (OJ L 136, 22 May 2019).
[3] In accordance with Article 21 of Regulation (EU) 2017/2394 of the European Parliament and of the Council of 12 December 2017 on cooperation between national authorities responsible for the enforcement of consumer protection laws and repealing Regulation (EC) No 2006/2004 (OJ L 345, 27 December 2017).
[4] Article 3, Point 3, Directive (EU) 2019/2161;
[5] Article 3, Point 7 (b), Directive (EU) 2019/2161;
[6] Article 3, Point 7 (b), Directive (EU) 2019/2161;
[7] Article 3, Point 7 (b), Directive (EU) 2019/2161.

The article can be downloaded in PDF format right from this link.

Cookie Settings