Amongst the measures being introduced are new rules on online reviews, price reduction promotions, enhanced rights for free digital consumers, GDPR-style fines and information requirements on online markets.
With the 28 May 2022 deadline for EU member states to implement the Enforcement and Modernisation Directive ((EU) 2019/2161) or “Omnibus Directive” just days away, what does this modernisation of consumer law mean for businesses and consumers?
Aimed at giving consumers more rights and greater protections, the “Omnibus Directive” amends rules contained in the: (a) Unfair Contract Terms Directive (93/13/EEC); (b) Price Indication Directive (98/6/EU); (c) Unfair Commercial Practices Directive (2005/29/EC); and (d) Consumer Rights Directive (2011/83/EU).
Amongst the measures being introduced are new rules on online reviews, price reduction promotions, enhanced rights for free digital consumers, GDPR-style fines and information requirements on online markets.
The Omnibus Directive has given consumer law sharper teeth. Any company doing business in Europe will need to make sure that it complies with the requirements of the implementing legislation of the member state it operates in or risk substantive penalties.
The Directive requires member states to introduce fines for certain infringements of a minimum of 4% of a seller’s annual turnover in that member state. If the necessary financial information is not available to make this calculation, then the fine available to national regulators is up to at least €2m.
These turnover-based penalties bear similarities with GDPR fines, which are based on a proportion of a company’s global turnover. It will be interesting to see if lessons have been learnt from the implementation of the GDPR regime. Over 900 companies across the European Economic Area and the UK have received fines since its inception, and the five largest fines have been issued to household names (such as Amazon, WhatsApp and Google) which one would have thought had robust practices in place to avoid GDPR infringement.
It remains to be seen if the spectre of a 4% fine of annual turnover of the member state they’re operating in (as opposed to global turnover on which GDPR fines are based) help to get consumer law compliance towards the top of board agendas? Either way the potential for such fines should help to underline the importance of companies considering if they have the mechanisms in place to meet the new requirements.
Several measures are being introduced to give consumers enough information to make faster and better informed buying decisions, based on genuine product reviews that reflect the experience of real consumers.
For example, the Omnibus Directive prohibits traders from:
Traders who display customer reviews will need to review their policies and procedures to ensure they have adequate measures in place to protect against fake reviews being posted. This might require a reviewer to verify they have used or purchased the product, or to register on a specific platform to post reviews. But the trader will need to walk the tightrope between making the process so onerous that it puts real people off from submitting genuine reviews or accepting evidence so readily that it can’t show it’s taken adequate steps to protect against fake reviews.
The business model of the platform, the scale of the activity and the level of risk will determine whether a business has gone far enough to counter this risk. In other words, the steps that Amazon may be expected to take will be more onerous than a small independent trader.
To tackle artificial pricing practices designed to hoodwink consumers into believing they’ve got a great deal, the Omnibus Directive introduces stricter requirements for traders who announce a price reduction on goods. When a price reduction is announced, a trader will now have to identify the prior price which applied before the reduction. This reference price must have applied for at least 30 days prior to the reduction, subject to limited exemptions.
Traders should ensure that their sales and marketing teams are fully up to speed with these new rules and that they have mechanisms in place to verify that any price change is genuine and not designed to artificially inflate prices prior to a sale.
In recent years, online marketplaces have become an increasingly popular tool for consumers when deciding between various offers - such as travel and accommodation providers. These comparison sites will be subject to much greater transparency requirements under the Omnibus Directive. Marketplace operators must now publish the following information:
Ranking: information on how search results are ranked and the criteria used to do this must be easily accessible to the consumer (even if this is through a link to a separate page of the website).
Paid results: search providers must clearly identify where a higher placed search result has been influenced by payments made by the seller.
Status of the trader: The marketplace must state whether each seller listed is a private individual or a trader (this can be based on a self-declaration from the seller). This distinction is important because customers will only benefit from EU consumer law where they have purchased from a trader.
The Omnibus Directive expands consumer rights to users of free digital services and content such as online games or social media apps. Traditionally only paid digital services and content attracted EU consumer protections. Now if consumers provide personal data, such as their email address, in return for these free services, this will be treated as consideration in the same way that money is. Traders should ensure that where they offer free digital services and content, they’ve complied with the applicable consumer law obligations. These obligations include providing certain pre-contract information to the consumer and allowing them a right to cancel a contract for digital services up to 14 days after purchase.
As the United Kingdom has left the European Union, the Omnibus Directive will not be transposed into UK law. Consequently, UK-based companies who trade entirely within the UK will be unaffected by the Omnibus Directive. However, UK traders who offer their goods or services to EU resident consumers will have to comply or risk facing actions taken against them in member states.
However, for those traders operating only in the UK, the announcement of upcoming legislation, The Draft Digital Markets, Competition and Consumer Bill, in the Queen’s Speech this month indicates that it will not be long before they also need to review their policies and procedures to address many of these issues or risk substantial fines. In particular, the Bill will look to tackle fake reviews and the ‘subscription trap’, as well as granting the Competition and Markets Authority an ability to enforce consumer law directly by imposing penalties of up to 10% of annual turnover for certain infringements.
Watch this space for further information on consumer law developments in the UK.
In this session, we examined the legal framework around grant funded collaborations and discussed the key risks to be aware of, including IP ownership and compliance with grant terms.
National law firm Browne Jacobson has advised long standing retail client, Wilko on the sale and leaseback of its Nottinghamshire distribution centre in Worksop to logistics specialist DHL for £48m.
Law firm Browne Jacobson is pleased to announce that Suzanne Harlow has been appointed Non-Executive Director of its Retail, Consumer & Logistics sector.
Earlier in the year a number of fashion retailers, boldly announced the introduction of a charging fee for returning any product purchased via their online store. Yet, despite this commercial, and perhaps somewhat controversial decision, at least one major fashion giant that adopted this approach has recorded ‘historic highs’ in its September profits. Browne Jacobson partner, Cat Driscoll who heads up the firm’s commercial team in Manchester and is also head of its Fashion & Beauty sector discusses whether this change has put the average consumer off and whether the days of free returns are long gone.
Every AI will have its own terms of use. DALL·E 2’s Terms of Use dated 3 November 2022 specify that as between a user and Open AI, a user owns their prompts and uploads. Open AI also assigns to the user all rights in any images generated by DALL·E 2 for that user (subject to the user complying with those Terms of Use, and to a licence to use inputs and output to develop and improve the services).
This article is the second in a series to help firms take a practical approach to complying with the ‘cross-cutting rules’ within the new ‘Consumer Duty’ (CD) framework. The article summarises what it seems the Financial Conduct Authority (FCA) is seeking to achieve from the applicable rules (section 2 below) and potential complications arising from legal considerations (section 3).
The fashion industry has a mountain to climb when it comes to sustainability. More than 8% of greenhouse gas emissions come from the apparel and footwear industries, and approaching three-fifths of all clothing ends up in incinerators or landfill within a year of being made.
Created at the end of the Brexit transition period, Retained EU Law is a category of domestic law that consists of EU-derived legislation retained in our domestic legal framework by the European Union (Withdrawal) Act 2018. This was never intended to be a permanent arrangement as parliament promised to deal with retained EU law through the Retained EU Law (Revocation and Reform) Bill (the “Bill”).
The Chancellor’s recent mini-budget provided a significant announcement for business as it was confirmed that the off-payroll working rules (known as “IR35”) put in place for public and private sector businesses from 2017 and 2021 will be scrapped from April 2023.
It was reported in May 2022 that the BMW-owned manufacturer had been forced to put a temporary stop on the production of all manual transmission vehicles due to the global semi-conductor shortage and the war in Ukraine. Mini stated that the move was made in order to "ensure production stability".
Browne Jacobson has bolstered its commercial practice in the UK with the appointment of commercial contracts and international trade specialist, Emma Roake, into its City-based London team.
Rolls-Royce has shortlisted six locations for its first factory for small nuclear power stations. We look at the impact on regions & local businesses
The Court of Appeal overturned the “fire and re-hire” injunction, finding that there was nothing in the express contractual provisions preventing Tesco from giving the notice to terminate employment in the usual way.
The Federation of Small Businesses (FSB) has released a report setting out the impact of new and changing regulations arising from the pandemic on small businesses across the UK.
First Hydrogen has identified 4 sites in the UK where it plans to locate large hydrogen refuelling stations for commercial vehicles. The sites will also accommodate on-site hydrogen production of between 20 and 40 MW (totalling 80 MW - 160 MW across all 4 locations) and will serve the urban areas of Greater Liverpool, Greater Manchester, London and the Thames Estuary. The plans form part of the Energy division’s strategy to develop green hydrogen production projects, initially in the UK and Canada.
As has been widely reported this week, some 3,000 UK workers are taking part in a six month trial to assess the viability of a four-day working week without any reduction in their normal pay.
Amongst the measures being introduced are new rules on online reviews, price reduction promotions, enhanced rights for free digital consumers, GDPR-style fines and information requirements on online markets.
A lawyer and a HR business partner from law firm Browne Jacobson have been announced as winners of the WeAreTheCity’s Rising Stars Awards 2022.
Browne Jacobson’s corporate dealmakers have advised the shareholders on the sale of UK market leading automotive glass specialists, Charles Pugh Holdings to Swedish listed company, Cary Group for an undisclosed sum.
National law firm Browne Jacobson has launched an electric vehicle (EV) scheme as part of its employee benefits package. The benefit will be available to all of the firm’s employees across its five offices, including Birmingham, Exeter, London, Manchester, and Nottingham.
In anticipation of the adoption of the Building Safety Bill, our specialist compliance and regulatory team will give an overview of the measures proposed in the Bill.
There are a number of factors which have contributed to the crisis including the huge increase in wholesale natural gas prices, which have risen some 250% since the start of 2021. Since the start of last year, over 30 energy firms have gone bust in the UK alone.
From 6 April 2022, right to work checks on all migrant or settled prospective employees must be online and checks on British or Irish nationals will be manual (free) or digital (charged for).
The Presidents of the Employment Tribunals England and Wales and Scotland have issued a new road map for 2022-23, providing an update on the resourcing challenges faced by employment tribunals and the steps put in place to address these.
The Commercial Rent (Coronavirus) Act 2022 was finally passed yesterday (24 March) and comes into force immediately.
Browne Jacobson has broadened its national construction and engineering offering with the appointment of construction partner Zoe Stollard into its Birmingham office.
The Government appears set to announce plans on ‘living with Covid to restore freedom’. With the success of the retail and hospitality sector key to recovery, what protections will be on offer to tenants to deal with Covid-19 rent arrears?
In Nissan v Passi, the High Court recently considered the issue of an employee retaining confidential documents belonging to his former employer in the context of the employer’s application for an injunction seeking the return of such documents from the employee.
The levelling up white paper sets out a set of 12 priority ‘missions’ to be pursued by national and local government in the years to come. With measures covering regeneration, communities, connectivity, education, R&D, employment, and health.
The High Court has granted an injunction against Tesco preventing the dismissal and re-engagement (‘fire and rehire’) of employees in an attempt to remove a contractual entitlement to enhanced payment terms.
As a developing area, key stakeholders in this space such as insurers, and technology and software developers looking to become ASDEs or NUIC operators, should keep a keen eye on whether the Government proceeds with introducing new legislation in line with the report’s recommendations.
