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The Omnibus Directive – is your business ready?

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On 27 November 2019, the European Parliament and the Council adopted the Omnibus Directive, which aims at unifying consumer protection regulation across the countries of the European Union and ensure proper enforcement and modernization of consumer protection rules.


As we are approaching 28 May 2022, when the provisions of the Omnibus Directive and its’ incorporation into the national law will apply, it is important to be aware of the essence of the Omnibus Directive as well as the main rules of the Directive and the penalties for non-compliance with its’ provisions. Moreover, it is important to bear in mind that the Omnibus Directive will affect not all businesses and activities.


Which businesses to be affected by the Omnibus Directive?

The Omnibus Directive itself and the legislation implementing the Directive in Lithuania are of relevance to e-commerce businesses as well as to the companies, providing electronic services to consumers or serving the clients with other electronic services.

New regulatory rules to the Omnibus Directive:

1. Unified rules of the publication/announcement of reduced prices and discounts in the EU public space.

Under new rules, the trader is obliged to provide the consumer with information about the price reduction applied to the goods. The price reduction notices must state the previous price of the item. It should be emphasized that the previous price is the lowest price charged by the seller during the 30-day period prior to the price reduction.

If a price of an item is being reduced gradually, a previous price refers to a price of an item prior to the first reduction. If an item has been proposed to the buyers for less than 30 days, the actual period within the item was offered to the buyers shall apply. The new rule will not apply to perishable products or items that lose their commercial value quickly.

2. Requirement to indicate the seller’s status.

Persons offering goods and services via online marketplaces must be clearly disclosed to the consumer. It is also important to indicate whether a seller acts as a professional trader or as a private individual. In general, consumer rights must be disclosed if buying from a professional seller and from a private individual.

Thus, if the seller or service provider is not a professional trader, consumers must be warned that the consumer protection legislation will not apply to a contract concluded with such a person.

3. Prohibition to provide and use fake consumer reviews and recommendations for goods allegedly purchased by consumers via online marketplaces.  

Under this rule, the trader is obliged to inform the consumer on how the reviews are being handled. The trader will only be able to confirm the reviews provided by the genuine consumers only in such cases if  the trader applied respective measures, verifying a fact that the feedback has been left by consumers who acquired or used goods or services.

4. Sellers will not be allowed to resell event tickets purchased under the usage of special technologies.

This will allow consumers to acquire event tickets at a fair price and prevent the breaches of limits or other rules set by the original ticket seller.

5. Requirement to specify the criteria for ranking of  goods/service offers.

The trader is obliged to disclose the consumer a set of criteria, established for the ranking of goods/service offers. For example, goods/services might be ranked under a price or a number of positive reviews, etc.

6. It is forbidden to mislead consumers by selling products in identical packaging that are of a different quality and composition than in other EU countries.

7. A requirement to inform the consumer about the personalisation of the price applied to him by the algorithm.

E-commerce businesses might use special algorithms to identify customers, based on the customers’ traffic on other websites and their purchase history as well as their e-shopping cart. As a part of the requirements, businesses will be required to inform the consumer about an increase of the price of a good / service based on automated decision-making or an algorithm that generates a special price for them.

Sanctions for non-compliance with the Omnibus Directive

Non-compliance with the rules set out in the Directive can lead to fines similar to the penalties, applicable under the EU General Data Protection Regulation (GDPR), with a maximum of up to 4 % of a company's annual turnover in the respective Member State. If it is impossible to calculate the turnover, a fine of up to EUR 2 million can be imposed. Thus, an amount of the imposed fine might be quite significant.

As the Omnibus Directive introduces a number of novelties for businesses and stronger legal basis for consumer protection, it is important to properly prepare, review and update applicable rules, processes and policies.

Recommendations for businesses

In order to properly implement the requirements of the Omnibus Directive, we strongly recommend businesses to carefully analyse the following questions:

  • Where are the reviews of genuine users hosted up to now?
  • What sort of review management software do you currently use and how will you manage your user reviews / feedback in the future?
  • If you feel a shortage of time or energy in terms of user review management, it is worth to consider a usage of a third-party customer review platform for a simpification of the process. This sort of a solution might help to automate, respond to and manage feedback across different platforms.
  • How will you verify the identity of the user? How will you inform users about your verification process? Will this be stated, for example, in your terms and conditions?
  • How can influencers justify their reviews? In other words, how will you prove that you are not paying influencers for giving your business  five-star reviews?

Contact

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Ignė Rėklaitytė-Grybienė

Senior Lawyer

+370 5 212 35 90

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