New consumer protection law regulations

New consumer protection law regulations

 

Introduction

On 07.12.2022, Act No. 374/2022 Coll. amending the Consumer Protection Act[1] and the Civil Code[2] was published in the Collection of Laws (hereinafter referred to as the "Amendment").

The Amendment introduces, with effect from 06.01.2023, new rules governing relations between businesses and consumers. The aim of the Amendment is to transpose three European directives regulating consumer law. These are the Modernisation Directive,[3] the Digital Content Directive[4] and the Sale of Goods Directive.[5]

You will find an overview of the most important changes that should not be missed below.

Obligations related to discounts provision

Where retailers provide a discount on the price of a product, they will now be required to provide information on the lowest price of the product over the last 30 days. The new regulation should thus prevent situations where sellers artificially inflated the amount of the discount by making the product more expensive before putting it on sale, thereby having the subsequent price reduction represent a higher discount. However, the actual discount was often much lower. The obligation to quantify the discount in relation to the lowest selling price in the last 30 days will however not apply to perishable products or products with a short expiration date.

The check-box amendment

A new obligation will also arise for entrepreneurs who offer their products via electronic means, i.e. mainly e-shops. According to Section 1826a of the Civil Code, when purchasing on-line, the customers will have to check a specific box with a legible inscription "Order committing to payment" or with another similar wording. The provided information should make it sufficiently clear to the customer that checking the box will constitute a binding order.

Withdrawal from a contract concluded outside business premises

The Amendment will also provide for a 30-day period for withdrawal from a contract concluded outside "business premises during a trip organised by an entrepreneur for the purpose or with the effect of promoting and selling goods or services or during an unsolicited visit by the entrepreneur to the consumer's home." This regulation is clearly aimed at sellers with unfair practices who have sold overpriced and poor-quality products to senior citizens at various demonstrations under duress. 

Presumption of product defect

Another change, favouring the consumers, is the new amendment to Section 2161(5) of the Civil Code. This will stipulate that if a defect manifests itself within one year of receipt, it will be presumed that the defect had already existed at the time of receipt. In contrast, the current legislation provides for a period of six months for such presumption.

Consumer liability for diminished value

The new regulation introduces provisions that are mainly aimed at protecting consumers. However, there is a provision that will certainly please entrepreneurs. This is the amendment to Section 1833, which corrects the previous incorrect transposition of Directive 2011/83. Consumers will thus now be liable for any diminution in the value of the goods that is caused by the fact that they have handled the goods in a manner other than necessary to familiarise themselves with the goods. However, this regulation only applies to goods purchased outside business premises, i.e. typically on-line purchases. In simple terms, the consumer will have to compensate the diminution in value of the goods if he uses the goods supplied (i.e. does not simply try them on) and then returns them. The Explanatory Memorandum to this provision states that 'the consumer should be able to dispose of the goods in the same way as if they were collected from a bricks-and-mortar shop'.

Digital content and digital services

The regulation will specifically address digital content and digital services in a completely new way, e.g. the seller will be obliged to provide the buyers with agreed updates of their digital content. Digital content means data created and provided in digital form, such as applications, e-books, computer programs and other electronic publications, which are not made available on physical media but only in an electronic form. A digital service is a service provided online, such as social networking sites, file and video sharing portals, etc. In this regard, the Explanatory Memorandum adds that digital content and services will generally be protected by intellectual property rights, hence the ongoing need to have appropriate licenses when providing these services/content.  

Verified reviews

The amendment finally places increased demands on the publication of consumer reviews. Businesses should avoid publishing fake reviews, as such behaviour will now be considered an unfair commercial practice. Each published review should be verified by the business to determine whether the review actually came from the consumer who purchased the product. At the same time, the trader must inform the consumer how he ensures such a measure. It must also be able to demonstrate this in the event of an inspection by the competent authorities.

Conclusion

The amendment brings a large number of changes to consumer law. Many businesses will be obliged to amend their terms and conditions and other documents relating to their relations with consumers.  In view of the threat of heavy fines in the event of breach of obligations arising from the new legislation (amounting up to 4% of annual turnover, or eventually up to CZK 50,000,000), we recommend not to underestimate this issue. If necessary, please do not hesitate to contact us and we will be happy to help you with the necessary adjustments.

[1] Act No. 634/1992 Coll., on Consumer Protection, as amended

[2] Act No. 89/2012 Coll., Civil Code, as amended

[3] 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

[4] 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

[5] Directive (EU) 2019/771 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the sale of goods, amending Regulation (EU) 2017/2394 and Directive 2009/22/EC, and repealing Directive 1999/44/EC