The expected reform of Act No. 250/2007 Coll. on consumer protection and on amendments to Act No. 372/1990 Coll. of the Slovak National Council on certain offences, as amended (hereinafter also referred to as the Consumer Protection Act), prepared by the Ministry of Economy of the Slovak Republic, was approved in April 2023, and so significant changes are expected soon in this regard for traders and e-shop operators, for which they should prepare.
The aim of the new consumer protection law is to modernize consumer legislation and ensure fairer relations between consumers and traders, including the transposition of Directives 2019/770 and 2019/771 of the European Parliament and of the Council of the EU. However, only practice will show whether these changes are positive for all market participants. In this article, we summarize who is affected by the expected reform and what needs to be prepared.
The draft consumer protection law was adopted on April 14, 2023.
Update: The bill was vetoed by the President of the Slovak Republic. The bill was approved and will take effect on July 1, 2024.
Affected entities - Sellers, operators of e-shops and online platforms
If you sell goods or provide services to consumers remotely or in brick-and-mortar stores, or if you operate an online platform through which consumers can conclude distance contracts with other traders or consumers, you will be most affected by the changes.
Offering discounts, publishing prices
If you are a seller or service provider whose sales are growing mainly thanks to discounts, you should pay attention. Traders will face a new price regulation obligation, whereby, in addition to announcing a reduced price for goods or services, they will also be required to indicate the previous price. What exactly does this mean? The term "previous price" refers to the lowest price at which you sold the goods or provided the service during a period of at least 30 days (not less) prior to the price reduction or the current price offered for the goods or services. This obligation also applies to goods and services for which you offer a discount, even if you started providing the goods or services less than 30 days before the current price reduction, and therefore the original and/or discounted price of the goods must also be disclosed here.
Transparency of product searches
A new obligation for traders will also arise in the area of keyword-based searches for products and services in the online environment, the main purpose of which is to enhance the transparency of the ranking of goods and services in search engines. Traders will thus be required to disclose information on the main parameters determining the ranking of offers displayed in search engines through keywords. Violation of this obligation will be considered a misleading omission on the part of traders, with the threat of sanctions by the supervisory authority, whereby the legislator aims to effectively minimize the use of unfair commercial practices by individual traders.
Reviews and ratings of goods and services by customers
If you are an operator of an online platform on which you publish customer reviews and ratings of goods and services, you will have a new obligation to disclose information on whether and how you ensure the publication of reviews or ratings by consumers (customers) who have actually purchased the product or service. reviews by consumers (customers) who have actually purchased the product or service. If the supervisory authority finds that a trader has published false reviews, this will be considered an unfair commercial practice and may result in sanctions.
Cancellation of obligations
The long-awaited reform of consumer law will also bring several positive changes for traders, relieving them of certain obligations considered to be a bureaucratic burden without any benefit or increased consumer protection. In this regard, you can look forward to the abolition of duplicate requirements for purchase documents, the publication of notices of planned temporary closure of business premises at least 24 hours in advance, the obligation to prepare an expert assessment of complaints, provide confirmation of the handling of complaints, or notify the municipality of the closure of a business.
Withdrawal from the contract
A positive change for consumers, but somewhat less positive for traders, will occur in the area of withdrawal from the contract without giving a reason. In other words, we are talking about the possibility for consumers to return goods within an extended period, which will be extended from the original 14 days to 30 days, provided that the distance contract was concluded during a sales event or an unsolicited visit by a trader to the consumer's home. This measure was adopted by the legislator precisely in order to increase consumer protection against unfair commercial practices by traders in the form of artificial price increases and subsequent discounts in order to attract new customers and lure them with discounts that are not actually discounts. From a practical point of view, however, this measure may cause existential problems for small and medium-sized e-shop operators in the long term.
Sanctions
A welcome addition to the amended Consumer Protection Act is the so-called second chance mechanism, which traders have been calling for for a long time. In practice, this means that if traders voluntarily refrain from or cease unlawful conduct and at the same time remedy the situation to the benefit of the consumers concerned, the supervisory authority will have the option of refraining from imposing sanctions on those traders.
At the same time, a new sanctioning mechanism is being introduced, aimed precisely at preventing the imposition of ruinous fines. In this regard, the principle of imposing a sanction determined as a percentage of up to 5% of the trader's total turnover or a fixed amount of EUR 600,000 will apply, which, according to the legislator, should ensure fairer and more proportionate imposition of fines with a positive impact on small and medium-sized enterprises. Whether the mechanism of imposing fines as a percentage of the trader's turnover can be considered an anti-liquidation measure when imposing fines on traders is a matter for consideration, and expert opinions differ in this regard, as there is an assumption that "the intention will be ineffective," mainly because the turnover of traders is not necessarily a guarantee of their solvency, and therefore we can only speak of an assumption on which the legislator based its decision in this case.
Updating documents
In connection with the adopted changes, we recommend that you review and update the general terms and conditions you currently use and ensure that you extend your information obligations towards consumers arising from the adopted amendment to the Consumer Protection Act. If you are interested, our law firm Hronček & Partners will prepare the necessary documentation for your e-shop.
