The anticipated reform of Act No. 250/2007 Coll. on Consumer Protection and amending Act No. 372/1990 Coll. of the Slovak National Council on Certain Offenses, 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; as a result, merchants and e-shop operators can soon expect significant changes in this regard, for which they should prepare.
The aim of the new Consumer Protection Act is to modernize consumer legislation and ensure a fairer framework for relations between consumers and traders, including the transposition of European Parliament and Council Directives 2019/770 and 2019/771. However, only time will tell whether these are positive changes for all market participants. In this article, we summarize who the expected reform affects and what everyone needs to prepare for.
The draft Consumer Protection Act was adopted on April 14, 2023.
Update: The bill was vetoed by the President of the Slovak Republic. The bill was approved to take effect on July 1, 2024.
Affected entities - Sellers, e-shop operators, and online platform operators
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 you enable consumers to enter into distance contracts with other merchants or consumers, then these changes will affect you the most.
Offering discounts, price disclosure
If you are among the sellers and service providers whose sales are rising mainly due to offering discounts, you should take note. Merchants face a new obligation regarding price regulation: in addition to announcing the reduced price of a good or service, the operator will also be required to state 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 (no less) prior to the price reduction, or the currently offered price for the goods or services. This obligation also applies to goods and services for which you are offering a discount, even if you began offering the goods or services less than 30 days prior to the current price reduction; therefore, in such cases, you must also disclose the original and/or discounted price of the goods.
Transparency in product search
A new obligation for merchants will also arise in the area of searching for products and services based on keywords in the online environment, the main purpose of which is to enhance transparency in the ranking of goods and services in search engines. Traders will thus be required to disclose information about the main parameters determining the ranking of offers displayed in search engines via keywords. Violation of this obligation will be considered a misleading omission on the part of merchants, carrying the threat of sanctions by the supervisory authority; through this, the legislator aims to effectively minimize the use of unfair commercial practices by individual merchants.
Customer reviews and ratings of goods and services
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 regarding whether and how you ensure that the ratings or reviews published come from consumers (customers) who have actually purchased the product or service. If the supervisory authority finds that a merchant has engaged in misconduct by publishing fake reviews, such conduct will be considered an unfair commercial practice, carrying the risk of sanctions.
Elimination of Obligations
The long-awaited reform of consumer law will also bring several positive changes for merchants, eliminating certain obligations considered a bureaucratic burden without any benefit or enhanced consumer protection. In this regard, you can look forward to the elimination of duplicate requirements regarding purchase documents, the publication of notices regarding planned temporary closures of business premises at least 24 hours in advance, the obligation to prepare expert assessments of complaints, the provision of confirmations regarding the resolution of complaints, and the obligation to notify the municipality of the closure of a business.
Withdrawal from the Contract
A positive change for consumers, though somewhat less so for merchants, will occur in the area of withdrawal from the contract without giving a reason. In other words, we are referring to 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 promotion or an unsolicited visit by a merchant to the consumer’s home. The legislature adopted this measure precisely to enhance consumer protection against unfair business practices by merchants, such as artificially inflating prices and then offering discounts to attract new customers with deals that are not actually discounts. From a practical standpoint, 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 will be the so-called “second chance” mechanism, which merchants have long called for. In practice, this means that if merchants voluntarily cease or terminate unlawful conduct and simultaneously provide redress to the affected consumers, the supervisory authority will have the option to refrain from imposing sanctions on these merchants.
At the same time, a new framework for imposing sanctions is being introduced, aimed specifically 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; according to the legislature, this is intended to ensure a 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 a trader’s turnover can be considered an anti-bankruptcy measure when imposing fines on traders is a matter for consideration, and expert opinions diverge on this point, as there is a presumption that “the intent will miss the mark,” primarily because a merchant’s turnover 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 reviewing and updating the general terms and conditions you currently use, as well as ensuring compliance with the expanded information obligations toward consumers arising from the adopted amendment to the Consumer Protection Act. If you are interested, our law firm, Hronček & Partners, can prepare the necessary documentation for your e-shop, tailored to your specific needs.
