Professional parties that conclude contracts with consumers remotely (e.g., online) face numerous changes on the back of the entry into force of the Sale of Goods Directive, the Digital Content Directive and the Omnibus Directive earlier this year.[1] Aiming to clarify the rapidly evolving field of consumer law, this blog discusses the most significant changes to the laws and regulations.

Sale of Goods Directive and Digital Content Directive

Changes were made to Title 7.1 of the Dutch Civil Code (“DCC”), which took effect on 27 April 2022. This title covers things like consumer purchases, i.e., a contract of sale between a seller who sells movable items as part of a profession or business to a consumer (a natural person) who purchases these items outside a profession or business. The changes are not retroactive. Previously concluded contracts remain subject to the old Title 7.1 DCC.

On 27 April 2022, an entirely new title was also introduced to the Dutch Civil Code, Title 7.1AA DCC. This title applies, briefly put, to contracts in which a trader provides digital content (like apps) or a digital service (like streaming or cloud services) to a consumer who pays for it with money, with a digital representation of value (e.g., bitcoins) or with personal data. This title is retroactive, which means that it also applies to contracts concluded before 27 April 2022.

The new consumer legislation tightens the conformity requirements for both consumer purchases involving movable items and digital content or services. This means that these items, services and this content must meet more requirements than before in order to conform to a contract, affecting the question of whether the seller has fulfilled its obligations. Conversely, there is no non-conformity if, at the time the contract of sale was concluded, the buyer was specifically informed that a particular characteristic of the item was deviating and the buyer expressly and separately accepted that deviation at the time (known as the ‘dual expression test’).

Compliance

• In principle, the digital content or service has to be supplied in the most recent version available at the time the contract is concluded.
• The content or services must also include updates, including security updates, for as long as the consumer may reasonably expect these updates.
• In addition, in principle, the item, digital content or service must be of the quantity and have the features that the buyer may expect, partly as a result of public statements (like advertising or labelling) made by or on behalf of the seller or previous links in the transaction chain (like the manufacturer).
• Moreover, the period during which a reversal of the burden of proof in favour of consumers applies has been doubled. Now, if a defect in an item, digital content or a digital service becomes apparent within one year of delivery, it is presumed that the item purchased did not conform to the contract at the time of delivery, unless the seller proves otherwise or the nature of the item or deviation precludes this (as is the case for perishable items). Before the new consumer legislation took effect, the period of the evidentiary presumption was ‘just’ six months.

Omnibus Directive

The Omnibus Directive has also entered into force. Amending four directives with effect from 28 May 2022, it applies to contracts concluded on or after that date and is not retroactive. The main topics are:

‘From-to’ prices

The Omnibus Directive provides that a trader who compares a price (in a discount promotion, for example) with a price that was previously in effect (the ‘reference price’) must use, as a reference price, the price that it actually used for a period of at least thirty days prior to the price change.

Consumer reviews

• If a trader displays consumer reviews of items or services, it must provide information on whether and how it ensures that the published consumer reviews originate from consumers who have actually purchased the item or service. As the purpose is to counteract fake reviews, this information about the faithfulness of consumer reviews is even classified as ‘material information’. This means that the trader commits an unfair commercial practice if it omits this information or provides it in an unclear or untimely manner, causing the average consumer to take a decision about buying the item or service that he would not otherwise have taken. In principle, if the consumer suffers damage as a result of an unfair commercial practice, the trader is liable for it. The contract concluded as a result of the unfair commercial practice is also voidable.
• There is an unfair commercial practice in all circumstances (i.e., the ‘average consumer’ test may be omitted) if a trader claims that the reviews were posted by authentic consumers but has not taken reasonable and proportionate steps to verify this. The same is true for any case in which a trader posts or commissions other parties to post false reviews or endorsements or if, for example, it displays only positive reviews.

Personalised price offers

• In addition, any trader who uses personalised price offers through automated decision-making (i.e., decision-making without human intervention, like profiling a consumer based on the consumer’s data) must inform the consumer in a clear and comprehensible manner about the fact that the price has been personalised on the basis of automated decision-making. A price offer like this may be based, for example, on recent search queries or where the consumer lives. The trader must inform the consumer about this before the consumer is bound by a distance contract or a corresponding offer.

Online marketplaces

• It is not only for traders that the bar for meeting obligations is being raised – the same goes for providers of online marketplaces. A ‘provider of an online marketplace’ is a provider of a service that uses software, like a website or an app, allowing consumers to conclude distance contracts with suppliers or other consumers. From now on, this type of provider must inform consumers in a clear and comprehensible way about the main parameters (like price, click-through rate or number of consumer reviews) determining the ranking of offers presented to the consumer. The relative importance of those parameters as opposed to other parameters is also part of this obligation. In other words, there must be an indication of which parameters carry more weight than others.
• Also, the provider of an online marketplace must inform consumers about whether the supplier is a trader or a private individual. This is relevant because consumer law, which gives consumers a lot of protection, only applies if the supplier is a professional trader. Information on whether consumer law applies is equally mandatory from now on, being considered ‘material’ within the meaning of an unfair commercial practice. Finally, consumers have to be informed about how obligations are shared between the provider of the online marketplace and the third party providing the item or service.
• All this information, which has to be provided to consumers before they are bound by a contract, must be placed in a specific section of the website or app (a separate page, for example). This section must be directly and easily accessible from the page where the offer is presented.[2]

Online search functionality

• Many providers of online marketplaces are also providers of online search functionality. They are traders that enable consumers to search for goods or services offered by different traders and/or consumers on the basis of a search query (e.g., a keyword). Providers of online search functionality must also inform consumers of the main parameters determining the ranking of the search query results. This, again ‘material information’, has to be placed in a specific section of the website or app, which must be directly and easily accessible.
• Moreover, providing search query results in response to a consumer’s online search query without clearly disclosing that it is paid advertising or that there was payment for achieving a higher ranking for products, is considered a commercial practice that is unfair in all circumstances.

Conclusion regarding the new consumer legislation

All in all, the obligations imposed on traders, providers of online marketplaces and providers of online search functionality have been tightened considerably. They must be mindful that they are required to inform a consumer about a variety of matters before the consumer is bound by a contract, and that the item or service must subsequently also actually conform to that contract. If this obligation to provide information is violated, it is possible that the contract will be subject to full or partial annulment and, if the consumer has suffered damage as a result of the violation, that the trader or provider will be liable for the damage. Finally, the new consumer legislation has extended the enforcement instruments available to the Authority for Consumers and Markets (ACM) and the Authority for the Financial Markets (AFM), allowing them to impose a higher fine if a trader has been found guilty of unfair commercial practices more than once. As a result, there are plenty of reasons why you should be aware of the latest developments in consumer law.

 The Commercial Contracts practice group is happy to advise you on issues around contracts, including consumer contracts, or the online or offline registration or order process set up for that purpose. Should you have any questions about the ACM’s enforcement instruments, please do not hesitate to contact the EU & Competition practice group.

[1] 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, 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, and 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.

[2] This means that providing this information solely through the general terms and conditions is not sufficient (which was allowed subject to certain conditions up to the recent Tiketa judgment of the EU Court of Justice).