Once the amendment to the Czech Consumer Protection Act becomes effective, consumer protection rules shall have to start being reflected in the digital world. If the amending legislation is passed in its current draft form, consumer protection rules shall also apply to the offering and provision of digital content and services, even if the consumers "pays" for them with their personal data. Violations of the new obligations shall be punishable by a fine of up to CZK 50.000.000 or 4% of the trader’s annual turnover. The amendment implements the requirements set by EU law.
Other new provisions address the misleading presentation of products in the online space. When searching for specific aspects (such as product type and features), it shall not be possible to display advertised products or services first. Such can only appear if they are clearly identified as a paid search result. As a result, if you search for a red table, for example, if the trader has paid for it to appear on the first page of the search results, the result will have to be marked as an advertisement.
In general, it should become standard to share with the consumer the parameters on the basis of which their search results were ranked, including the importance of such parameters. This regulation is aimed at typical scenarios in which the trader has paid the provider of the online search functionality for a top ranking of a product within the search results, even though the product or service does not meet the specified conditions. Not only a direct financial transaction is considered payment in this case, but any other financial benefit, such as a larger commission on the transaction, is considered payment as well.
Another new feature is the regulation of the use of misleading reviews. The trader will have to ensure that the reviews come from customers who have actually purchased the product or service. Similarly, the new regulation also addresses price reductions. Information regarding price reductions must include the lowest price of the product in the thirty days prior to the application of the price reduction.
If a consumer's right is violated or even threatened by an unfair commercial practice, the consumer shall have access to compensation for damage. An unfair commercial practice may be, for example, conduct containing materially incorrect or false information without which the consumer would not have purchased the goods or services in question.
The amended regulation shall also regulate much more strictly what clauses are prohibited in consumer contracts and shall provide a specific list of such prohibited clauses in its annex. For example, clauses that impose disproportionate penalties for breach of obligations, allow the trader to withdraw from the contract without reason even though the consumer is not allowed to do the same, or allow the trader to determine when performance is in accordance with the contract, shall be prohibited.
European legislation requires that sufficiently dissuasive penalties be imposed for breaches of the obligations imposed by this regulation. The fine for a breach could be up to 4% of the trader's annual turnover or up to CZK 50.000.000 if the turnover cannot be determined.
The newly transposed European regulations reflect the desire to improve the position of consumers in the online world, as the level of consumer protection in the online environment should be the same as the level of consumer protection in reality. The government's proposal to amend the consumer protection rules is currently awaiting its first reading in the Chamber of Deputies. Although the approval of the proposal by the end of the parliamentary term (by October 2021) is uncertain, it is a matter of transposing European legislation and for this reason the changes will be adopted sooner or later in a similar wording.
By Miroslav Dubovsky, Partner, Jan Metelka, Associate, DLA Piper
