Lawmakers have adopted new rules protecting consumers against faulty goods applicable as of 1 January 2021.
Pursuant to media communication, the new rules were triggered by the excessive volume of consumer protection cases lodged by consumers and by the conclusions/statistics the consumer protection authorities drew from this: a relatively high number of companies keep infringing the guarantee rules. Therefore, the new rules address potentially infringing behaviour by imposing mandatory actions for companies, thereby aiming to enhance consumer satisfaction.
A consumer guarantee covers consumer rights if the goods turn out to be faulty within a certain amount of time after purchase. In other words, a consumer guarantee is an agreement between the consumer and the guarantor (seller) in which the guarantor undertakes to assume liability for faultiness during the guarantee period and may only be released from liability if it can prove that the cause of the defect occurred after performance (e.g. the consumer used the goods inadequately).
Under these rights, the consumer has the following options: to have the goods repaired or replaced, to ask for a price reduction or to repair the defect himself, or to withdraw from the contract.
A consumer guarantee may be a service bought by the consumer but there are cases where a mandatory consumer guarantee is imposed by law, e.g. on durable goods, like home appliances or automobiles. In the latter case, the consumer may be offered an extended consumer guarantee (either for free or to purchase) in addition to the mandatory statutory one.
Rethinking the mandatory consumer guarantee period
Currently, where a consumer guarantee is mandatory by law, the statutory time period for the guarantee is one year. As of 1 January 2021, there will be time period ranges. The respective time period varies based on the purchase price:
- for goods costing between HUF 10,000 and HUF 100,000 (approx. EUR 30 – EUR 300) the mandatory consumer guarantee remains one year;
- for goods costing between HUF 100,000 and HUF 250,000 (approx. EUR 300 – EUR 750) the mandatory consumer guarantee lasts for two years; while
- for goods costing more than HUF 250,000 (EUR 750) the mandatory consumer guarantee lasts for three years.
Introducing e-guarantee letters
To enforce consumer guarantee rights, the consumer must be in possession of a guarantee letter (in certain cases, the invoice may serve this purpose).
The new law will introduce e-guarantee letters next year. This means that the seller may send or upload the e-guarantee letter to the attention of the consumer. In the latter case, the seller must also make sure that the consumer may download the e-guarantee letter within the mandatory timeframe, i.e. for the duration of the consumer guarantee.
Addressing consumer guarantee rights
The new rules introduce various scenarios for how guarantors must act when dealing with guarantee claims (unless the consumer decides otherwise or chooses another option granted by law). These include:
- If, during the first repair, the goods turn out to be unimprovable, the guarantor must replace the item within eight days. If this is not possible, the consumer is entitled to a refund.
- If the goods break down three times during the mandatory guarantee period – and unless the consumer decides otherwise – upon the fourth breakdown the guarantor must replace the item within eight days. If this is not possible, the consumer is entitled to a refund.
- If the repair is not finished within 30 days, the guarantor must replace the item within eight days after the repair period elapsed. Again, if this is not possible, the consumer is entitled to a refund.
The new rules will require additional efforts from companies to prepare, since the current consumer guarantee policies must be tailored to comply with the new rules. As the new rules may naturally lead to higher costs for companies, it is recommended that companies negotiate with their subcontractors (e.g. service partners, suppliers) about sharing the additional obligations and costs. When preparing, the companies must amend their guarantee letters and be ready for e-guarantee letters. In addition, if companies apply general terms and conditions, these policies must also be revisited in a timely manner.
By Alexandra Bognar, Attorney at Law, Schoenherr