Omnibus Directive – What has it actually brought?

Since the implementation of the Omnibus Directive in 2021, much has been said about its impact on industry and entrepreneurs in Europe. This comprehensive and complex law encompasses a range of changes in consumer protection laws, combating fraud, unfair market practices, and changes in e-commerce regulations. However, despite its scale and ambitious goals, some wonder whether the directive has actually brought the expected benefits and how it has affected businesses. In this article, we will analyze the changes introduced by the Omnibus Directive and consider what they actually mean for entrepreneurs.

New Price Reduction Notification Rules

The Omnibus Directive is a European Parliament directive from 2019 that introduced new rules focusing on combating unfair market practices. The new provisions impose an obligation on entrepreneurs and online trading platforms to clearly, understandably, and easily provide consumers with information about changes in prices of goods.

According to this directive, the entrepreneur must clearly specify the old and new price of the goods or services, as well as indicate the percentage change in price. This information must be made available at the point of sale or in advertisements. Additionally, the entrepreneur must ensure that the reduced price is actually lower than the price before the reduction, and not merely the result of periodic promotions.

In the case of online sales, the entrepreneur must also ensure that the reduced price is visible before adding the product to the cart, as well as in the transaction summary. If the sales offer includes more than one product, the entrepreneur must clearly indicate which product has been reduced.

Failure to comply with the new provisions may result in sanctions for entrepreneurs, including financial penalties. The Omnibus Directive aims to provide consumers with full and transparent information about prices, as well as to counteract practices that mislead consumers.

What Else Do We Need to Remember When Running an Online Store?

The Omnibus Directive introduced many other changes in consumer rights than just the provision allowing price comparison.

Digital Goods

Consumer rights applicable when purchasing physical products have also been extended to digital products. This includes:

• The right to receive key information before entering into a contract;
• The right to withdraw from the contract within 14 days.

*Exceptions include personal data processed solely for the purpose of delivering digital content or provided due to legal requirements.

Transparent Prices

Another significant change is the increase in price transparency. According to the directive, the customer must have access to the prices of discounted goods for up to 30 days before the promotion, to prevent price manipulation and “fake” discounts. It also introduced a requirement to inform that the promotion used a mechanism that automatically personalizes prices based on consumer analysis.

Customers must be clearly informed about their consumer rights and have access to contact details of the entity to which they can address in case of a breach of these rights. Online stores are obliged to inform customers whether the seller is a natural person or a legal entity, which aspects of consumer protection apply to each transaction, to what extent the buyer and the seller are responsible for the compliance of the goods with the description, what criteria are used to display search results, and whether the results ranked higher are paid advertisements.

End to Fake Reviews

The directive also introduces a complete ban on the use of fake product reviews. Sellers must ensure that published opinions come from real buyers. It is also prohibited to remove unfavorable comments, claim that reviews have been verified when they have not, transfer opinions from one product to another, and not disclose paid search results.

Online Dispute Resolution

The Omnibus Directive provides for the possibility of resolving disputes online through special internet platforms. These platforms are intended to provide quick and effective resolution of disputes between consumers and sellers.

Consumer as an Active Party

The last, but not least, change is a reminder that the consumer is an active party in the commercial relationship. The directive imposes an obligation on sellers to facilitate consumers in exercising their rights. This means that sellers must provide easy and fast access to information about consumer rights, enable easy withdrawal from contracts, and facilitate the complaint process.

Reasons for Introducing New Regulations

The Omnibus Directive was introduced for several important reasons. One of the main goals of its introduction was to simplify and streamline regulations concerning the internal market of the European Union, which was intended to facilitate business operations in Europe, increase competitiveness in the market, and protect consumer rights.

Another reason for introducing the directive was to adapt European law to the changing digital and technological reality, which was necessary to ensure adequate privacy and copyright protection in the era of the internet.

The European Commission introduced the obligation to inform about the previous price due to the practice of artificially raising prices by entrepreneurs before starting promotions, such as Black Friday or Cyber Monday. According to the EC, such actions constituted unfair practices for customers and required prevention. The introduction of new regulations aimed to give discounts a real dimension and increase consumer protection.

Who Do the New Regulations Apply To?

The new regulations introduced under the Omnibus Directive apply to various entities operating in the internal EU market. Primarily, the regulations apply to entrepreneurs conducting business activities in the EU, including both large and small and medium-sized enterprises.

These regulations also apply to consumers who use services and products offered by entrepreneurs in the internal EU market. The introduction of new regulations aims to provide greater protection for consumers by increasing the transparency of commercial offers, facilitating price and service comparisons, and enhancing consumer awareness of privacy protection and personal data security.

Furthermore, the new regulations also apply to state authorities and other entities operating in the internal EU market, such as non-governmental organizations or media, which are required to adjust their activities to the new requirements.

In What Situations Can the Requirement to Provide the Previous Price Be Waived?

According to the new provisions introduced by the Omnibus Directive, entrepreneurs are required to provide consumers with information about the reduced price of goods or services before making a purchase or entering into a contract. However, there are circumstances in which waiver of this requirement is permissible.

First and foremost, an entrepreneur may waive the requirement to provide the previous price when the price of the goods or services depends on circumstances that are not predetermined, for example, in the case of software development, where the price may change depending on individual needs.

Additionally, an entrepreneur may waive the requirement to provide the previous price when selling goods or services at an auction or through tender.

However, it is worth noting that waiver of the requirement to provide the previous price is permissible only in exceptional circumstances and should always be justified.

How to Announce Price Reductions?

The Omnibus Directive introduced new requirements regarding informing about all price reductions of goods. According to them, entrepreneurs must adhere to certain rules to ensure transparency of commercial offers for consumers.

• Firstly, entrepreneurs must clearly and legibly state the amount of the price reduction in relation to the previous price or the suggested selling price. For example, if the previous price was $100 and the price after the reduction is $80, the entrepreneur must clearly specify that the price has been reduced by 20%.
• Secondly, entrepreneurs must provide the start and end dates of the reduction to give customers a clear picture of how long the offer is valid.
• Thirdly, entrepreneurs must provide a contact number for customer service.
• Finally, entrepreneurs cannot use manipulative techniques aimed at misleading consumers about the actual value of the product or service offered. For example, fictitious previous or suggested prices cannot be used to make the reduction appear larger than it actually is.

Penalties for Failure to Inform about the Previous Price

The new regulations introduce penalties for violating the requirements regarding informing about the prices of goods before a reduction. Entrepreneurs who do not comply with the specified rules may face severe financial penalties.

In the event of a breach of the requirement to provide the previous price, the entrepreneur may be fined up to PLN 20,000. If the entity does not cease this practice within the following months, the penalty may even amount to PLN 40,000. The amount of the fine is determined depending on the nature of the violation, and in its most severe form, it can reach 10% of the turnover from the previous year. Similar consequences will be enforced in the situation where a company announces that it verifies the credibility of comments and reviews when it does not actually do so.

Furthermore, if an entrepreneur uses manipulative techniques or misleads consumers about the actual value of the product or service, it may constitute a violation of the law against collective interests of competition and consumer protection and lead to more serious consequences.

It is important to note that in some countries, regulations regarding penalties for non-compliance with requirements regarding informing about price reductions are strictly enforced. That is why entrepreneurs should comply with them to avoid unnecessary financial penalties and risking their company’s reputation negatively online.

Do you meet the requirements of the Omnibus Directive? How to check?

If you run a business in the e-commerce industry, regardless of whether you are just starting out or already have experience, you need to ensure that your company complies with the new legal requirements. To make sure that all processes in your e-store comply with the regulations, it is worth conducting an internal compliance assessment.

Be sure to check whether the process of managing consumer reviews is in line with the applicable regulations and establish rules for reviewing reviews and include them in the e-store’s terms of use. It is also worth making sure that information about the actual price history is disclosed on every product page, including personalized prices.

If your company sells digital products, do not forget to review and update the e-store’s terms of use to comply with the applicable consumer laws. Also, make sure you are knowledgeable about consumer rights and know how consumers can use them if necessary. Compliance with these requirements is crucial for maintaining customer trust and operating your company lawfully.

Summary

Although these regulations may seem inconvenient from the perspective of an entrepreneur or e-commerce owner, it must be acknowledged that they were necessary. Many companies have been preying on consumers using various manipulative techniques.

However, if we want to maintain a positive company image and retain our customers, as well as avoid penalties, we should adhere to the above principles and also inform customers about their consumer rights.