The Omnibus Directive – Harmonising EU Consumer Rights (Part 2)

The new directive on consumer protection, also known as the “Omnibus Directive”, brings many quality-of-life changes for consumers, alongside several new obligations towards traders and online marketplaces. For the former, the Omnibus Directive expands consumers’ rights further into the digital world, thus ensuring that online customers benefit from similar rights to those purchasing goods or using services offline. In what regards the latter, the new directive introduces additional requirements, amongst others, on transparency, double standards and market manipulation. This article is the second part of our two blog posts, where we explain the main changes brought by the Omnibus Directive, which is going to affect both consumers and traders. In this second part, we shall talk about the other important changes brought by the Directive, including the way it shapes the relationship between the traders and consumers and how it will be enforced, before wrapping things up and showcasing the main implications for traders and online marketplaces alike. Make sure you check out the first part of this article as well, where we break down the Omnibus Directive, by focusing especially on the most impactful changes it brings, e.g., aligning the regime of physical and digital goods & services, limiting traders’ market manipulation, combating double standards between traders’ products and improving transparency for online marketplaces and consumer reviews. Don’t forget to subscribe to our newsletter to stay updated on the latest legal developments. Shaping the relationship between traders and consumers The Directive aims to facilitate better communication between traders and consumers, by allowing more flexible means of communication. Basically, traders can now use means of online communication, as long as those methods guarantee that the consumer can keep a written record (including the date and time) of any correspondence with the trader, on a durable medium, and if they enable quick and efficient communication. Such means could include the typical uses of WhatsApp, Telegram or Facebook Messenger, and can go as far as utilising voice assistants, chatbots and even state of the art AI implementations. Furthermore, the Omnibus Directive also touches upon another critical issue: the legal regime of content which was provided or created by the consumer when using the digital content or service supplied by the trader. The Directive gives the trader limited rights of use of such content, whilst also offering the consumer the right to retrieve that digital content free of charge, without hindrance from the trader, within a reasonable time frame, as well as in a commonly used and machine-readable format. Having said that, the Directive is not entirely doom and gloom for traders, since it also brings some changes that benefit them. For example, where consumers have requested that traders visit their home to perform repair services, the consumers shall lose their right of withdrawal from that specific contract. This applies only in the case of service contracts that place the consumer under an obligation to pay, whereby the performance has begun with the consumer’s prior express consent and only if the repair service has been fully performed. Other important changes for traders & consumers The Omnibus Directive blacklists several other activities that may be detrimental to consumers, in order to ensure that they are well informed when making online purchasing decisions, especially considering the ambit of online reviews and their influence on consumers’ choices. These activities include:

► reselling events tickets to consumers, in cases where the trader acquired them by using automated means to circumvent any limit imposed on the number of tickets that a person can buy or other rules applicable to purchasing tickets;

► providing search results without clearly disclosing any paid advertisements or payments, specifically for achieving a higher ranking of products within the search results;

► submitting or commissioning another person (be it legal or natural) to submit false consumer reviews or endorsements, as well as misrepresenting consumer reviews or social endorsements, in order to promote products.

Lastly, the Directive allows the Member States to have stricter provisions for the benefit of consumers, such as restricting aggressive or misleading marketing or selling practices, in the context of (i) unsolicited visits by a trader to a consumer’s home or (ii) excursions organised by a trader in order to promote or sell its products to consumers. Enforcement The Omnibus Directive adopts GDPR-like penalties, albeit in a distinct manner. Unlike the GDPR, where fines go up as high as EUR 20 million or 4% of the infringing entity’s total worldwide annual turnover, the fines under the Omnibus Directive are up to 4% of the trader’s annual turnover in the Member State(s) where the infringement took place. Should the information on the trader’s turnover be unavailable, then the trader may be sanctioned with a fine up to EUR 2 million. However, Member States can opt for even harsher fines, since the Directive only requires that the maximum amount of the fines be at least 4% of the annual turnover generated in the concerned Member State(s). Thus, depending on the specifics of each case, the fines imposed under the Omnibus Directive can be substantial, even when compared to the ones under the GDPR. As regards the imposition of penalties, the national authorities must take into account, inter alia, the following aspects:

► the nature, gravity, scale and duration of the infringement;

► any mitigating or aggravating factors;

► the trader’s past behaviour;

► the financial by-products of the trader’s activity (e., financial benefits gained or losses avoided).

Not least, consumers that are harmed by unfair commercial practices can now claim compensation for damage, receive price reductions or terminate the contract. Previously, only national authorities had the power to combat unfair commercial practices, so these changes are welcome and will certainly ease the local authorities’ job, as well as empower consumers to seek relief without being held in check by bureaucracy. A New Chapter in the EU Consumer Protection Framework Under the Omnibus Directive, traders and, to a lesser extent, online marketplaces, will have additional homework to do in order to become compliant with this new piece of legislation. Their workload shall get even more difficult, since the Directive, unlike a regulation (such as the GDPR), requires each Member State to implement it into its national law. Add the leeway Member States have at their disposal when transposing the Directive, and it is easy to see why traders and online marketplaces will struggle to find a panacea covering their entire business across the EU:

► Traders will have to adapt their standard policies and terms & conditions to fit the specifics of each market, to ensure that none of their clauses would be regarded as unfair. This becomes even more glaring for those traders providing “free” digital services in exchange for personal data, who will have to ensure their users are informed about their rights as consumers;

► Online marketplaces are not left out either, since they also fall under the Directive. As detailed above, marketplaces will have to inform consumers about the status of the traders using their platform (e., legal entity or private individual). This means additional work pertaining to diligence, such as maintaining up-to-date databases with accurate information of all the traders using their platform, as well as updating their terms & conditions accordingly.

The potential “final blow” for both traders and online marketplaces may actually be the consumers’ new-found personal means of redress for breaches of their rights, which shall allow consumers to claim compensation for damage, receive price reductions and even terminate contracts in case traders infringe their obligations. Be that as it may, the Omnibus Directive should be gladly received, since it is truly refreshing the existing EU Consumer Protection Framework, empowering consumers and striking a better, if not fine, balance between their rights and traders’ obligations.