The European Union is pushing ahead with its “New Deal for Consumers”, which aims to strengthen consumer rights. The so-called omnibus directive is intended to increase transparency in online trading and modernize a number of changes. For retailers, this means that they have to adapt their business processes to the regulations, otherwise severe penalties in the form of warnings are threatened.
Omnibus Directive: The most important things at a glance
- Discount promotions: For discounts, the lowest price applied at least 30 days before the promotion must be indicated as the original price.
- The cancellation policy for digital products is undergoing some changes
- Product ratings must indicate whether an authenticity check is taking place. If this is the case, it must also be communicated how this takes place.
- In the event of competition violations, consumers can now also assert claims for damages.
- Online marketplaces must provide information as to whether a product is sold by a private or commercial dealer.
- Online marketplaces must announce key parameters and their weighting for rankings in search results.
- The Omnibus Directive comes into force on May 28th.
What is the Omnibus Policy?
The Omnibus Directive is part of the European Union’s “New Deal for Consumers” and is intended to expand and modernize consumer protection law. It is based on European Directive (EU) 2019/2161, but includes amendments for four other directives: the Unfair Contract Terms Directive (93/13/EEC), the Price Indication Directive (98/6/EC), the Unfair Contract Terms Directive Business Practices (2005/29/EG) and the Consumer Rights Directive (2011/83/EU).
Reading tip: The omnibus directive is not the only change in the law this year. You can read in our blog which new laws are still waiting for retailers in 2022 .
This is changing with the Price Indication Ordinance (PAngV)
The omnibus directive provides for an adjustment to the so-called Price Indication Ordinance (PAngV). This is to be supplemented by a 30-day rule for discount advertising. From May 28, only the price that was considered the lowest price within the last 30 days should be used as the strike-through price for discount campaigns. This is to prevent retailers from increasing the product journey at short notice and discounting the items a short time later, which suggests particularly large savings.
This could make itself felt for companies during a fiscal year. An example:
During the run-up to Christmas , a company sells different types of Christmas chocolate and raises prices a week before the holiday. After Christmas, when the items are no longer in demand, remaining stocks are offered at greatly reduced prices. When the Omnibus Directive came into force, the lower price would have to be used for the strike-through price.
The omnibus policy in connection with dynamic price adjustment
Dynamic price adjustments are not excluded from the provisions of the Omnibus Directive. This means that if you discount an item whose price is constantly changing due to automation with repricing, you must also enter the lowest price in the last 30 days. For this it is important that your repricing tool has a detailed analysis function.
SnapTrade: Dynamic repricing and detailed information
SnapTrade allows you to automatically adjust your prices within defined price ranges. In addition, you always have all the important KPIs at hand, which gives you the opportunity to react to changes in the competition.
Basic price information
The omnibus directive is intended to standardize basic price information. Claims per 100 grams or 100 milliliters are no longer permitted. Instead, nominal volumes of 250 grams or 250 milliliters are given in kilograms or liters.
deposit details
If products are deposit items, the deposit must no longer be included in the total price and must be displayed alongside the non-deposit price.
Information obligation for algorithmic prices
If a price was determined by algorithms that analyze the purchasing behavior of consumers, this must be indicated by the company. The basis for this is (Art. 246a § 1 Para. 1 Sentence 1 No. 6 EGBGB new version).
Changes to the cancellation policy due to the Omnibus Directive
With the Omnibus Directive, a number of regulations on the right of cancellation are changing. Since retailers in e-commerce are obliged to provide information about these, the scope of these innovations is correspondingly large.
The telephone number becomes mandatory
The telephone number must be given in the cancellation policy, this was previously only conditionally so. The basis for this are the design instructions for the cancellation policy in Appendix I of the European Consumer Rights Directive (RL 2011/83/EU). So far it said:
“Include your name, address and, if available , telephone number, fax number and e-mail address.”
The addition “if available” will no longer apply when the Omnibus Directive comes into force, which means that a telephone number is a prerequisite for the cancellation policy.
Note: Specifying a fax number is no longer up-to-date and was therefore removed from the law by the legislature. It therefore no longer has to appear in the cancellation policy.
Changes in withdrawal of digital products
Consumers are also granted a right of withdrawal when purchasing digital products (§ 312g Para. 1 BGB). However, since these are not physical items that can be used or even reproduced by the consumer after receipt and then returned, the right of withdrawal can be excluded prematurely according to the current legal situation. This is possible if customers are aware and aware that the cancellation period will end prematurely. This must be confirmed by the buyer with a checkbox, for example.
From May 28th, a distinction will be made as to whether the buyer pays a purchase price for a product or not. If this is not the case, for example when subscribing to a newsletter, the right of revocation expires automatically upon receipt of the respective content.
However, the requirements increase for articles that are subject to a fee. In addition to the fact that retailers have to inform about the expiry of the right of withdrawal and obtain confirmation from customers, this information must now be stored on a durable medium.
Action against unfair competition
The law against unfair competition (UWG) is also undergoing some changes as part of the omnibus directive.
More transparency in reviews
Product reviews are one of the most important decision criteria when finding a product. In the current legal situation, however, it is difficult to see how the assessments are made and how credible they actually are. The Omnibus Directive is intended to ensure more transparency here. From now on, retailers are obliged to state whether reviews are checked for authenticity or not. If this is the case, information must also be provided on how this test is carried out. By definition, this information is “essential information” within the meaning of Section 5a II UWG. Anyone who withholds essential information from consumers is sometimes threatened with warnings and fines.
Reading tip: Learn how to get more real reviews on Amazon in this blog post.
Consumers can now also make claims for damages
So far, consumers have not been able to assert claims for damages in the event of unfair competition. That is now changing. In order for a right to compensation to exist, the company must intentionally or negligently violate the UWG.
What happens if the Omnibus Directive is violated?
Violations of the omnibus directive can be violations of European law, if several countries are affected, a fine can amount to 4% of the annual turnover and at least 2 million euros if nothing more is known about the turnover. Fines of up to 500,000 euros can be imposed at federal level.
Conclusion
The Omnibus Directive expands and/or modernizes existing consumer protection regulations. Some changes should pose less of a hurdle for companies in e-commerce, for example specifying the fax number is a relic of the past that is no longer up-to-date in online trading. On the other hand, there are regulations that require more transparency and adjustments to existing business processes on the part of the company. For example, in the medium and long term, the new obligation to provide information about reviews will mean that companies that collect reviews also check their authenticity, otherwise this important sales argument loses credibility. In addition, companies will certainly want to avoid the severe penalties imposed by the Omnibus Directive.
