Key changes for e-commerce platforms operating in the EU
On 7 January 2020, the European Commission adopted the “Omnibus Directive” (Directive(EU) 2019/2161, the “Regulation”), which must be implemented by Member States as of 28 May 2022. The regulation package amends existing European Union (EU) directives and is part of the so-called “New Deal for Consumers”, an EU-wide initiative aimed at modernizing consumer laws and protecting online consumers.
EU and non-EU-based online platforms offering products, services, or digital content to consumers must comply with the new requirements. With approximately 7,000 online platforms falling into the scope of the Regulation (1), the rules are expected to have a major impact on the online platform economy in the EU and worldwide.
The set of rules outlined is wide-ranging, but in this article, we summarise four key changes that e-commerce businesses should be aware of.
1) Increased transparency
Online marketplaces are now subject to greater transparency requirements, including clearer information about discounts and reduced prices. For example, if your e-commerce platform offers sales, such as Black Friday or Christmas deals, you will need to inform consumers about the previous price listed for sale within the past 30 days.
2) Dual quality products
Your e-commerce business cannot market a product as being identical to the same product marketed in different Member States, when in fact they have distinctive components or characteristics(i.e.dual quality products). If that is the case, consumers must be adequately informed that the products are different, as this practice can be potentially misleading.
3) Wider consumer protection concerning digital products
The Regulation expands the scope of consumer protection to include digital goods, services, and content. Information on these digital products will also have to be clearer, including the absence or presence of technical restrictions. The new provisions apply even when a consumer pays for a service with personal data, e.g. when users give their data in exchange of a “free” service.
4) Increased enforcement powers
Stiff new GDPR like penalties have been introduced. E-commerce businesses can now be fined up to 4% of their annual turnover in the relevant Member State (or €2m if a calculation is not possible). Member States can also introduce higher fines. What steps should e-commerce businesses take? As the Member States’ deadline approaches, to avoid sanctions, e-commerce platforms must familiarise themselves with the new rules and ensure that all its activities (including its website, policies and terms and conditions) are carried out in compliance with all the legal requirements.