This article was published as part of the Logan & Partners and qLegal series, which showcased practical and helpful insights on a variety of legal topics. qLegal is a pro bono law clinic at Queen Mary University of London that works with entrepreneurs and start-up businesses.
Spain’s Implementation of the Omnibus Directive – Key Things E-commerce Businesses Should Know
In our series on the implementation of the Omnibus Directive in Europe, we highlight how the major EU member states are implenting this New Deal for eConsumers in their national laws and how it will impact you in your online business. The new EU provisions brought by the Omnibus Directive aim to harmonise the protection of consumer rights across the EU, particularly by adapting them to the digital market.
In a previous article, we provided comments on the French implementation of the Directive. Here, we focus on the Omnibus Directive’s implementation in Spain.
Spain implemented the Omnibus Directive provisions into national law through the Royal Decree-Law 24 of 2 November 2021 (the “RD-L 24/2021”). The RD-L 24/2021 introduces different changes in the Consumer Protection Act, the Unfair Competition Act and the Act on Retail Trade. So, to help you prepare for the new regulations, we have put together the main changes that have taken place.
Unfair commercial practices and consumer contracts.
The Omnibus Directive strengthened protection of consumer interests infringed by unfair commercial practices. In the same sense, the newly created provisions of Spanish legislation follow the same approach. Consumers are now provided with a more appropriate level of protection against unfair commercial practices, as follows:
- Consumer reviews: online consumer reviews will only be allowed if done by the consumers who bought or used the services or products in question. E-commerce businesses that use false reviews to boost their business will risk being accused of unfair practices, because the practice will be considered misleading.
- Rankings for online platforms: online businesses must inform customers about any paid ads that may have contributed to a product or service review or rating. Additionally, they must communicate the criteria used to rank the reviews and ratings. This new obligation will affect not only e-commerce businesses, but also search engines platforms where you can search for products and services such as flights, hotels, etc.
- Prohibition of “ticket bots” to buy tickets for resale: if event tickets were bought using specialised software (e.g., through internet bots that may prevent normal purchases by the public), sellers will not be able to resell them. This is now seen as an unfair practise.
- Clarification of product quality: if a product differs significantly in composition or characteristics from a product marketed in another Member State, online businesses will not be able to market those products as identical. This is also considered an unfair practise.
- Identity of online sellers: e-commerce businesses must explicitly display the identity of a seller who offers a good or service online, whether a company or an individual (i.e., a non-trader), according to the seller’s own declaration. They will also need to state the legal consequences and obligations associated with third-party sellers, and whether consumer legislation will be applicable.
Sanctions and consumer remedies in Spain
The RD-L 24/2021 also introduced a new classification of infringements and quantification of penalties. It has established new rules for consumer law infringements, including seriousness levels for the infringements and the related penalties.
Companies can face fines for offences, depending on whether their violation is minor, serious or very serious. To achieve better protection of consumers, sanctions must consider the gravity and nature of the unfair commercial practice, the damage suffered and any other relevant circumstance, such as the trader’s misconduct or a contract’s infringement. The newly created General Register of Consumer Infringements and the relevant Spanish Autonomous Community will issue any other necessary information on sanctions.
The new sanctions are mainly administrative and are as follows:
- From €150 to €10,000, for a minor offense, or 2 to 4 times the illegal gain
- From €10,001 to €1000,000, or 4 to 6 times the illegal gain
- From €1000,001 to €1,000,000, or 6 to 8 times the illegal gain
If the infringement concerns other Member States, the maximum fine would be 4% of the company’s annual turnover in that state. Alternatively, a maximum fine of €2,000,000 can be issued. In Spain, the “Ministry of Consumer Affairs” (Ministerio de Consumo) has the power to enforce such sanctions.
Furthermore, Spanish consumers will now be able to end agreements and claim compensation for 20% of the original price. A price reduction of 10% of the actual price will be available to consumers who face a minor infringement. For offenders, the seriousness of the offence may be scaled down for any of the following conditions:
- The consumer hasn’t yet started legal proceedings;
- The violation has been properly corrected;
- The consumer did not suffer direct damage; and
- The offender voluntarily compensated the consumer for any illicit gain.
All in all, we can see that the RD-L 24/2021 incorporated a series of changes into Spanish law. There are new examples of misleading practices, as well as new obligations and sanctions affecting online platforms that offer products or services to Spanish consumers.
How can Logan & Partners help?
Compliance with the new legislation requires a detailed assessment of the scope of new legislation, and an analysis of the measures put in place by the business in Spain and others EU Member States, if applicable. If you have any questions, please contact us as our e-commerce team can help you with this and other matters.