Retail and Consumer Goods04.11.2021 Newsletter

Modernisation of consumer protection: obligations to provide information, fines and damages

Driven by digitisation, consumer protection is currently being modernised: in August 2021, two further new legislative amendments were promulgated. These will come into force on 28 May 2022. Previously, in June 2021, amendments were promulgated, which particularly affected purchase law.

Below, we explain the impact the new legislative amendments will have on traders and what preparatory steps they can already take.

Stricter obligations to inform consumers

First of all, the amendments will have an effect on the contract law provisions of the German Civil Code (Bürgerliches Gesetzbuch - BGB) and the Introductory Act to the German Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuch - EGBGB) and, secondly, on the competition law provisions of the German Unfair Competition Act (Gesetz gegen den unlauteren Wettbewerb - UWG).

In future, traders will be under stricter obligations to inform consumers. New information obligations are being introduced to this end. With regard to the ranking of goods, services or digital content presented to consumers in response to their search queries on online marketplaces, for example, the operators of such online marketplaces will have to inform consumers of the main parameters used to determine the ranking and the relative weighting of the main parameters.

In future, violations of these requirements will constitute an administrative offence that is punishable by a fine of up to 50,000 euros. Violations of duties to inform and other forms of conduct, in particular, are risky. This includes, for example, the use of invalid general terms and conditions.

Large fines for unfair commercial practices

In future, fines will also be imposed under the UWG for infringements of consumer interests through unfair commercial practices. This is the case, for example, if a trader uses inadmissible misleading “bargain” offers or makes untrue statements in connection with the use of quality labels.

A so-called unfairness offence is being newly introduced in connection with the so-called dual qualityof products, which has increasingly become a topic of discussion: it is considered misleading if a product is marketed as if it were identical to a product that has been made available on the market in other Member States but is actually substantially different in its composition. The differences must be clearly visible to the consumer. It is not deemed misleading if the deviations are justified by objective and legitimate factors.

Individual damage claim possible

Another reason for caution is the consumer's newly introduced individual damage claim: in future, a consumer will be able to claim damages if a trader acts unfairly or unreasonably harasses a consumer and, as a result, the consumer reaches a commercial decision.

Background to the legislative amendment

The reason for the enactment of the two laws is the European Directive on Better Enforcement and Modernisation of Consumer Protection Rules, the so-called Omnibus Directive. This Directive provides for numerous amendments to various other directives for protecting consumers. Member States must transpose the Omnibus Directive by adopting national legislation by 28 November 2021. These laws must be applied from 28 May 2022 onwards.

The Omnibus Directive is part of the "New Deal for Consumers", a proposal by the European Commission for restructuring the regulatory framework conditions for consumers. The proposal consists in particular of two proposed directives, which have become known as the Omnibus Directive and the Representative Action Directive. The aim of restructuring the framework is to enforce existing consumer rights in the Member States more effectively. This is to be achieved, among other things, by means of comprehensive obligations to provide information, dissuasive sanction options and comprehensive reimbursement claims of consumers.

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