New year started with a bang. The world of European e-commerce was flooded with new pieces of information – sadly, often mixed with disinformation – concerning the changes introduced to the EU regulations.
However, one is known for sure, the main purpose of the Omnibus Directive is to prevent artificial price gouging and fake reviews.
From this article, you will learn what changes you have to introduce in 2023 to keep running your ecommerce store and developing your online business without risking legal implications. We’re also going to give you a few pieces of proven information – yes, we’ve verified it! – and tips on how to obey the new law.
Truth be told – the more customer-friendly your store is, the better for you!
The Omnibus Directive – When It Comes into Effect & What You Need to Know about It
One of the most important purposes of Omnibus is to counteract and prevent fake price reductions. What is the fake price reduction in plain English? It happens when the cost of a product is raised for a short period of time, to later be reduced to provide the customers with a false impression of a bargain.
The directive was enacted already on November 27th, 2019, and from that day it’s been protecting consumer rights.
Technicality – this is what we’re talking about!
The Omnibus Directive is:
Directive 98/6/EC of the European Parliament and of the Council of 16 February 1998 on consumer protection in the indication of the prices of products offered to consumers.
When Is Omnibus Coming into Force?
The European Union directive Omnibus was introduced on January 7th, 2020, meaning it’s been applicable for almost two years now. All members of the European Union were obligated to adopt the provisions necessary to comply with this directive by November 28th, 2021, which in turn were meant to be fully applicable from May 28th, 2022.
However, some Member Countries postponed the introduction of the new law till January 1st, 2023.
Who the New Rules of Omnibus Directive Apply to?
The new legislation applies solely to the sellers who are a party in the agreement between a consumer but aren’t a middleman. That’s why the new legislation doesn’t apply to places like trading platforms and price comparison websites, as well as the natural person who trades their products online.
It’s also worth noting that platforms that work as a middleman between a seller and a buyer, and who sell products on behalf of another business entity also fall under the new regulation.
What Regulations Are Introduced by the New Law?
1. Obligation to Provide Information on the Price Reduction
Due to the introduction of new regulations, each online store is obligated to provide information on the lowest price of an item that was available for the last 30 days prior to offering a discount.
In the case of a product that has been available for purchase for less than 30 days, you are obliged to provide the information on the lowest price that was applicable from the day the product was available.
What is the purpose of the new law?
To prevent creating fake bargain offers to boost sales through unclear pricing rules. As a customer, you probably face this problem on a daily basis, especially in highly competitive industries, e.g. electronics, as well as during Holiday Season or Black Week.
New regulations oblige online stores to show both the current and the lowest price that the item could have been bought in the last 30 days. One of the reasons for enacting the Omnibus Directive is to prevent dishonest price manipulation by increasing the price right before introducing a planned discount to distort the size of the factual bargain.
Tip: If the change in the product cost isn’t related to the planned price reduction, if there are other reasons for increasing the prices (e.g. inflation), then you don’t have to provide your customers with the product’s price history.
- personalized discounts (e.g. special deals for members of loyalty programs)
- upselling activities (e.g. two for one)
- soon-to-expire products (e.g. food products)
2. Preventing Fake Customer Reviews
That is, the obligation for the entrepreneur to prove if and how they ensure that the reviews published on their website are written by the consumers who actually purchased and used the product.
This amendment is strictly connected with the ban on publishing fake reviews (sadly, the practice of commissioning fake reviews is common). This law also applies to the practice of deleting negative reviews – despite being genuine and confirmed by the purchase ratings – that don’t present the store or manufacturer in good light.
How can you introduce such changes to your online store?
For example, you may allow adding comments and reviews only to registered users – which seems to be the easiest option. By doing so, you can verify whether a person posting a review is your customer and whether they bought the reviewed product.
Also, the entrepreneur is able to moderate the comments to prevent spam. However, hiding or deleting negative comments remains illegal.
As an ecommerce online store owner you’re obliged to demonstrate whether – and how – you make sure the reviews published on your website are verified.
3. Changes to Terms and Conditions
After the Omnibus Directive entered into force, you need to make sure that the Terms and Conditions published on your website are updated, and that the information provided in the document is valid. Fortunately, this process isn’t complex, yet it’s obligatory.
In connection with the new rules, the Terms and Conditions should include:
- phone number to contact the customer service
- updated limitations of seller’s liability
- conditions of selling digital content
4. Changes to Selling Digital Products
This one is very important. The law on selling digital products – and digital content in general – has never been as straightforward and clear as it’s now. Nowadays, a buyer loses the statutory right to withdraw from the contract upon performing contractual obligations – in this case, upon receiving the digital content.
However, it has to be noted that two conditions must be met to make this law applicable:
- prior to making the purchase the consumer must be informed that they lose the right to withdraw from the contract upon receiving the digital product (and that the customer confirmed they were informed about it).
- the seller confirmed (and provided the consumer with the confirmation) that the consumer agreed to get the digital product delivered, and accepted the fact they lost the right to withdraw from the contract.
5. Obligation to Include a Contact Phone Number to the Store on the Website
Apart from providing the physical and email addresses of your company, now you must also provide consumers with a phone number. This way a customer is able to contact customer service in case of returns, complaints, or questions regarding the status of the order. The contact phone number should be included in two places: in the Terms and Conditions, and on the website, e.g. in the footer or the Contact tab.
Please notice that the contact number for the store must be active. You are obliged to let your customers contact you whenever they have doubts or questions.
6. Obligation to Inform the Customer about Personalized Pricing
What is this Omnibus Directive section about?
It concerns pricing that is set for each customer individually with the use of the algorithms. The consumer must be notified that the price for an item has been personalized.
It’s worth noting that displaying information on personalized pricing may be perceived as good news – some people favor content personalization. However, other people may not be happy finding out that the online store they’re visiting uses such a practice. That being said, be sure to politely inform your customers about customizing prices.
7. Obligation to Inform the Customer about Personal Data Processing
In 2023 you also have an obligation to inform your visitors about data processing: when a prospect is on your website, their personal data is used in exchange for certain benefits. For instance, when a customer subscribes to the newsletter to receive a discount code, you are obliged to inform them you will use their email address in the future for marketing purposes (e.g. sending information on new discounts).
8. Obligation to Inform the Customer Whether the Seller Is a Trader or a Private Person
Another regulation concerns sales platforms, also known as marketplaces, like eBay or Amazon. According to the information provided in Omnibus Directive, marketplace platforms must provide information on whether the seller is a trader (hence being a seller in the legal sense) or a private individual.
This information is important for the customers due to the differences between the purchasing processes and various customer protection conditions. To illustrate, when buying goods from a trader, the customer may invoke the provisions of the Consumer Rights Act, which isn’t an option when buying items from a private person.
Truth be told, that is good news for you – the e-commerce store owner. Having such a notification displayed somewhere on your website earns you greater customer trust.
9. Obligation to Disclose Paid Advertising
In short, from now on consumers must be informed when the product positioning (e.g. sponsored ads) is used on a sales platform. This means that if you pay a marketplace to display your products above your competitors, the platform is obliged to notify the customer about it.
Similarly, as an e-commerce store owner, you must clearly inform your visitors about product positioning, providing that you adopt this practice in your store.
10. Obligation to Inform Customers about Dual Quality Products
The last point of the Omnibus Directive concerns the issue of dual-quality products. Simply put, this amendment was introduced to prevent dishonest traders from selling a product of a similar yet different characteristic than the advertised product.
Truth be told, using dishonest practices to trick a customer is never a wise strategy.
What Happens If You Fail to Comply with the New Omnibus Directive Regulations? Financial Penalty
The Omnibus Directive clearly defines the financial penalties that apply in case of failure to fulfill obligations by online store owners.
It’s worth adding that repeated violations result in increased penalties.
- Without prejudice to paragraph 2 of this Article, Member States shall ensure that, when penalties are to be imposed in accordance with Article 21 of Regulation (EU) 2017/2394, they include the possibility either to impose fines through administrative procedures or to initiate legal proceedings for the imposition of fines, or both, the maximum amount of such fines being at least 4 % of the seller’s or supplier’s annual turnover in the Member State or Member States concerned.
- For cases where a fine is to be imposed in accordance with paragraph 4, but information on the seller’s or supplier’s annual turnover is not available, Member States shall introduce the possibility to impose fines, the maximum amount of which shall be at least EUR 2 million.