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Consumer and advertising law in 2023: What's on the horizon?
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Consumer and advertising law in 2023: What's on the horizon?
Overview
Last year marked a number of significant legal developments for the protection of consumers, both nationally and at an EU level. The headline development was the enactment of the long awaited Consumer Rights Act, 2022 (see our previous publication here). This has substantially strengthened consumer rights, protection and remedies across a number of key areas. Consumers will also benefit from greater price transparency following the introduction in November 2022 of the Price Indication (Amendment) Regulations, 2022, which require very specific information to be provided when promoting price reductions.
In 2023, attention now shifts to the enforcement of these rights, with a number of areas of focus emerging. In this piece, we assess the regulatory landscape ahead for consumer-facing businesses, including:
A continued spotlight on influencers by the Competition and Consumer Protection Commission (the CCPC) and the Advertising Standards Authority of Ireland (the ASAI).
Expected regulatory focus on the advertising of price reduction claims.
A movement towards enforcement by the CCPC's P2B (`Platform to Business') Unit, which was established to ensure compliance by online platforms with new EU rules introduced in July 2020 on how they must treat small businesses who use their services to offer goods and services to consumers.
Increased focus on the protection of consumers' rights in the digital sphere, including most recently EU-wide targeted `sweeps' to identify `dark patterns'.
The law is also not standing still. In parallel with increased enforcement of consumer protection law, there is also a continued focus at EU level on reforming and strengthening consumer law with a number of key legislative proposals expected to be advanced in 2023.
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Consumer and advertising law in 2023: What's on the horizon?
1. Continued regulatory spotlight on influencers
In line with the international focus on influencers and potentially misleading content in social media advertising, the CCPC has undertaken a market research project to develop a comprehensive understanding of the key issues in this sector in advance of forthcoming changes in the European digital market (i.e. the Digital Services Act), the Irish advertising landscape (i.e. the establishment of a new Media Commission) and consumer protection law (i.e. the Consumer Rights Act, 2022).
In December 2022, the CCPC published the output of this research a 78 page report entitled `Online Behaviour, Influencer Marketing'. The report followed extensive engagement with social media platforms, the ASAI, the Broadcasting Authority of Ireland, and Media Literacy Ireland
Many of the key findings (such as the fact that only 10% of consumers said they trust the information provided by social media
influencers) will not come as a particular surprise either to advertisers or consumers. However, the recommendations made to tackle these issues are interesting. The CCPC recognises that the regulation of influencer marketing requires a `hybrid approach', encompassing a range of measures. These include:
Strengthened guidance the CCPC has indicated that it will work with the ASAI to deliver joint guidance in areas such as labelling, own-brand products and reposts. We expect that this will build on the ASAI's existing Guidance Note on the recognisability of influencer marketing communications published in February 2021 (see our previous bulletin here).
Further education and engagement the CCPC intends to write to agents representing influencers and brands to make them aware of the updated guidance once published, the objective being to ensure they understand their legal obligations as it relates to `paid for' social media content. The ASAI will also work with relevant educational institutions to ensure that their material is included on courses.
Increased role of social media platforms the CCPC has indicated that it has obtained commitments from a number of large social media platforms to build upon existing educational content around branded content, and the risks of hidden and misleading advertising. It has said it will be seeking similar commitments from others, and will also be seeking to ensure that the Digital Services Act can be used as an effective tool for monitoring and reporting hidden and misleading ads. The CCPC will also be monitoring `branded content' policies to ensure they contain clear disclosure requirements in line with developments in legislation and guidance. Separately, the ASAI will also be engaging with platforms to explore the possibility of supporting a `name and shame' list for non-compliant influencers.
Enforcement through new and existing mechanisms the CCPC has indicated that they will continue to work with the ASAI to drive better compliance, and use intervention powers where it is considered a `proportionate response'. In particular, it has signalled that if its enforcement powers are ineffective in
tackling issues with influencer advertising, it may advocate for administrative powers to impose fines for national breaches of consumer law.
Separately, the ASAI has turned its focus to AI-based monitoring technology to support its existing complaints system and enforcement activities. On 1 March 2023, it announced that, as part of a broader EU initiative co-ordinated by the European Advertising Standards Authority, it will be using a new AI tool to evaluate activity by social media influencers and to assess if they are correctly disclosing commercial content.
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Consumer and advertising law in 2023: What's on the horizon?
2. Expected regulatory focus on advertising price reductions
The Price Indication (Amendment) Regulations, 2022 introduce new requirements whereby retailers must provide specific information when promoting price reductions for individual products. In particular, they are now specifically required to include the `prior price'. The Regulations don't apply to general price reduction promotional statements (e.g. 20% off everything), long term price arrangements or personalised price reductions.
To assist businesses in the practical application of the new regulations, the CCPC published `Price Reduction Business Guidelines' in November 2022. The key points to note are as follows:
`Prior price' This is the lowest price the product was sold at in the last 30 days before the price reduction (even if there have been price fluctuations up and down during this period). It must be included
in any promotional statement about the price reduction of a specific product.
Calculating price reductions the reduction calculation must be based on the `prior price'. For example, in calculating a percentage discount, a business should compare the difference between the `prior price' and the reduced price.
Clear and easy to read the price reduction must be presented in an unambiguous, clear and legible manner, and the specific product that is the subject of the promotion should be easily identifiable to a consumer.
Record-keeping records should be maintained to ensure that a business can substantiate price promotions, for example, data on the `prior price' and the reduction calculation.
The CCPC has strongly signalled that it will be monitoring compliance with the regulations and investigating suspected breaches. The penalties available include `fixed payment notices', an enforcement tool which the CCPC has frequently deployed as regards breaches of other pricing related regulations.
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Consumer and advertising law in 2023: What's on the horizon?
3. Ramping up of CCPC `P2B Unit'
In 2021, the CCPC established a new `P2B unit', aimed at increasing compliance with the Platform to Business Regulation, 2019. This EU legislation, which is directly applicable in Member States, sets out rules on how online platforms must treat small businesses who use their services to offer goods and services to consumers. For example, the online platform's T&Cs must be easily accessible to business users and be written in plain and intelligible language. If the platform wishes to change their T&Cs, they must provide business users with 15 days' notice.
In 2022, the CCPC engaged extensively with over 170 businesses and 23 online platforms regarding the application of the P2B Regulation. Of the businesses which were surveyed, two-thirds reported experiencing difficulties when offering goods or services to consumers through online platforms. Common issues included unnoticed changes to terms and conditions, difficulty in lodging and resolving complaints, and a lack of information on differential treatment.
In January 2023, the CCPC stated that they would use the output of the engagement to identify future areas of focus, would continue to monitor the correct application of the P2B Regulation and take enforcement action where necessary.
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Consumer and advertising law in 2023: What's on the horizon?
4. Targeted regulatory `sweeps' to identify breaches of consumer law
As part of EU's `Consumer Protection Cooperation Network' a network of national consumer regulators across the EU that coordinates enforcement activities under the Consumer Protection Cooperation Regulation (EC) 2006/2004 the CCPC has participated in a number of EU-wide `sweeps'. The `sweeps' are intended to investigate areas of regulatory focus where it is assessed that there are compliance and consumer protection issues across a number of jurisdictions.
The latest such `sweep', announced in January of this year, was targeted at consumer-facing websites available across the EU where it is perceived there is a risk of digital practices being used that unfairly influence or manipulate consumer decisionmaking such practices have come to be
known as `dark patterns'. The specific types of practices which were targeted were hiding of information relevant to decisionmaking, fake countdowns and websites whose design was intended to pressure consumers into concluding purchase contracts and subscriptions.
Almost 400 websites were reviewed as part of the EU wide sweep including traders engaged in selling clothing, electronic goods, cosmetics, and food. At an EU level, almost 40% of websites being found to have used manipulative practices to exploit consumers' weaknesses and enforcement action is expected at a national level to tackle these identified breaches. For Ireland, the CCPC concluded that, of the Irish traders reviewed, no clear infringements were identified. However, the CCPC warned that online traders will be continuously monitored to ensure they adhere to consumer law so this is certainly an area to watch.
5. Enhanced focus on the role of platforms and marketplaces in the protection of consumer rights
Another area to watch is the recent uptick in regulatory scrutiny of compliance by online platforms with consumer law by the CPC Network. A number of `dialogues' have resulted in online platforms providing commitments to introduce changes to their products or services to align with the requirements of EU consumer protection legislation in recent years.
These commitments are subject to ongoing monitoring, with the CPC Network indicating that `national authorities will monitor and enforce compliance where concerns remain'.
Separately, the Court of Justice of the European Union has also been active with regard to the liability of online platforms in
recently finding an online marketplace liable for third party trademark infringement. The decision was partially reached on the basis that an average consumer may believe that the platform was acting on its own behalf, and not necessarily on behalf of a third party. The approach to liability adopted by the Court resembles the liability distribution provisions for online marketplaces contained in Digital Services Act which starts to come into effect from 18 June 2023 onwards.
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Consumer and advertising law in 2023: What's on the horizon?
6. Further legislative change following Commission `fitness check' and public consultation?
As noted above, the law is not standing still with further planned enhancements to consumer protection law.
In May 2022, the EU Commission announced that it was conducting a `fitness check' (evaluation) on whether the existing directives which deal with unfair commercial practices (Unfair Commercial Practices Directive 2005/29/EC), pre-contract information provisions to consumers (Consumer Rights Directive 2011/83/EU), and unfair terms in consumer contracts (Unfair Contract Terms Directive 93/13/ EEC), ensure a high level of protection in the digital environment.
As part of the `fitness check', on 28 November 2022, the Commission launched a public consultation to gather stakeholder views on whether the Directives should be amended to provider better protection to consumers online including by:
Avoiding `dark patterns' being digital practices that unfairly influence consumer decision-making.
Providing an easily understandable summary of the key terms.
Sending reminders of automatic renewals, providing easy means of cancellation, not requiring the submission of payment details for a free trial and requiring express consent to a switch from a free trial to a paid service.
Giving consumers the explicit option to receive non-personalised advertising and prices.
Allowing consumers to set limits on the amount of time and money they want to spend using digital services.
Giving consumers the right to speak to a human instead of a chatbot when making a complaint.
The public consultation closed on 20 February 2023 with the summary report just published stating that over 350 responses and 71 position papers were received from government, businesses, and consumer organisations across the EU. A report from external consultants is also anticipated. The Commission has indicated that the results of the fitness check and the responses to the public consultation could lead to a new legislative proposal, to measures to improve implementation through better enforcement and guidance or further monitoring. The indicative date for any proposed outcome, once all of this information has been analysed, is the first quarter of 2024.
7. Broader consumer protection focused developments
The EU is also active on a number of other legislative fronts with regard to enhancing consumer protection for example, the proposed Green Claims Directive, aimed at tackling `greenwashing' claims (which you can read more about here), the General Product Safety Regulation (see here) and the proposal for legislation to be introduce an out-of-court dispute resolution mechanism for consumers to resolve disputes with traders in the digital market and it is clear that this is an agenda item that will continue to feature heavily in the years to come.
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Consumer and advertising law in 2023: What's on the horizon?
Conclusion
Overall, 2022 was a bumper year for consumer protection law developments. That trend is set to continue into 2023 where we expect to see increased enforcement activity both at a domestic and EU level. Together with the new availability of expanded GDPRstyle fines for EU wide breaches of consumer protection law following the implementation of the Omnibus Directive by the Consumer Rights Act, 2022 last year, these developments underscore the vital importance of consumer protection law compliance for all businesses.
Ireland is also in the process of transposing the Collective Redress Directive which will allow Irish consumers to bring collective actions against businesses for breaches of consumer protection law for the very first time. This will mark a watershed moment in Irish law (for more information on this, please see our most recent article).
For more information or advice on any of these issues, please contact Katie O'Connor, Partner, Mairad O'Brien, Senior Associate, Denise Daly Byrne, Senior Associate, Rebecca O'Brien, Solicitor, Orla Clayton, Knowledge Consultant, or your usual contact in ALG's Disputes & Investigations group.
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Key contacts
Katie O'Connor
Partner +353 1 649 2591 [email protected]
Mairad O'Brien
Senior Associate +353 1 649 2045 [email protected]
Denise Daly Byrne
Senior Associate +353 1 649 2124 [email protected]
Orla Clayton
Knowledge Consultant +353 1 649 2485 [email protected]
Resources
Consumer Rights Act 2022 is signed into law
CCPC influencer marketing research Social media advertising and marketing when to #hashtag and when not to? Price reductions
Unsubstantiated green claims will no longer wash
One step closer: Reform of European product safety laws progresses
Ireland publishes Bill to implement Collective Redress Directive
READ MORE READ MORE READ MORE READ MORE READ MORE READ MORE READ MORE
A&L Goodbody LLP 2023. The contents of this document are limited to general information and not detailed analysis of law or legal advice and are not intended to address specific legal queries arising in any particular set of circumstances.
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