Lockdowns induced by COVID-19 have accelerated the consumer trend away from the physical high street to online marketplaces across Europe. With this acceleration, it is timely for retailers to recall that the Directive on Better Enforcement and Modernisation of EU Consumer Protection must be implemented by November 28, 2020.
The Directive introduces key online consumer protection measures, intended to apply on a platform neutral basis, and contains three key elements likely to impact on the fashion retailers’ day-to-day activities:
For every price reduction claim, retailers will have to display (as the reference price) the lowest price applied within a period of at least 30 days preceding the price reduction announcement to that product. This requirement will likely be of particular importance when planning major promotions around key sales dates in the retail calendar like Black Friday, Cyber Monday and Boxing Day.
Consumer reviews are a useful tool in building trust and reputation. Under the Directive, online retailers will only be permitted to claim that reviews were submitted by consumers if they take “reasonable and proportionate” steps to validate the relevant reviewee, such as by ensuring that only consumers who purchased or used the good(s) or service(s) submit a review.
Personalized pricing and ranking
Consumers must be informed each time the price presented to them online is based on an algorithm which takes into account their personal consumer behavior, so they are aware of the risk that the retail price was “artificially” increased. Additionally, retailers will also have to inform consumers of the main criteria (and relative importance placed on that factor) which determines the ranking of offers provided in response to a search query.
The Directive provides national authorities with autonomy to implement a number of enforcement measures which will provide consumers with a consistent minimum standard of protection/redress throughout the EU.
The headline here: national authorities must have the ability to impose fines for “widespread” breaches of consumer law of at least 4% of a trader’s annual turnover (or up to EUR2 million when turnover information is unavailable).
A note on Brexit: As at the date of writing, the UK has been supportive of the implementation of the Directive and it is conceivable that the UK could enshrine the new rules in its local law even if it leaves the EU in a no-deal scenario.