Consumers often rely on online reviews to decide what bike to buy, where to eat or what article to read. But what if those reviews are fake? New Dutch rules were announced on 23 October 2020 seeking to ensure a higher level of consumer protection online. These rules mean more obligations for online traders, and potentially high fines if they get it wrong. For example, traders should implement procedures to ensure that published reviews originate from consumers who have genuinely used the product.
EU Directive 2019/2161 seeks to modernise EU consumer rules with a view to the emergence of the digital economy (see our previous blog). The Dutch Ministry of Economic affairs has now published the draft rules to implement this directive in the Netherlands.
The new rules implement EU Directive 2019/2161 and will be enforced from 28 May 2022 onwards. Time for online traders to check whether their current sales practices are in line with the upcoming rules or need further tweaking.
The draft legislation imposes a number of obligations on online platforms and other online businesses to ensure the protection of consumers’ rights. In addition, businesses are affirmatively required to provide various disclosures and information to consumers. The new rules include:
- an obligation to inform consumers about the most important parameters used to determine the ranking of products on a platform;
- an obligation to inform consumers whether a trader has paid an online platform to increase the trader’s ranking in search results;
- a requirement to disclose to consumers (before conclusion of the contract) whether the offer is personalised based on an algorithm (such as offering a higher price if a consumer visits a website from an expensive smartphone);
- a duty to show the lowest price over the preceding thirty days, if a product is discounted;
- online marketplaces must provide information on whether the supplier is a trader or a private individual, with a warning that EU consumer rules may not apply where relevant;
- several longstanding consumer rules – such as the right of withdrawal for distance contracts – will now also apply to ‘free’ online services which require the consumer to provide personal data to a trader (such some social media networks).
Businesses will now also be obliged to take reasonable steps to ensure that a consumer has actually bought or used a product before it posts a review. Failing to do so could be considered an unfair trading practice. Fighting fake reviews has been a focus point for the Dutch competition authority (ACM) in the past.
Although the new rules will not be enforced before May 2022, they fit within a clear trend to enhance consumer protection online and to step up overall enforcement of consumer rules. The new rules will be enforced by the ACM and the Dutch financial authority (AFM) with maximum fines ranging up to 10% of a company’s total turnover. All the more reason for online traders to carefully check whether their current sales practices are in line with the upcoming rules or need further tweaking.
This article was published in the Competition Newsletter of November 2020. Other articles in this newsletter: