Amendments to strengthen the level of consumer protection and enforcement of consumer rights
In the Government Bill HE 14/2022 vp. (link below), the Finnish government has proposed amendments to the Finnish Consumer Protection Act (38/1978) and the Finnish Act on Certain Competencies of the Consumer Protection Authorities (566/2020). The amendments, which have now been approved by the parliament, will take effect as of 1 January 2023 in order to allow companies to prepare for the new requirements.
The aim of the amendments is to implement the so-called Omnibus Directive (2019/2161/EU) as regards the better enforcement and modernization of EU consumer protection rules. By way of the Omnibus Directive, four EU-level instruments have been amended in the area of consumer protection law, namely:
- Directive (93/13/EEC) on unfair terms in consumer contracts;
- Directive (98/6/EC) on consumer protection in the indication of the prices of products offered to consumers;
- Directive (2005/29/EC) concerning unfair business-to-consumer commercial practices in the internal market (Unfair Business Practices Directive); and
- Directive (2011/83/EU) on consumer rights.
Further, the amendments introduce certain national provisions aimed at improving the level of protection for consumers in connection with telephone and home sales. We have highlighted below some of the changes introduced by the proposed amendments.
New provisions concerning online marketplaces
An ‘online marketplace’ means a service using software (including a website, part of a website or an application) operated by or on behalf of a trader which allows consumers to conclude distance contracts with other traders or consumers. Thus, the requirements concerning online marketplaces have a fairly broad area of application.
When products are offered to consumers in online marketplaces, consumers may not clearly understand who their contractual partners are and how their rights and obligations are affected. Providers of online marketplaces are therefore obligated to inform consumers whether the third party offering the product is a trader or a non-trader. When the third party is a non-trader, providers of online marketplaces should provide a short statement to the effect that the consumer rights stemming from consumer protection law do not apply to the contract concluded. Furthermore, consumers should be informed of how obligations related to the contract are divided between third parties and providers of online marketplaces.
In addition, traders enabling consumers to search for goods or services, such as travel, accommodation and leisure activities, as well as financing services offered by different traders or by consumers, should inform consumers about the main parameters determining the ranking of offers presented to the consumer as a result of the search query and their relative importance as opposed to other parameters. Such information should be directly available on the page outlining the search results. However, traders will not be required to disclose the details of how their ranking mechanisms work, e.g., algorithms. The requirement would not apply to searches of a single trader’s goods and services, e.g., those provided by the provider of the search functionality.
New obligations regarding consumer reviews
The proposed amendments introduce a requirement for traders to inform consumers whether processes are in place to ensure that the published reviews originate from consumers who have actually used or purchased the goods or services, and, if so, traders should provide information on how the validations are conducted. In practice, the validation could be conducted by, e.g., only enabling consumers who have purchased the goods or services to submit a review through a link to the online review form sent via email.
Trader’s information requirements regarding price reductions
When announcing a discount or a price reduction, the trader must indicate the lowest earlier price applied to the goods or services in question during the 30-day period prior to the application of the price reduction. If the price has been subject to a discount during these 30 days and subsequently been increased, such discounted price must be indicated as the lowest prior price. This requirement applies to all indications of a discount or price reduction, whether the discount is indicated in, e.g., euros or as a percentage, verbally or numerically.
As an exception, where the maximum period of the discount campaign is 60 days and the discount gradually becomes greater during the campaign, the trader may inform the customer of the lowest price at which the product has been available during the period of 30 days before the first discount. In addition, the requirement to indicate the lowest prior price does not apply to highly perishable foods, i.e., foods that become unsaleable within 30 days from harvesting, production or processing.
Furthermore, regarding pricing in general, the trader must clearly inform the consumer prior to concluding a contract if the price presented to them is personalized on the basis of an automated decision.
Remedies available to the consumer and administrative sanctions imposed on the trader
The consumer has the right to claim damages and a price reduction in the event that the trader has willfully or negligently breached their obligations under Chapter 2 of the Consumer Protection Act, which are based on the Unfair Business Practices Directive, e.g., where the trader has used unfair, misleading or aggressive business practices. In addition, it should be kept in mind that the parties to a contract are entitled to cancel the agreement based on general contractual legal provisions and principles.
Furthermore, the powers of the Consumer Ombudsman to propose an administrative penalty payment to be imposed on the trader are extended. According to the proposal, this sanction could also be applied in instances where the trader continues to engage in a practice that has been deemed unfair or a contract term that has been deemed unreasonable and which a court or the Consumer Ombudsman has prohibited. Additionally, the sanction could be applied in relation to other practices that are contrary to the new provisions introduced in the Consumer Protection Act based on the Omnibus Directive, including the requirements regarding providing information on price reductions as indicated above.
Introducing a written confirmation procedure in telephone sales
In addition to the amendments arising from the Omnibus Directive, the amendments introduce a written confirmation procedure in order to improve the level of consumer protection in telephone sales. After concluding a telephone call, a trader must deliver to the consumer a written (or in another retainable format) copy of the offer that they presented in the telephone call. In the event that the consumer does not accept the offer as stipulated after the telephone call, the offer will generally not be deemed binding on the consumer.
The requirement to apply the written confirmation procedure will apply to all products within the scope of Chapter 6 of the Consumer Protection Act on distance sales. As an exception, the requirement will not apply to communication services agreements and consumer credit agreements, which are subject to specific regulations.
In addition to the above, the amendments introduce further noteworthy changes, including obligations for the trader to provide additional information to the consumer prior to concluding a contract in distance sales, as well as certain changes relating to the consumer’s cancellation rights.
It should additionally be noted that the implementing provision relating to the Consumer Protection Act will be amended so that Chapter 5(a) of the Consumer Protection Act will also be applied, with certain exceptions, to contracts concerning the provision of digital content and services concluded prior to 1 January 2022 when the digital content or service is provided to a consumer after the effective date of the proposed amendments.
We continue to monitor the legislative process in relation to the proposed amendments along with further developments in the area of consumer protection law. For further background on these topics, please see our previously published articles on the strengthening of the Finnish consumer protection authorities’ powers (9 July 2020) and the amendments to the Finnish Consumer Protection Act that took effect as of 1 January 2022 (10 January 2022).
*Government Bill HE 14/2022 vp.