New amendments to the Finnish Consumer Protection Act
The latest amendments to the Finnish Consumer Protection Act, which entered into force as of 1 January 2022, introduce updated requirements concerning the sale of goods and new provisions concerning digital content and digital services.
The new provisions, arising primarily from harmonized EU-level requirements, i.e. the Sale of Goods Directive and the Digital Content Directive, must now be applied to all new agreements entered into between a consumer and a trader. Although certain provisions have been analogously applied in the past, no particular provisions governing digital content, digital services or digital elements in goods have previously existed under the Finnish Consumer Protection Act (38/1978, CPA)
The Sale of Goods Directive (EU) 2019/771 aims at modernizing and further harmonizing rules on contracts for the sale of goods between traders and consumers. Besides enhancing and specifying certain existing requirements and principles governing the sale of goods, including conformity criteria and remedies for defects, the directive introduces rules that govern goods with digital elements, e.g. applications delivered together with a device.
The Digital Content Directive (EU) 2019/770 introduces new rules on contracts between traders and consumers for the supply of digital content (e.g. software, digital games and e-books) and digital services (e.g. SaaS, cloud services and social media services). The scope covers digital content and services either purchased for money or (as a new aspect) supplied in exchange for the consumer providing non-necessary personal data where certain conditions are met – an example of this could be personal data provided for the purposes of direct marketing.
Extended reverse-burden-of-proof period
Generally, goods must meet the conformity criteria at the time of their delivery. Any defect in the delivered goods which becomes apparent within the so-called reverse-burden-of-proof period thereafter is presumed to have existed at the time of delivery, and thus the trader would be responsible for remedying such defect. This is generally the case unless the presumption is against the nature of the goods or the defect, i.e. where the expected life span of the goods is very short, or where the defect results from normal wear and tear.
As a result of the amendments to the CPA, the reverse-burden-of-proof period available to the consumer is extended from six months to one year. The one-year period applies equally to all goods and digital content and digital services that are supplied to consumers through a single act of supply, subject to certain exceptions. Regarding digital content and services to be delivered through continuous supply, the trader will be held liable for any lack of conformity that occurs and becomes apparent throughout the agreed period of supply.
The extension also has an impact on warranties: as a warranty must be an additional benefit granted to the consumer, there may be a need to extend the duration of one-year warranties in order to comply with the amended provisions.
Clarifications to commercial warranty terms
Although this is already widely standard market practice, under the previous legislation the warranty terms have only been required to be provided in writing upon request by the consumer. As a result of the amendments to the CPA, where a commercial warranty is granted to the consumer, the warranty terms must be given in plain and understandable language in writing, electronically, or in another retainable form at the time the goods are delivered, at the latest.
The amendments also clarify the requirements for the content of the warranty terms, including a requirement to provide details of the steps that the consumer is required to take in order to receive warranty service.
Additionally, if the conditions laid down in the warranty terms are less advantageous to the consumer than those stated in the related marketing materials, the conditions that are more advantageous to the consumer are deemed to be binding. Additional undertakings provided to the consumer for a payment may no longer be referred to as a “warranty”, but have to comply with the legal requirements otherwise laid down for warranties.
Remedies available to the consumer redefined
The consumer’s freedom of choice in the event that a product is deemed defective has been expanded as a result of the amendments, as the consumer will essentially have a right to choose between repairing and replacing a defective product. This is subject to an exemption in cases where the remedy chosen by the consumer would be impossible to effect or would require the trader to incur disproportionate costs. In such case, factors to consider include the significance of the lack of conformity, the value of the product where they meet the conformity criteria, and whether an alternative remedy could be provided without inconvenience to the consumer. Where digital content or services are deemed defective, the consumer may demand that it be redelivered.
Furthermore, as secondary remedies, in the event that a product is deemed defective, the consumer will be entitled to demand a price reduction or termination of the contract and receive a full refund in cases where, for instance, the trader has not been successful in its efforts to repair the product. A degree of flexibility is included in the provisions to allow for the delivery of e.g. expensive or complex products. Other remedies available to the consumer include withholding payment due to lack of conformity and to some extent damages caused by a defect.
In the event that the delivery of the product is delayed, the consumer is entitled to withhold the payment of the purchase price until the agreed delivery takes place. The same applies to digital content or services in the event of delayed delivery. Furthermore, in the case of a delay in the delivery of digital content or services, the consumer has the right to require the trader to perform the contract.
The trader can only be released from its obligation to perform the contract if there is an insurmountable obstacle to performing the contract. If the trader fails to deliver the digital content or services without undue delay, or within an additional period of time expressly agreed by the parties, the consumer is entitled to terminate the contract. However, the consumer is entitled to terminate the contract immediately without an additional period of time where the trader has declared, or it is clear from the circumstances, that the trader will not deliver the digital content or services. In addition, the consumer is, to some extent, entitled to damages caused by the delay in the delivery of a product as well as the delivery of digital content or services.
It should be noted that, in the event that the consumer has exercised their right to terminate the contract, the trader is obligated to ensure that they do not continue using the content provided or created by the consumer while using the digital content or services. The consumer should also be allowed to retrieve such content upon request for a limited time without additional payment.
New conformity criteria
Where the digital element in the goods is essential for the functioning of the goods for their intended purpose, the digital element of the goods will be regulated in accordance with the new provisions included in Chapter 5 of the CPA. The provisions concerning digital content and services are introduced in the new Chapter 5(a) of the CPA. The conformity criteria for digital content and services follows closely the new conformity criteria set for goods (with and without digital elements).
The starting point for evaluating conformity is that the goods must meet the requirements agreed between the trader and the consumer (subjective criteria) as well as otherwise meet the general requirements for similar goods (objective criteria).
This means that, in order to meet the conformity criteria, the goods must have similar qualities and features, such as functionality, compatibility and interoperability, which are standard for goods of the same type and quality and which the consumer can reasonably expect. Digital content and services, as well as digital elements in goods, are required to be delivered in the most recent version available at the time the contract is concluded and they would be required to comply with any trial or preview version made available to the consumer before the contract was concluded.
However, such requirements do not have to be met if the trader has specifically notified the consumer that the trader has not met this requirement and this has been specifically accepted by the consumer at the time the contract is concluded. Thus, the trader’s obligation to inform the consumer of any deviations from the objective criteria is set out specifically in the new legislation.
Trader’s obligation to provide updates
New requirements are imposed on traders regarding the provision of updates. In the case of goods with digital elements, the trader will have to ensure that the consumer is informed of and supplied with updates, including security updates, that are necessary for the goods to meet the objective conformity criteria. Failure to supply such necessary updates for a reasonable period (following the expected life span of the goods) may be considered a lack of conformity, unless agreed otherwise between the parties.
The same applies generally to updates for digital content and services. However, the reasonable period would be assessed based on the type and purpose of the digital content or services as well as on the circumstances and nature of the contract. If the digital content or services are to be supplied under a contract providing for a continuous supply over a period of time, mandatory updates would have to be supplied during the time for which the digital content or services are to be supplied under the contract.
Additionally, a trader is obligated to provide the consumer with updates aiming at enhancing and improving quality to the extent that the provision of such updates has been agreed upon between the trader and the consumer.
The trader’s failure to comply with the obligations would result in a lack of conformity and entitle the consumer to seek the remedies available, unless the consumer has failed to install a necessary update while being aware of the consequences. Thus, the trader’s obligations to provide sufficient information concerning updates as well as to notify the consumer when updates are available are set out in the new provisions.
Conditions for changing digital content and services
As digital content and services are continuously developing, amendments may be beneficial to the consumer under continuous agreements. Finnish law does not require in all circumstances that the consumer provides explicit consent to a change.
In order to make non-mandatory changes which are required for any reason other than e.g. changes in the applicable legislation, the right to unilaterally change the digital content or services must have been agreed upon in the terms. Furthermore, the reason for the change must have been specified in the terms, the change must not result in additional costs to the consumer, and the consumer has to be notified of the change in a clear and understandable manner.
In the event that the change negatively affects the consumer’s ability to access or use the digital content or services, the trader must provide to the consumer (in a retainable form at least 30 days prior to the change taking effect) a clear and understandable notice setting out the details of the change and the consumer’s right to terminate the contract or to continue to use the content/services in the same way as previously.
Article written by Partner Mikael Segercrantz, Associate Kristiina Rove and Associate Trainee Jessika Eikonsalo.