New rules for online sales

Do you own an online shop, run an online sales platform, or sell goods via social media? There are new rules that will affect you. From May 2022, you have a duty to disclose information about your reviews, prices, offers, and ‘free’ digital services. Read here how you can prepare your business for the 6 upcoming changes.

There will be new rules because there is a new European Directive for consumer protection. Based on this, the Ministry of Economic Affairs and Climate Policy made a draft proposal for online shops and platforms. On 28 November 2021, this draft proposal will be adopted as a law. The law will become effective on 28 May 2022.

Vincent Romviel, legal expert and policy advisor of the e-retailer advocacy group Thuiswinkel.org, is pleased with the new directive. “The rules in the directive address the new digital developments. They ensure that the same rules apply to all entrepreneurs active on the European market. They also improve online consumer protection and increase consumer trust in online shopping.”

So why wait until May 2022 to comply with the new rules? Get a head start. Set up your online store or marketplace with these new rules in mind now, and you will distinguish yourself from your competitors in a positive way. After all, your customers benefit from this new law, as they will know much more about the way you operate.

Online shop reviews

Do you show reviews for the products in your online shop, on your online platform, or on social media? If so, you must add the following information as of 28 May 2022:

  1. How you verify that these reviews are from customers who have actually bought and used that item. You can do this by checking suspicious patterns, such as many reviews for a specific product in a short period of time, or product reviews displaying identical texts.
  2. Whether or not you process all the positive and negative reviews about products.
  3. Whether or not you have sponsors or pay for reviews.

On social media it is now also illegal to show fake consumer reviews, such as posting Likes or having other people post Likes.

Consumers rely on reviews and recommendations. This more extensive information requirement ensures that customers can determine better and more fairly if the reviews are genuine and make an informed decision to buy or not to buy.

Romviel: “Entrepreneurs who are affiliated with review organisations such as Kiyoh or Trustmaster can comply with the new information requirement regarding reviews by simply mentioning on their website how these review organisations handle reviews. If you are not affiliated to such an organisation, you must prepare your own statement and stick to it. The time and costs involved will probably not be too high.”

Personalised recommendations

Do you give your customers personalised recommendations for products or services? For example, automated recommendations that are based on recent searches, purchase history, place of residence, or any other characteristic of your customer that is known to you. If so, you must notify your customer before they buy something. You can use a pop-up or place an announcement on the payment page.

With this information, customers can decide to check whether your recommendation is actually interesting. They can search for a provider who does not have their details or does not use their personal details for this purpose, and compare prices.

Discounts

Amazing discounts! Priced down from Y to X! There will also be new rules for these 2 well-known ways to advertise discounts. As of next year, it is illegal to take a ‘random’ price as a starting point for discounts. If you advertise priced down discounts, you must use the lowest price you charged for that item at least 30 days before the discount action. You are, however, allowed to show your discount price compared to the price of your competitor or compared to the recommended retail price of a specific product.

‘Free’ online services

Do you offer ‘free’ online services? That is, services for which your customers do not pay but must give their personal data. Then you must give information about how long they are bound to the digital service and how they can unsubscribe. Under the new rules, customers have the right to unsubscribe without reason from the free digital service within 14 days. Do they unsubscribe? Then you – as the provider of a digital service – must stop processing their data and delete it.

Online marketplaces

Do you own an online marketplace? In this case, your customers can buy products or services from you or from entrepreneurs or other customers who offer their products or services on your marketplace. Under the new rules, you must inform your customers about who they are dealing with directly. They must have this information before they buy something. Additionally, you must specify if they are dealing with a business or with a private individual and what the terms of agreement are. State this information in plain language on your payment page. Trying to hide this information in, for example, your general terms and conditions is not allowed.

You not only have a duty to disclose information, but also a duty to investigate. As an online marketplace owner you must ask the third-party seller in advance for information about their legal status (business or consumer). You must also ask anyone selling products and services on your marketplace for their terms and conditions.

If you allow others to offer products or services through your online shop, you are considered an online marketplace, and the rules mentioned above shall apply to you as well.

Comparison websites

If you provide online search functions, such as a website where you compare energy providers, travels, hotels, or other products or services, you must also comply with a more extensive information requirement. You must inform your customers in advance about the factors that determine the outcome (ranking) of a search query. You do not have to disclose your search algorithms. You must, however, let your customers know how the search result came about. An example: if companies pay for a high ranking in the search results, you must be transparent about this. You give this information to every visitor, on the page where you present the search results, regardless of whether they buy something from you.

Enforcement and sanctions

If you do not comply with the new rules, the Netherlands Authority for Consumers and Markets (ACM) and the Dutch Authority for the Financial Markets (AFM) will consider this unfair commercial practices. In which case, they are going to enforce the law. They will specifically focus on the nature, size, severity, duration, and frequency of the offence. The ACM and AFM can impose fines or give offenders a term in which they need to resolve the unfair situation. The fines can run up to 4% of your annual turnover or up to a maximum fine of 2 million euros. If the offence occurs more often, the percentage can accumulate to 10% of your annual turnover.

“We expect that the enforcement of the new rules by ACM and AFM will mostly be prompted by tip-offs from customers”, says Romviel.

Support

Do you have questions about the new rules and can you not find the information you need? Please contact the KVK advice team. Together we can take a look at your specific situation, find the help you need, and give further advice on this subject.

Stay informed on the latest news on the laws and regulations that apply to you: rules and laws for entrepreneurs.

InfoPage