On November 27, 2019, the European Union adopted the Modernization Directive. The directive aims to modernize European consumer law and better protect consumers in the digital domain. In addition to obligations for (online) traders, the directive also has a number of new information obligations for online marketplaces. In this blog, Jesse Vermeij of SOLV Advocaten discusses some of these obligations.
Online marketplaces are popular with consumers because they bring together a large and diverse range of products and services in an orderly fashion. However, in their role as (neutral) intermediaries, online marketplaces can often evade applicable consumer laws.
With the modernization directive, some of this is going to change.
To do so, the provider of an online marketplace must first fall under the legal definition. The outdated definition of an "online marketplace" has therefore been revised and made more technologically neutral. An online marketplace now no longer refers exclusively to "a website," but to:
"a service that uses software, including a website, part of a website or an application operated by or on behalf of the merchant, in accordance with the term online interface."
The scope of the definition has thus broadened considerably.
Sales platforms, including Marktplaats and EBay, only display the offerings of third-party sellers. Web stores such as Amazon, Bol.com and AliExpress, on the other hand, offer their own assortment in addition to a sales platform where third-party sellers can sell their products. This sometimes leads to consumer confusion: Did he buy the product from Bol.com or from another seller? This is a relevant question if, for example, the consumer wants to return the product within the legal cooling-off period.
To prevent this, the new directive requires the online marketplace to inform consumers in a "comprehensible and clear manner" about the identity of the seller: Is this the online store itself, a third-party merchant or another consumer. In the case of a consumer, the online marketplace will also have to inform that the additional consumer protection does not apply in that relationship(Consumer-to-Consumer). Thus, an appeal to the statutory cooling-off period is then not possible.
Information about the seller's identity may not be tucked away in the general terms and conditions, but must be apparent from the actual offer. Failure to comply with this obligation to provide information now qualifies as a misleading commercial practice and is therefore unlawful. However, the online platform may rely on the information provided by the third party. If this third party indicates that he is a seller, the online platform does not have to verify this.
The new directive also requires the online marketplace provider to provide information about the ranking of search results in a "clear and understandable way. This will give consumers a better understanding of why they see certain commercial offers.
Specifically, the provider must inform consumers about the main parameters that determine the ranking in a search. The relative importance of these parameters compared to other parameters must also be described. However, this information obligation again does not extend to the extent that the provider must disclose its algorithm. Furthermore, the description need not refer to each individual search query separately. A general description of the parameters that can be easily found via the web page/application is sufficient. This disclosure obligation already applied under the P2B Regulation to platforms in relation to their business providers, but not yet in relation to consumers.
Finally, the nature of sponsored listings must be directly visible with the relevant search result. This can be done, for example, through a text bar with "Spon."
The European legislator further signaled that product reviews have a great deal of influence on consumers' purchasing decisions. When using consumer reviews, the provider must now inform whether it verifies that the published reviews come from consumers who have used or purchased the products. If so, the platform must also provide information about the control mechanisms and the way the reviews are processed.
Finally, the directive also prohibits online marketplaces from sharing false consumer reviews and recommendations. As an example, the European legislator mentions the posting of "likes" on social media. In the Netherlands, by the way, the Authority Consumer & Market (ACM) already acts against false consumer reviews. In January, the ACM imposed a penalty of up to €100,000 on a webshop run by a well-known influencer for using fake likes and fake followers on social media.
In the Netherlands, the implementation bill has already been published and submitted for consultation. The bill is expected to be adopted sometime in the third quarter of 2021. European member states have until Nov. 28, 2021, to transpose the directive into national law. As of May 28, 2022, the legislation will actually have to be applied within the European Union.
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