Towards a Digital Single Market: Amendments to Consumer Protection Act in 2022
The Consumer Protection Act is set to see many amendments in the coming year. Some of the amendments are due to the national transposition of the EU’s Sale of Goods Directive (2019/771). Amendments are also being made to the Consumer Protection Act due to the Digital Content Directive (2019/770). These two directives are based on the EU’s Digital Single Market Strategy. One of the main goals of the strategy is to give consumers and businesses better access to online goods and services in Europe.
A government proposal (HE 180/2021) for amendments to the Consumer Protection Act was given to Parliament in October 2021. The amendments are scheduled to enter into force on 1 January 2022. This bulletin looks at the amendments arising from the Sale of Goods Directive.
From Sale of Consumer Goods to Sale of Goods
The transposition of the Sale of Goods Directive requires amendments to chapter 5 of the Consumer Protection Act with respect to the sale of consumers goods, particularly to the provisions concerning the characteristics and defects of goods as well as the sanctions for defects. At the same time the title of the chapter will be changed from ‘Sale of consumer goods’ to ‘Sale of goods’.
As things currently stand, the main reforms to the sale of goods will be the following:
- Goods with digital elements will fall under the sale of goods provisions if the absence of the digital element would prevent the goods from performing their functions.
- The characteristics of non-defective goods will be set forth in more detail. Besides goods having to be as agreed, they will also need to fulfil the objective requirements set for goods.
- In order to ensure that goods with digital elements are non-defective, companies must, in principle, guarantee the supply of necessary security and other updates to consumers for a set period.
- The ‘as is’ clause will consigned to history, as the defectiveness of used goods will be assessed on the same grounds as new goods.
- The trader’s burden of proof for defectiveness will increase from the current six months to one year, in other words a defect will be assumed to have existed when the good was delivered to the buyer if it appears within one year from the delivery, unless this assumption is incompatible, for example, with the nature of the defect or the goods.
- By default, consumers will, in principle, have the freedom to choose whether they want a defective product repaired or wish it to be replaced with a new, non-defective product. Despite the fact that EU law already have earlier highlighted the freedom of consumers to choose between repair and replacement, the state of national law has not reflected this.
- Furthermore, consumers will, in principle, have the right to demand a price reduction or terminate the contract regardless of the company having attempted to remedy the defective product. The goal is to prevent repeated repair and replacement cycles of products.
- The provisions on guarantees will in future also be applicable, with certain restrictions, to undertakings comparable to a guarantee given to consumers at additional cost. However, such undertakings cannot be called guarantees.
- In future, guarantees must always be given in writing or in some other durable manner. Currently, doing so is only necessary at the request of the consumer.
Position of Consumers Strengthened, More Care Required of Companies
The reforms have been presented as improving the ability of companies to sell and consumers to buy goods across borders between EU and EEA countries. However, the positive impacts on cross-border trade are undermined by the fact that both directives ultimately allow a great deal of latitude on the national level, and only some of the provisions are harmonised.
In the sale of goods, the position of consumers in relation to seller companies will improve, at least to some extent, and companies may correspondingly be held responsible for defective goods more often. The more uniform sale of goods provisions that have been proposed will be particularly significant to companies engaging in e-commerce. In particular, the new provisions concerning the sale of goods with digital elements will require companies to exercise care.
It would be wise for companies to start reviewing their terms and conditions and guarantee terms in light of the new legislation if they have not already done so. For instance, the longer defect assumption period means that companies will no longer be able to offer consumers one-year guarantees as such, because a guarantee must provide genuine added value to consumers.