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A New Layer of Protection for Consumers?

A New Layer of Protection for Consumers?

Czech Republic
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Once the amendment to the Czech Consumer Protection Act becomes effective, consumer protection rules shall have to start being reflected in the digital world. If the amending legislation is passed in its current draft form, consumer protection rules shall also apply to the offering and provision of digital content and services, even if the consumers "pays" for them with their personal data. Violations of the new obligations shall be punishable by a fine of up to CZK 50.000.000 or 4% of the trader’s annual turnover. The amendment implements the requirements set by EU law.

Other new provisions address the misleading presentation of products in the online space. When searching for specific aspects (such as product type and features), it shall not be possible to display advertised products or services first. Such can only appear if they are clearly identified as a paid search result. As a result, if you search for a red table, for example, if the trader has paid for it to appear on the first page of the search results, the result will have to be marked as an advertisement.

In general, it should become standard to share with the consumer the parameters on the basis of which their search results were ranked, including the importance of such parameters. This regulation is aimed at typical scenarios in which the trader has paid the provider of the online search functionality for a top ranking of a product within the search results, even though the product or service does not meet the specified conditions. Not only a direct financial transaction is considered payment in this case, but any other financial benefit, such as a larger commission on the transaction, is considered payment as well.

Another new feature is the regulation of the use of misleading reviews. The trader will have to ensure that the reviews come from customers who have actually purchased the product or service. Similarly, the new regulation also addresses price reductions. Information regarding price reductions must include the lowest price of the product in the thirty days prior to the application of the price reduction.

If a consumer's right is violated or even threatened by an unfair commercial practice, the consumer shall have access to compensation for damage. An unfair commercial practice may be, for example, conduct containing materially incorrect or false information without which the consumer would not have purchased the goods or services in question.

The amended regulation shall also regulate much more strictly what clauses are prohibited in consumer contracts and shall provide a specific list of such prohibited clauses in its annex. For example, clauses that impose disproportionate penalties for breach of obligations, allow the trader to withdraw from the contract without reason even though the consumer is not allowed to do the same, or allow the trader to determine when performance is in accordance with the contract, shall be prohibited.

European legislation requires that sufficiently dissuasive penalties be imposed for breaches of the obligations imposed by this regulation. The fine for a breach could be up to 4% of the trader's annual turnover or up to CZK 50.000.000 if the turnover cannot be determined.

The newly transposed European regulations reflect the desire to improve the position of consumers in the online world, as the level of consumer protection in the online environment should be the same as the level of consumer protection in reality. The government's proposal to amend the consumer protection rules is currently awaiting its first reading in the Chamber of Deputies. Although the approval of the proposal by the end of the parliamentary term (by October 2021) is uncertain, it is a matter of transposing European legislation and for this reason the changes will be adopted sooner or later in a similar wording.

 

By Miroslav Dubovsky, Partner, Jan Metelka, Associate, DLA Piper

Czech Republic Knowledge Partner

PRK Partners, one of the leading Central European law firms, has been helping clients achieve their business objectives almost 30 years. Our team of lawyers, based in our Prague, Ostrava, and Bratislava offices, has a unique knowledge of Czech and Slovak law and of the business environment. Our lawyers studied at top law schools in the United States, United Kingdom, Switzerland and elsewhere. They also have experience working for leading international and domestic law firms in a number of jurisdictions. We speak your language, too. Our legal team is fluent in more than 15 languages, including all the key languages of the region.

PRK Partners has one of the most experienced legal teams on the market. We are consistently rated as one of the leading law firms in the region. We have received many significant honours and awards for our work. We represent the interests of international clients operating in the Czech Republic in an efficient way, combining local knowledge with an understanding of their global requirements in a business-friendly approach. We are one of the largest law firms in the Czech Republic and Slovakia. Our specialised teams of lawyers and tax advisors advise major global corporations as well as local companies. We provide comprehensive legal advice drawing on our profound knowledge of local law and markets.

Our legal advice delivers tangible results – as proven by our strong track record. We are the only Czech member firm of Lex Mundi, the world's leading network of independent law firms. As one of the leading law firms in the region, we have received many national and international awards, in some cases several years in a row. Honours include the Chambers Europe Award for Excellence, The Lawyer and Czech and Slovak Law Firm of the Year. Thanks to our close cooperation with leading international law firms and strong local players, we can serve clients in multiple jurisdictions around the globe. Our strong network means that we can meet your needs, wherever you do business.

PRK Partners has been repeatedly voted among the most socially responsible firms in the category of small and mid-sized firms and was awarded the bronze certificate at the annual TOP Responsible Firm of the Year Awards.

Our work is not only “business”: we have participated on a longstanding basis in a wide variety of pro bono projects and supported our partners from the non-profit sector (Kaplicky Centre Endowment Fund, Tereza Maxová Foundation, Czech Donors Forum, etc.).

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