THE NEW CZECH CONSUMER PROTECTION LEGISLATION – part one

As of 6^th January 2023, the new legislation on consumer protection introduced by the Act No. 374/2022 Coll. amending to the Act No. 634/1992 Coll., on Consumer Protection, and Act No. 89/2012 Coll., the Civil Code, has become effective.

The amendment is intended primarily to increase the protection of consumer rights, in particular by expanding the list of prohibited unfair commercial practices, by imposing additional obligations on entrepreneurs, and by introducing the possibility of administrative punishment of entrepreneurs in the case of a breach of the obligations set out in the Civil Code.

The amendment is based on EU regulations and transposes into the Czech legal system:

• Directive (EU) 2019/2161 of the European Parliament and of the Council of 27 November 2019 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU of the European Parliament and of the Council as regards better enforcement and modernisation of Union consumer protection legislation (the "Modernisation Directive");
• Directive (EU) 2019/770 of the European Parliament and of the Council of 20 May 2019 on certain aspects of contracts for the supply of digital content and digital services (the “Digital Content Directive”); and
• Directive (EU) 2019/771 of the European Parliament and of the Council of 20 May 2019 on certain aspects of contracts for the sale of goods, amending Regulation (EU) 2017/2394 and Directive 2009/22/EC and repealing Directive 1999/44/EC (the “Sale of Goods Directive”).

Amendment to the Consumer Protection Act

The amendment to the Consumer Protection Act introduces some new definitions, in particular:

• an online marketplace, which means a service enabling a consumer to conclude a contract with a seller or another person by distance using software including a website, part of a website or an application operated by or on behalf of an entrepreneur other than the seller; and
• an online marketplace provider, which is an entrepreneur who enables a consumer to use an online marketplace;
• marketing of 'dual quality' products, defined as any marketing of a product as identical to a product marketed in at least two other EU Member States, even though such a product has substantially different composition or characteristics, unless justified by legitimate and objective facts. This newly defined unfair commercial practice is prohibited.

The list of information that is considered essential when offering products or services on online marketplaces is also expanded. If an online marketplace provider fails to provide this information to the consumer, it is also committing a prohibited unfair commercial practice. In particular:

• information about whether or not the third party offering the product or service is the seller.
• where the provider of an online marketplace provides an internet search service which, on the basis of a consumer's query in the form of a keyword, phrase or other input, makes it possible to search for products and services offered by different sellers or other persons, it must also provide general information on the main parameters determining the ranking of the offers generated on the basis of the consumer's query and on their relative weight compared to other parameters.

The new rules will also apply to so-called consumer reviews. Where a seller provides access to a review of products or services by another consumer, information on whether and how the seller ensures that the published consumer review comes from a consumer who has actually used or purchased the product or service is also considered to be essential information.

New consumer rights. Consumers, whose rights have been affected by an unfair commercial practice, will have a new right in addition to the existing claims under the Civil Code (e.g. assessment of the validity of a legal act, claim for unjust enrichment, etc.):

• in principle to withdraw from the contract within 90 days of the date of conclusion of the contract, or
• to demand a reasonable reduction in price according to the nature and gravity of the unfair commercial practice.

A new obligation for the seller to refrain from using abusive terms in contracts concluded with consumers is also introduced. This applies to clauses that were not individually agreed, i.e. the consumer could not influence their content. Unless the contrary is proven, the arrangement is deemed not to have been individually negotiated and the burden of proof is placed on the seller by the new legislation.

According to the new regulation, sellers who offer products at a discount will be obliged to include in the information about the discount also information about the lowest price at which the seller offered and sold the product, namely in the last 30 days prior to the discount offer. The obligation to inform about the discount in this way will apply to all sales methods, i.e. both sellers in stores and sellers offering products via the internet or other means of distance communication. However, it will not apply to perishable products or products with a short shelf life.

A very important change is the extension of the competence of supervisory bodies, in particular the Czech Trade Inspection Authority, to control compliance with the obligations set out in the Civil Code. Specifically, this will include, for example:

• the obligation to provide pre-contractual information, always with regard to the manner of conclusion of the contract.

The Consumer Protection Act thus newly prohibits acting of the seller that is contrary to certain provisions of the Civil Code. Such acting may be qualified as an administrative offence, which will be punishable by a fine of up to 5 million CZK. In certain cases of large-scale infringements or infringements with a EU dimension, a fine of up to 4% of the seller's total annual turnover may be imposed. If information on the seller's annual turnover is not available, a fine of up to 50 million CZK may be imposed.