In context

Dutch regulator guidelines on online consumer protection – what these mean in practice

June 16, 2020
-
In context

The Netherlands Authority for Consumers & Markets (ACM) has published guidelines on the protection of online consumers. The aim is for businesses and traders to have the necessary clarity on the legal aspects of doing business online. The guidelines explain how the ACM interprets European and Dutch consumer laws, and they aim to clarify where persuasion – which is permitted – turns into deception, which is prohibited. Tobias Cohen Jehoram and Koen Orbons discussed the relevance of the guidelines and other social media and e-commerce topics at a recent Master Class.

 

The ACM’s guidelines are particularly relevant during the COVID-19-pandemic, with commercial activity shifting increasingly to an online environment. By carefully considering the ACM’s interpretation, businesses and traders can identify how best to protect the interests of consumers in the online marketplace and act in conformity with the law, avoiding liability claims in the process.

Background

The guidelines follow specific requests for clarification from a number of e-commerce companies and traders, and the ACM’s own observation that there was legal uncertainty on consumer protection in the online market. The guidelines explain how the ACM interprets the Unfair Commercial Practices Directive and other consumer laws. These laws intend to allow consumers to make an informed decision when entering into a contract or making an online purchase. This allows them to “trust” and stimulate trade in the Dutch online environment. The ACM has noticed that consumers use different rules of thumb when making an online purchase. Consequently, online traders may knowingly or unknowingly do things to influence consumers. For example, by suggesting that a product is in demand, since consumers are more likely to buy products that others are also buying.

 

Legal context

The ACM primarily explains how it interprets the existing rules set out in the Unfair Commercial Practices Directive. This directive contains many open norms and is supposed to be applied broadly, leaving significant room for the interpretation of certain rules and standards. In that sense, the guidelines are a welcome addition to the legal framework.

According to the directive, an unfair commercial practice can occur when:

  1. it is contrary to the requirements of professional diligence, and
  2. it materially distorts, or is likely to materially distort, the economic behaviour with regard to the product of the average consumer whom it reaches or to whom it is addressed, or of the average member of the group when a commercial practice is directed to a particular group of consumers.

 

Unfair commercial practices entail wrongful conduct, for which damages could be claimed under tort. In addition to a number of general rules and standards, the directive also contains two “blacklists”, which consist of “aggressive” and “misleading” commercial practice that is always considered unfair. We discuss a number of these blacklisted practices and the ACM’s clarification below.

 

Price indications

The ACM considers that it is key to disclose to the consumer all relevant aspects that eventually make up the total price. Price indications should therefore always mention:

  • booking costs when purchasing a ticket or hotel; or
  • additional costs as set out in legislation.

 

This also applies to “free” products, because the corresponding commercial use of data might be a relevant aspect that should be disclosed. In the ACM’s view, the absence of disclosure regarding the commercial intentions of a trader might sometimes lead to an unfair commercial practice.

 

Personalisation

Businesses and traders collect and track consumer data more than ever, especially online. In the ACM’s view, this collection and tracking creates possibilities and responsibilities. Online players may not use the data gathered to abuse the vulnerabilities of consumers or of specific groups of consumers (such as senior citizens or children). Consequently, the ACM encourages online businesses and traders to be transparent about how they handle data and how they utilise this data to personalise certain offers.

 

Illusion of shortages

Another commercial strategy that the ACM has looked at is the pressure that is placed on consumers when businesses and traders emphasise or create the illusion of a shortage. By mentioning that there is only a limited amount of a certain product left, consumers feel pressured into buying the product. This may hinder the consumer in making an informed decision, as the consumer might feel that there was no time, for example, to compare the product to other products on the market. The ACM emphasises that, as a rule, businesses and traders must be truthful when mentioning the limited availability of products and may not distribute false information, or unnecessarily pressure the consumer in any other way. This means that if a product is advertised as being in short supply (“only two items left”, “last day of the discount!”), this must really be the case. Acting untruthfully carries the risk of being an unfair commercial practice.

 

Product reviews

Consumers use different rules of thumb when making an online purchase. For example, many consumers are heavily influenced by the behaviour of others. As a result, online players look to the reviews or testimonials by other buyers of the product in question. The ACM emphasises that online players may not post fake reviews, or publish reviews paid for by the business or trader. Reviews must also be presented in a fair manner; for example, a company may not list all the negative reviews after the positive reviews. Finally, the business or trader must be honest and transparent, and inform consumers about the methodology used to collect and present reviews.

 

Default settings and hidden info

In the ACM’s view, businesses and traders that are active online should ensure that the standard settings on a website or platform are set up in the most favourable way for the consumer. The ACM might consider a commercial practice unfair in this regard when the default settings are unfavourable to the consumer, or when important information regarding the trader, the product or the transaction are hidden or hard to access. Furthermore, optional additional products or services may not be added to a purchase by default. Instead, the ACM requires that there be an active opt-in system to help consumer decision making for additional services or products when making a purchase.

 

Presentations and rankings

A business or trader can significantly influence a consumer’s decision by the way it ranks products or services after a search. Possible examples of unfair commercial practices in this context include the blocking or hiding of search results, not adhering to the filtering options the consumer applied to the search, or presenting certain products in a non-attractive manner (by differentiating in font, colour or images), thereby putting other products at a disadvantage. The ACM also highlights the potential danger of paid ranking. According to the ACM, even when disclosed to the consumer, a ranking based on an agreement between the trader or platform and the initial seller of the product, might entail an unfair commercial practice.

 

Conclusion

The ACM’s guidelines provide businesses and traders with helpful insight into the manner in which the ACM interprets and intends to enforce the Unfair Commercial Practices Directive, and consumer law in general. A significant number of online trading aspects as outlined above may seem obvious, or may raise questions about how the guideline’s apply to specific cases. To view the guidelines, click here (Dutch only).

 

For more information or questions on how the guidelines or consumer laws might apply to a specific case or situation, contact one of our experts.

 

Fields of expertise

We keep track of you on our site with cookies, in order to offer the basic functionality of the website and generate user statistics on an anonymous basis to make our website more user-friendly. We do not use or share your data with third parties for advertising purposes.