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EU Omnibus Legislation Pricing Compliance Source

On May 28, 2022, the Omnibus European Legislation about Prices and Promotions came into force, and as of that date, it is now necessary to demonstrate that "any announcement of a price reduction shall indicate the prior price applied by the trader for a determined period of time -- no shorter than 30 days -- prior to the application of the price reduction."
Written by
Josselin Liebe
Published on
May 30, 2023
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25
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On May 28, 2022, the Omnibus European Legislation about Prices and Promotions came into force, and as of that date, it is now necessary to demonstrate that

Any announcement of a price reduction shall indicate the prior price applied by the trader for a determined period of time -- no shorter than 30 days -- prior to the application of the price reduction.

The Omnibus Directive of the EU is a series of rules that, among other things, tries to guarantee that shoppers are given accurate and fair pricing information. By making it simpler to evaluate various offers, particularly discounted versus non-discounted pricing, and make sure you're receiving value for your money when buying, the directive is intended to protect the interests of consumers. In this post, we'll examine how these regulations impact companies that use price reductions in their advertising, such as discounts, savings, or offers.

A System That Automatically Gathers Pricing Documentation

It can be challenging to show that the starting price of each product on promotion was charged more than 30 days ago if your business operates an e-commerce site and sells thousands, or even millions, of products annually.

In addition, it can be more difficult to confirm that your suppliers and partners have implemented the starting pricing outside of promotional periods if you are a reseller with an affiliate business model.

By constantly extracting data from your own website or, with their prior consent, from those of your partners, our web scraping tool piloterr.com can assist you in creating a database that will allow you to track the evolution of the prices of your products, including the initial price affected by promotions.

It is essential to highlight two significant aspects of this database in the event of control by the pertinent authorities about pricing compliance:

  • Immutability : The data was not altered or "forged" after it was scraped, and the prices that were retrieved during this extraction were those that were available on the day that was specified in the database.
  • Authenticity : the data was legitimately collected from the database-referenced website.

The subsequent actions need to be taken in order to carry out this price verification:

  • Extract the total cost of prices charged for each product on a regular basis. Using the tools from piloterr.com, this is possible.
  • The logs should also be saved with the extraction data on a "Write Once, Read Many" (WORM) server.
  • To demonstrate the validity of the information and the effort put forth to implement a data extraction technology, keep the history of revisions made by the operators that configured the extraction robots.
  • Use a time-stamping mechanism, such as the one the APP (Agency for the Protection of Programs) has suggested. The logs are converted into a "hash" at the conclusion of each scraping process. This "hash" is a distinct signature created by a hashing technique and is saved in the APP servers. You only need to check your computed hash and the one stored by the APP if an authority requires you to demonstrate immutability, or that the extracted data have not been modified. Only one character needs to be altered for the two hashes to differ.

What Results From Disobeying The Omnibus Directive?

With the threat of significant fines, the Omnibus Directive places requirements on businesses. A comparable system of sanctions is laid down in the Omnibus Directive as the GDPR. If available, fines for violations of the Directive are capped at 4% of a company's annual revenue in these nations or €2 million in cases where this cannot be determined. When putting the Directive into practice, Member States are free to enact their own stricter penalties.

The following factors will be taken into account when determining the penalty:

  • The type, gravity, scope, and length of the violation ;
  • If any steps have been taken to lessen the effects of harm ;
  • Any prior infractions, including fines in other nations of the European Union ;
  • Any gains or costs to the seller's bottom line that may have resulted from violations of consumer laws ;
  • If the trader has ever been the subject of any prior accusations ;

EU Omnibus Directive's Effect On Consumers

The EU Omnibus Directive has given consumers new rights and safeguards when making online purchases of digital goods and services. This means that they can pursue individual remedies for their complaints if they have been affected by unfair business practices like bogus reviews or deceptive marketing strategies. In addition, the greater openness in online markets would aid customers in making wiser choices when selecting the goods that best suit their needs. Consumers can gain from a healthier, more vibrant online economy with these additional consumer protections in place.

EU Omnibus Directive's Effect On Businesses

This regulation forces businesses to totally rethink their current operations due to its high rules covering everything from pricing practices and transparency to data protection. As a result, numerous businesses have been compelled to update their terms of service, provide greater openness in their operations, and create fresh strategies for safeguarding the personal information of customers.

Guidelines For Responding To The EU Omnibus Directive

It may be difficult to comply with the EU Omnibus Directive, especially if your business is young. Even while many of the rules appear simple, following them correctly can be challenging. Here are some of the crucial areas to assess in light of the EU Omnibus Directive to keep you on track.

Review your customer information : Checking your consumer data is the first thing you should do. It is crucial that your records are up to date since, in order to comply with this requirement, you must obtain consent from your consumers before collecting or storing any information.

Make sure third parties understand their legal obligations : Additionally, you must guarantee that any third-party vendors you work with are aware of and prepared to comply with their obligations under the regulation.

Examine Your Marketing Techniques : Review your marketing strategies as well, paying close attention to any forms or sign-up pages that request user information. Your sign-up procedure must completely comply with the directive's requirements for the types of information that must be on these forms in order to legally conduct marketing campaigns within the European Union.

Examine your data flows and security precautions : Reviewing your data flows is essential if you want to know where and how the data of EU people are being used. In accordance with the EU Omnibus Directive, this will enable you to determine whether any additional precautions are required for the protection of this information. Reviewing your security protocols will also guarantee the privacy and security of the data you have on EU citizens. It's crucial to be open and honest about your security procedures since EU citizens have a right to know that their data is safeguarded.

Check for User Reviews : The EU Omnibus Directive forbids the use of bogus reviews, as we said before. Businesses must therefore assess and update their current procedures for confirming customer reviews to guarantee that each review submitted is true and authentic in order to comply. This could entail utilizing improved algorithms, crowdsourcing strategies, or establishing stricter standards for approving reviews.

In What Ways Will The EU Omnibus Directive Be Put Into Effect?

The EU Omnibus Directive lays forth important guidelines and standards for consumer protection, leaving it up to each member state to carry them out. In other words, it is up to each EU member state to decide how to incorporate the EU Omnibus Directive's requirements into their own national legal systems. Many people have claimed that handing enforcement off to individual EU member states could lead to issues. The EU Omnibus Directive's regulations may be interpreted differently by various nations. This might ultimately result in variations in how the directive is applied by various countries.

Recent initiatives by EU policymakers, however, imply that this worry might not be entirely warranted. The New Deal for Consumers, a new initiative unveiled by EU leaders in 2018, aims to modernize EU consumer legislation and make it simpler for consumers to exercise their rights.

The EU Omnibus Directive's provisions must be incorporated into each member state's domestic law by May 28, 2022, according to this new initiative.

Penalties And Fines For Failure To Comply

The EU Omnibus Directive carries stiff penalties for noncompliance, much like the General Data Protection Regulation (GDPR) of the EU.

If you break the first three directives that make up the present consumer rights legislation, the EU Omnibus Directive imposes the following penalties. Businesses could face fines of up to 4% of their yearly revenue if they sell products or services to consumers in an EU member state. If the turnover of the company cannot be determined, a 2 million euro punishment may be assessed.

Depending on a number of variables, each member state is free to choose the appropriate fine. These factors include the type of offense, its seriousness and scope, and the financial impact of the behavior on the company.

Omnibus Directive Implementation And New E-Commerce Industry Regulations

The Law on Consumer Rights, the Law on Countering Unfair Market Practises, and the Law on Information on Prices of Goods and Services were amended as part of the Omnibus Directive's implementation. The e-commerce sector would be the most impacted by the modifications, despite the fact that the amendments' scope does not simply include laws that apply to that sector. We go over a few of the new regulations' provisions below that are pertinent to the e-commerce sector.

Information responsibilities: By requiring member states to implement the remedies envisioned by the Omnibus Directive in response to the expansion of e-commerce, the EU legislator hoped to increase consumer protection. The key improvements in this regard deal with the problem of informing consumers.

Before the new regulations went into effect, dealers who entered into distance contracts had to give customers specific information at the latest at the time they agreed to be bound by the contract. The catalog of this material has been altered by the new legislation. The modifications include, among other things, imposing a duty to inform customers about specific online communication channels and about particular pricing adjustments based on automated decision-making, and eliminating the necessity to disclose the trader's fax number to customers.

Platforms for trading : Trading platforms will be impacted by the new regulations. The revisions also establish new trading platform requirements in accordance with the Omnibus Directive. They provide definitions of Internet trading platforms and their suppliers, among other things. Additionally, they place disclosure requirements on these service providers with regard to the criteria used to rank listings (assigning particular visibility to products or weighting search results), the status of the seller as a trader (based on pertinent statements made by the seller), the exclusion of consumer protection laws from dealings with non-traders, and the sharing of consumer contract-related obligations between the seller and the platform.

Regulating Customer Reviews : Due to the Omnibus Directive's incorporation into Polish law, failure to disclose whether and how the trader ensures that the published opinions come from customers who have actually used or purchased the product will be regarded as a misleading practice where the potential buyer has access to other customers' opinions. Furthermore, it is unfair business practice to represent opinions as coming from genuine customers or users without taking reasonable and proportionate steps to confirm their legitimacy. Additionally, submitting fraudulent customer reviews or recommendations, commanding someone else to do so, or manipulating customer reviews or recommendations to promote a product will be added to the blacklist of unfair practices.

In What Form Will The Updated Price Display Appear?

Discount communication is replaced with a new "Deal" flag

The word "Deal" will appear in place of every "Price Reduced" flag on the fashion store's product display page (PDP).

The reference price was moved next to the savings (% in red).

The Original Price will now be the new location for all information on the price comparison, but the conveyed "Savings" levels stay the same.

Originally included allowing for price comparison

To guarantee a consistent client experience with the fewest possible modifications to the present display, the term "Originally" is displayed alongside the term "Regular Price" across the entire platform. In order to help clients comprehend the overall benefit and initial value of the products offered, we use this approach to illustrate relative pricing changes between Current pricing and Original Price while maintaining Original Prices as an anchor.

New 3-Price Display (just for PDP)

When the lowest price over the previous 30 days fell between the "Original Price" and the "Current Price," a new three-price display (PDP only) was introduced. For instance, the Omnibus Directive mandates that the previous price of €90 be displayed to clients if the item had an "Original Price" of €100, was cut to €90 on Day 7, and again to a "Current Price" of €70 on Day 15.

Further "Information" icon (PDP only) the new "Three Price Display" is explained in detail by consumers by clicking on the PDP page. The price display stays the same when just "Black Prices" (the price at which an item is being sold on Zalando without enabling price comparisons) are supplied.

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