“Risk of sky-high fines when the Omnibus Directive is transposed in Sweden”
Risk of sky-high fines when the Omnibus Directive is transposed in Sweden
The legislative changes introduced for the modernisation of consumer protection (Government’s Proposal prop. 2021/22:174) place higher and tougher demands on consumer marketing. The amendments include tougher sanctions, similar to the GDPR, with possible administrative fines amounting up to 4 % of a company’s annual turnover.
What do the new consumer protection rules mean?
They significantly increase the possible administrative fines for infringements of marketing and consumer protection rules. The sanction level amounting to 4 % of the turnover introduced in 2018 by the GDPR has already entailed a large impact in the business community. Such high sanctions inevitably lead to substantial business risks for companies lacking procedures in place to mitigate non-compliance.
What is the background to the new rules?
The European Commission has assessed that compliance in the field of consumer protection does not meet a sufficient standard. To remedy this, the Commission has called for more dissuasive sanctions to increase the overall compliance in the market. In addition, it has been noted that the legislative framework is lagging behind in some respects, particularly in the area of digital communications. A number of rules are now being introduced to ensure that consumer protection is more fit for the digital age. One of the most central issues is price information where it can be noted that campaigns within in the digital context have shown to not always be based on previous prices applied in practice. Therefore, a rule is now being introduced regarding the disclosure of price reductions. Traders must be able to demonstrate that they have applied a certain price for at least 30 days before they can communicate a price reduction compared to a previous price. Another example is consumer reviews, which are very common today. An amendment is being made to increase the trustworthiness of consumer reviews. Another example is ranking in the digital context where it is far from always clear how the rankings are being made. From now on, the criteria behind the ranking of certain products must be disclosed. Of importance, it must be disclosed if an advertiser has financially incentivised its particular ranking. Overall, the amended legislation entails demands for clearer information – transparency is a centerpiece of consumer protection. This is equally important for consumers in the digital context.