The Bill
entitled “An Act to amend the Consumer Affairs Act, Cap. 378.” (the Consumer
Affairs (Amendment No. 2) Act, 2021”, hereinafter referred to as the proposed
Bill, is to transpose and to implement 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 the better enforcement and
modernisation of Union consumer protection rules, namely the Omnibus Directive;
and to introduce necessary and consequential amendments with regard to subsidiary
legislation made under the Consumer Affairs Act, hereinafter referred to as the
Act. The Omnibus Directive amends the Unfair Contract Terms Directive
93/13/EEC, the Price Indications Directive 98/6/EC, the Unfair Commercial
Practices Directive 2005/29/EC and the Consumer Rights Directive 2011/83/EU.
1.1 Brief
overview
Part I of the proposed Bill introduces
amendments to the Act; and Part II amends the subsidiary legislation made under
the Act.
1.1.1 Part
I
This Part mainly includes amendments to the
provisions in article 106A of the Act with regards to ‘Penalties’ that may be
imposed by the Civil Court, and to the provisions relative to Part VIII on “Unfair Commercial Practices and illicit
schemes”.
The Directive provides a general amendment with
regard to the penalty clauses relative to the Unfair Contract Terms, the Unfair
Commercial Practices, and the Consumer Rights Directives, and establishes that
when fines are to be imposed in accordance with Article 21 of the Consumer Protection Co-operation Regulation, the maximum amount of such fines shall be at
least 4% of the trader’s annual turnover in the Member State or Member States
concerned, provided that where such information is not available the maximum
amount of the fine shall be at least €2 million.
In addition, in order
to guide the establishment of fines, and in line with the provisions of the Directive,
a non-exhaustive and indicative criteria for the establishment of the final
penalty to be imposed on any infringement of the Consumer Affairs Act, relative
to Unfair Contract Terms, Unfair Commercial Practices and the Consumer Rights
Regulations, are being introduced.
In line with the above,
three new provisos to article 106A (3) of the Act are added.
In Part VIII of the Act relative to unfair
commercial practices, the amendments include an update to the definition of
‘product’ to also include digital products and digital services; and the
inclusion of the new definitions “online marketplace” and “ranking”.
A new provision is added in article 51C
relative to misleading actions with regard to dual quality of goods. This provision has been included to address
instances where marketing of goods across Member States is presented as being
identical when the goods have a significantly different composition or
characteristics.
In article 51D(3) relative to misleading
omissions and material information, paragraph (d) is being amended to remove
the requirement to have the complaint handling policy. Furthermore, a new paragraph (f) is being
added, namely: “(f) for products offered on online marketplaces, whether the
third party offering the products is a trader or not, on the basis of the
declaration of that third party to the provider of the online marketplace.”.
A new sub-article (3A) is also being added to
article 51D. This sub-article
establishes provisions relative to ranking of commercial offers within online
search results. Furthermore, a new sub-article (5) is added with regard to
consumer reviews of products and the information to be provided by the trader.
The Directive establishes that Member States
may adopt provisions to protect the legitimate interests of consumers with
regard to aggressive or misleading marketing or selling practices in the
context of unsolicited visits by a trader to a consumer’s home or excursions
organised by a trader. It is considered
that the provisions in paragraphs 24 and 25 of the First Schedule of the Act
already address such aggressive or misleading practices and no additional
provisions are being proposed in the draft Bill.
In the First Schedule, that enlists those
commercial practices that are in all circumstances regarded as unfair, four new
paragraphs are added as paragraphs 11A, 23A, 23B and 23C.
In order to transpose and implement Article
11A of the Directive relative to redress for consumers harmed by unfair
commercial practices, in article 21 of the Act relative to the determination of
disputes before the Consumer Claims Tribunal, a new proviso is being introduced
to ensure that when determining issues in disputes that concern harm suffered
by consumers resulting from unfair commercial practices, the Consumer Claims Tribunal
shall order proportionate and effective remedies.
1.1.2 Part II
This part entails the consequential amendments
with regard to the subsidiary legislation made under the Act, as follows:
1.1.2.1 Consumer Affairs Act (Price
Indication) Regulations (Subsidiary Legislation (S.L.) 378.09)
The amendments to these Regulations include
the update of the definition “consumer” to be fully in line with the definition
in the original Directive. Furthermore,
two new definitions are being added, these being the definitions for “place of
business” and “stall”. The inclusion of
these definitions does not emanate from the Directive but were included to
clarify that “place of business” includes also an online marketplace and any
stall.
A new regulation 5A to address ‘price
reductions’ is being added to fully transpose the Directive. This new regulation establishes that announcements of a price reduction shall
indicate the prior price applied by the trader during a period of time not
shorter than 30 days prior to the application of the price reduction.
The Directive also allows Member States to
provide for different rules for products which deteriorate quickly, and to establish
other rules for products which have been on the market for less than 30 days,
and where the price reduction is progressively increased. It has been considered that in the absence of
such rules there will be lack of clarity and interpretation. In view of this,
the Bill is proposing three provisos to this new regulation 5A.
Further amendments within this Regulation are
in regulation 9 relative to offences.
The first amendment refers to the commencement of proceedings, whilst
the second amendment refers to minimum and maximum amounts of fines for the
first, and second and subsequent convictions; and the deletion of the suspension of any licence
or other authorization. Another amendment refers to the publication
of the Court’s judgement.
Additionally, and in line with the Directive, a list of non-exhaustive and indicative
criteria is being included, which is to be taken into account by the Court when
imposing a fine.
1.1.2.2 Consumer Rights Regulations
(Subsidiary Legislation 378.17)
The amendments within these Regulations
comprise of a number of new definitions which are already defined in the
Digital Content Directive . This in view of the fact that the scope of the
Consumer Rights Regulations is being
extended to cover contracts under which the trader supplies or undertakes to
supply digital content or a digital
service to the consumer. Other existing
definitions are being amended to be in line with the Directive.
The applicability provisions of these
Regulations are also being updated to reflect the extension of the scope.
In regulations 4 and 5 relative to information
requirements, respectively for contracts other than distance or off-premises
contracts and for distance and off-premises contracts, a number of provisions
are being updated to reflect the inclusion of digital contracts and digital
services.
Furthermore, in regulation 5 other provisions
are being updated or added with regard to:
- the means of
communication with the trader which now includes also online communication,
subject that such communication can be kept by the consumer on a durable
medium; and
- the price, if this is
personalised on the basis of automated decision-making, where applicable.
A new regulation 5A relative to additional
specific information requirements for contracts concluded on online
marketplaces is being added. This information, which is to be presented in a
clear and comprehensible manner, should include:
- general information of
offers presented to the consumer as a result of the search query and the
relative importance of those parameters as opposed to other parameters;
- whether the third party
offering the goods, services or digital content is a trader or not;
- that the consumer rights
stemming from European Union consumer protection law do not apply to the
contract if the third party is not a trader; and
- where applicable, how the
obligations related to the contract are shared between the third party and the provider of the online marketplace.
Regulation 8 relative to formal requirements
for off-premises contracts is being updated to clarify that other than the
consumer’s express request on a durable medium as in the current regulation,
the consumer has to also acknowledge that once the contract has been fully
performed by the trader, the consumer will no longer have the right of withdrawal. The same applies for regulation 9(8) relative
to distance contracts, which is also being updated in the same manner.
The Directive allows Member States to adopt
rules in accordance with which the withdrawal period of 14 days is extended to
30 days for contracts concluded in the context of unsolicited visits by a
trader to a consumer’s home or excursions organised by a trader with the aim or
effect of promoting or selling products to consumers. The Bill is proposing this extension with
the purpose of protecting the legitimate interests of consumers with regard to
aggressive or misleading marketing or selling practices. This is being included as a proviso in
regulation 10 relative to the right of withdrawal by means of a proviso. This update is reflected in other
provisions, namely in regulations 10(2), 12(2), 16(4)(b)(i), 18(m), in the proviso to
Regulation 18 which exempts points (a), (b), (c) and (e) from the exceptions from the right of withdrawal, and the Schedule to the Regulations.
In regulation 15
relative to the
obligations of the trader in the event of withdrawal, new
sub-regulations are added to cover contracts under which the trader supplies or
undertakes to supply digital content which is not supplied on a tangible medium
or a digital service to the consumer, and the consumer provides or undertakes
to provide personal data to the trader instead of paying a price. Any
processing of personal data should comply with Regulation (EU) 2016/679 of the
European Parliament and of the Council, namely the General Data Protection
Regulation.
Regulation 16 regarding the obligations of the
consumer in the event of withdrawal is also being amended to include the
consumer’s obligation to refrain from using the digital content or digital
service and from making it available to third parties when exercising the right
of withdrawal.
In regulation 18 with regard to the exceptions
from the right of withdrawal, two paragraphs (a) and (m) are being updated. In
both paragraphs the wording ‘if the
contract places the consumer under an obligation to pay” is being added for
clarification. Paragraph (m) is further
updated to also clarify better those instances where the consumer cannot
exercise the right of withdrawal for contracts for the supply of digital
content which is not supplied on a tangible medium.