On May 28, 2022, several new provisions of the Danish Marketing Practices Act come into force, imposing stricter transparency requirements on merchants conducting online marketing activities.
The aim of the new requirements is to provide greater transparency for consumers in the context of online transactions.
The three new transparency requirements, which are described in more detail in the following sections, are:
– Disclosure of the parameters determining the ranking of products and services in online searches (Article 6a)
– Disclosure of whether the authenticity of consumer reviews is verified (section 6b)
– Disclosure of the quality of sellers as traders or non-traders (Article 6, paragraph 2, point 7)
The new Commercial Practices Act disclosure requirements are being implemented to comply with the Unfair Commercial Practices Directive (2005/29) which was recently amended by the Improved Enforcement and modernization (2019/2161).
Disclosure of parameters determining the ranking of products and services in online searches
Several online marketplaces allow consumers to search across different product and service providers, such as travel, accommodation, or electronics searches. Marketplaces provide search results by comparing and ranking respective products or services.
Since May 28, 2022, online marketplace providers are required to allow consumers to understand the main parameters used to determine the ranking of products and services in a search result. Only online marketplace providers comparing third-party offers (not just the provider’s own products/services) are covered by the new provision. Furthermore, a similar disclosure obligation already applies to online search engine providers.
The new transparency requirement implies that providers of online marketplaces must, in an easily accessible and direct way (e.g. via hyperlinks or pop-up texts), provide consumers with general information about the most important parameters that determine the classification of products and services.
In addition, the online marketplace provider is required to make it clear to consumers whether a search result is a “promotion of paid content” or whether a trader has directly or indirectly paid the marketplace provider by line to get a higher ranking in the leaderboard. Search results.
Disclosure of whether consumer reviews are verified for authenticity
Another new requirement is that merchants who provide access to consumer reviews of products or services must inform consumers whether processes and procedures have been implemented to ensure that the reviews posted come from consumers who have actually used or purchased the product or service being evaluated.
The requirement does not oblige traders to ensure that the reviews actually come from consumers, as it only requires traders to disclose whether the authenticity of consumer reviews has been verified and, if so, how these checks have been carried out.
Along with this requirement, two types of commercial practices related to consumer reviews are added to the “blacklist” (Schedule 1 of the Commercial Practices Act) listing certain types of commercial practices that are still prohibited. Therefore, from May 28, 2022, it will (still) be considered misleading if reviews of products and services are marked as consumer reviews if due process and procedures to ensure the authenticity of these n have not been respected. In addition, the act of submitting or obtaining fake reviews is added to the blacklist, along with activities that falsely portray or manipulate consumer reviews, such as posting only positive reviews and removing reviews. negative reviews.
Disclosure of the status of sellers as traders or non-traders
From 28 May 2022, online marketplace providers must inform consumers whether third parties offering products or services on the online marketplace are merchants or non-merchants (i.e. say private sellers). Compliance with the requirement is the responsibility of the online marketplace provider who must obtain merchant status declarations provided by each third party using its online marketplace to offer products or services.
Online marketplace providers must not mislead consumers about this information or present it in an unclear, incomprehensible or ambiguous manner.
Increase in the level of fines
The importance of complying with the Trade Practices Act and the new stricter requirements mentioned above is underlined by the fact that the level of fines in general for breaches of the law have recently been changed to justify higher fines .
The level of fines is calculated according to the seriousness of the infringement and the merchant’s turnover on the basis of fixed tariffs. For example, a company whose annual (global) turnover does not exceed DKK 5 million can expect fines in the range of DKK 40,000 to 80,000, while a company whose turnover is between 50 and 100 million DKK can be fined in the order from 400,000 DKK to 1 million DKK. The level of fines can be increased (or decreased) depending on the magnitude of the violation and the expected gain from the illegal marketing activity.
Alongside the new online marketing rules which will come into force on 28 May 2022, additional rules on fines will also come into force, under which breaches that could harm the collective interests of consumers in at least two EU member states in addition to Denmark can be punished with fines of up to 4% of the company’s annual turnover. If no information is available on the turnover, the fines in this type of cases can be up to 4 million euros.
With the implementation of the new transparency requirements and the recently changed level of fines, the requirements for online marketing are significantly increased. The requirements are of particular importance to providers of online marketplaces, but all merchants providing products and services online should familiarize themselves with the new rules and inform the online marketplaces, on which they have a presence. , their status as traders.