Direttiva Omnibus: New Rules for Discounts & Reviews

Tecnoacquisti.com
Regulations and Privacy

The Council of Ministers in February 2023 approved the implementing decree, of Directive 2019/2161, called the Omnibus Directive introduces important innovations regarding consumer protection regarding unfair commercial practices, particularly in reviews and promotional offers.

Already starting in May 2022, the European Union has decided to protect buyers. The goal is to make reviews authentic and a trusted tool for consumers and end unfair practices in offers. In this article we will look at the measures reinforced by this rule, what will change for ecommerce and how to comply with the Omnibus Directive.

Index

Features of the Omnibus Directive.
The authentic and verified reviews.
The management and control over prices.
Discounts on goods offered to customers
What changes for those running an e-commerce business
Self-managed or "Verified" reviews
The consequences for those who do not comply with the Directive
Conclusions

The characteristics of the Omnibus Directive

EU Directive 2019/2161, which came into force on May 22, 2022, has as its main goal the protection of consumers buying on the Web and sanctions those who engage in unfair trade practices, such asbuying positive reviews.

Article 17 of the Omnibus Directive states the following:"Existing Union consumer protection rules should be modernized. As digital tools are constantly evolving, it is necessary to adapt Union law on consumer protection."

Let us see, then, how the main objective of the Directive will develop.

The Omnibus Directive: the authentic and verified reviews

In fact, about 300 websites were surveyed. Among them, 104 did not provide information regarding how reviews are collected. On the other hand, 118 were those that did not mention the type of measures taken in the case of fake reviews, and 176 give the possibility to buy reviews.

An alarming percentage comes out of this data: 55 percent of the analyzed sites do not comply with European consumer protection directives. On the other hand, 18% leave doubts about the real authenticity of the published reviews.

The Omnibus Directive, therefore, is intended to push those who sell online (it applies to all online reviews, however, including those of restaurants and other offline businesses) to provide clear and truthful information about the checks carried out on reviews and how they are processed. It should also be clarified whether both positive and negative reviews are made available to consumers, whether the former are paid for, or whether they are influenced by any kind of contractual relationship.

In addition, merchants should not use unfair business practices such as, for example, guaranteeing compensation to users with in exchange for giving a positive review on a specific product or service. Indeed, it is common practice even on review channels such as Trustpilot and the like to offer free products or services to the most active users on these review portals, and all too often the users themselves offer themselves for this purpose.

Not least there are online services where you can buy reviews for a wide variety of portals including Google, Facebook, etc.... A real marketplace that I have discussed before in the article: Are user reviews reliable?

Management and control over prices and discounts

Article 2 of the Omnibus Directive is devoted to online discounts. This passage specifies how it is necessary to indicate, in each price reduction announcement, the previous figure applied by the seller before the discount was made.

Pictured is an example of how Zalando has implemented the Omnibus Directive.

When we talk about the previous price we mean the lowest price that the merchant has offered in a time frame of not less than 30 days before the reduction. Here we have the real novelty, which is having to indicate the price changes of the last 30 days.

In practice, the discount must always be put in direct relation to the lowest price achieved by the product or service on sale in the last 30 days. To give an example: a product has a standard price of 100 euros, the retailer decides to raise it to 120 euros and after only two days applies a 20% discount. The final price cannot be 96 euros, but 70 euros. This is because the 20 percent discount must be applied on the 100 euro figure, which is the lowest price the item has reached in the last 30 days.

This clarifies how the directive prohibits fictitious price increases and false discounting. Let us clarify, from the outset, that there are some exceptions such as, for example, those related to products that are expiring or to personalized offers (aspects that the full regulation clarifies in detail and that we will go into more detail later in the article).

The new rules are putting a strain on those who own and operate e-commerce, but they also give excellent possibilities in the marketing sphere. In fact, transparency to consumers can only increase their perceived trust in a company and brand. Currently, there are few addons for PrestaShop that allow us to get in compliance with this aspect of the directive.

Discounts on goods offered to customers

The rule imposed by the Omnibus Pricing Directive must be applied whenever the seller offers a promotion to customers, whether it is a discount that leads from one price to another, or when the reduction offered is in percentage.

In both cases, the seller must mandatorily report the starting price of the product or service offered (which, as we said, must refer to the last 30 days prior to the date of application of the discount).

The main reason for this change is to prevent the price from growing and being soaringly inflated by the seller in order to give the impression to the customer that he or she is faced with an unmissable discount, how much in truth it is outright deception.

Cases in which the Omnibus Directive does not apply

Although the regulations are very detailed and comprehensive, they do not apply in all cases. In fact, there are exceptions in certain cases. Such as in the case of products subject to perishability or close to the expiration date. In addition, those sales in which the price change does not relate to ongoing discounting operations are not taken into account.

The Directive, then, is not applied in three other eventualities: when faced with combined offers (with the classic take three and pay one), of personalized coupons or loyalty cards, and when not promoting the offer with wording such as "lowest price." When any of the above occur, the Omnibus Directive on prices and discounts is not applied. In fact, the consumer is not in danger of being misled.

The Omnibus Directive only covers sales to the final consumer, thus B2C ecommerce and does not apply to inter-company commerce, i.e. B2B.

Omnibus directive: what changes for those running an e-commerce business

Those who own an e-commerce is want to publish and make visible customer reviews must indicate, explicitly, what actions they take to make sure that such feedback is real and comes from buyers who actually purchased or use a particular product/service.

Pictured above is an example of a review given by one of our clients on Tecnoacquisti.com in compliance with the Omnibus Directive. It should be pointed out that since it is B2B, the directive would not apply.

Failure to make such reporting transparent is considered to all intents and purposes a deceptive and unfair practice. This is not to say that those who run an online store must mandatorily filter reviews, but they should still report that their ecommerce does not perform such checks and the management methods applied.

Those who already use a review collection system or take advantage of plug-ins should ask themselves the following questions:

does the system used specify the type of reviews collected?
are the reviews verified?
does the system indicate what methods are used to verify the authenticity of the reviews posted?

In definiva, it is always necessary to rely on forms or platforms that ensure that ecommerce managers can be assured of obtaining authentic and properly verified reviews. This does not mean that the check cannot also be manual, in fact, the important thing is to clearly indicate on the review that it is a verified purchase and how the reviews are handled, a simple disclosure as is the case for Cookies Policy, Privacy Policy and Terms of Sale.

Self-administered or "Verified" reviews

Regarding reviews it is very easy to adapt, external review systems such as Tripadvisor, Trustpilot, Verified Reviews, Feedaty, etc... have already adapted, although I do not recommend their use as we lose ownership of the reviews received, we provide sensitive business data to third parties and the integration impacts the loading time of our ecommerce including Web Vital metrics thus worsening the user experience, without providing any real benefits.

The legislation does not mandate the use of external, independent collectionservices, where however there has been no shortage of abuse, although in advertising these services the words"verified reviews" are often used in reality this has nothing to do with the Omnibus directive. It is just a marketing ploy. The directive lays down rules and obliges clear communication to the user about the mode, it does not impose a system of collection and management, which then can also be completely self-managed. Controls and penalties will take care of enforcement.

An excellent module for PrestaShop is definitely Trusted Reviews from ETS-Soft. The same one we chose for Tecnoacquisti.com.

E-commerce operators, in addition to informing about the source of reviews and how they were obtained, must also indicate how they are handled. The European Union Directive has given precise rules on rating: the buyer must have access to the calculation of the score. This information must be open to buyers through the same window in which reviews are posted. Communicating to them that these have been issued by real users, without the appropriate checks and verifications having been carried out, is considered an unfair and punishable practice.

The consequences for those who do not comply with the new Omnibus Directive

Those who fail to comply with the new rules imposed by the Omnibus Directive can run into very onerous penalties. In fact, it can go as far as fines amounting to 4 percent of turnover or 2 million euros if accurate information on annual revenues cannot be accessed.

In addition, each EC member state has the option of tightening the penalties from those specified within the Directive. The following are the different examples in this regard:

in Germany one can receive an Abmahnung. This is a warning letter that aims to put an end to unfair behavior performed in the context of online sales and carries a penalty;
in France, in addition to the fine, one can also suffer a criminal conviction with imprisonment. The penalty is around 300 thousand euros, but it can grow to the sum corresponding to 10% of the average turnover of the last three years or 50% of the costs incurred for promotion or other actions used to generate the offence. In addition, in this state one can also suffer a 5-year professional disqualification;
in Spain not respecting consumer rights is punished with a fine ranging from 150 euros to 10 thousand euros. This penalty can increase from 2 to 4 times the benefits obtained through such infringement;
in the Netherlands the fine can rise to 10% of the annual turnover if one has broken the law several times;
in Poland one can receive a fine that equals 10% of the previous year's turnover.

Conclusions

The Directive aims to prevent two widespread unfair business practices online, this does not mean that from now on reviews will be more trustworthy, unfortunately nothing a regulation can do about the lack of competence of those who issue them and actually little even about the abuses that will continue anyway, but now becoming clearly illegal. In reality such practices were still prosecutable, but with very long and complex investigations.

However, the control of infringements is not easy, not only by the authorities in charge, but also by Marketplaces such as Amazon where for some time a new practice has been underway by less-than-honest merchants to circumvent the regulations, simply by taking advantage of the possibility of putting two different products on sale in a single product sheet, as if they were a variant of color or size. In this way, the "good" and cheap product A takes positive reviews instead of the poor product B, exploiting a flaw in the Marketplace itself and misleading the customer, while still risking later being banned for life from Amazon.

The reviews thus obtained are in compliance with the Omnibus Directive being real purchases of product A, but not if the user believes they are referring to product B. Such a practice I hope will be banned by Amazon as soon as possible, but the system is not necessarily used on other ecommerce, and a similar system can safely be used even with "verified reviews" services being the check made on the automatic submission of order data to the service in use. Pure Marketplaces such as Ebay where positive Feedback from users is a very important metric, are not exempt from abuse, despite efforts to limit them and ban those who engage in malpractice.

Complying with the regulations is important in order to increase the quality of one's commercial offerings and transparency to one's customers; hardly any less than honest merchants, if not outright scammers, will find any obstacle in this legislation. Verifying that a review was really given by a real buyer and without any agreement of any kind requires very complex investigations, similarly to checking the price history, consequently, the agencies in charge will move as a result of reports and disputes.

Author: Loris Modena

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Omnibus Directive new rules for discounts and reviews