2022 brings a number of changes in the area of consumer protection which are of particular relevance to businesses engaged in online trading and providing digital content or services, as well as to operators of e-marketplaces.

These changes are linked to the implementation of European Union directives:

  • Directive on better enforcement and modernisation of consumer protection rules in the European Union, also known as “the Omnibus Directive” (Directive (EU) 2019/2161)
  • Directive on certain aspects concerning contracts for the supply of digital content and digital services (Directive (EU) 2019/770)
  • Directive on certain aspects concerning contracts for the sale of goods (Directive (EU) 2019/771)

In this newsletter, we discuss the main changes these directives are bringing to Lithuanian law and what businesses should be focused on.

 

New consumer information requirements

The new regulation requires businesses to inform consumers about:

  • Paid advertisements which are linked to a higher ranking of the products offered in search results
  • measures to ensure the credibility of the reviews displayed, i.e. how the company ensures that the reviews are authentic
  • the parameters that determine the position of the proposed product in the search results of a search query
  • personalised pricing through automated decision-making

 

Broader definition of unfair commercial practices

Under the new rules, there are now a broader range of commercial activities which are considered to be unfair. One of the most important additions is that it is now an unfair act to advertise a product as being identical to another (same) product, when in fact the ingredients or characteristics of the product being advertised are substantially different (more commonly known as dual-quality products). Instances have been identified where products distributed to Eastern European countries were of lower quality than the apparently identical products distributed in Western Europe. These new rules are aimed at preventing this practice.

Unfair commercial practices also include:

  • Posting reviews that have not been verified as real user reviews
  • publishing fake reviews
  • the presentation of search results based on a user’s online search query, where paid advertising or payment in order to achieve a higher ranking of products in the search results are not explicitly disclosed
  • the sale (resale) to consumers of tickets for events which have been purchased by a commercial operator by automated means, circumventing a limitation on the number of tickets that a person may purchase, or circumventing other rules applicable to the purchase and sale of tickets

For unfair commercial practices, the supervisory authorities are empowered to impose fines of up to 6% of the commercial operator’s annual revenue for the previous financial year.

The new rules also provide that in the event of unfair commercial practices, the affected consumers have the right to bring civil actions for damages, price reductions or termination of contract.

 

New rules for digital content and digital services contracts

New rules have been introduced concerning contracts for the supply of digital content or digital services, including:

  • quality requirements for digital content and digital services
  • requirements for providing updates, and the consumer rights associated with such products (statutory warranties and the period of liability on the part of the trader)
  • specific consequences of the termination of contracts and allocation of the burden of proof

These rules apply both to digital content contained in a physical medium (e.g. DVDs, CDs, USB sticks and memory sticks) and to the physical medium itself, provided that the physical medium is used only as a medium for the digital content; they also apply to digital content not contained in a physical medium and to the supply of digital services.

These provisions are mandatory and apply in addition to the main elements of existing consumer contracts. This means that when a trader sells software to a consumer, the contract concluded must comply with both the general terms of consumer contracts and the additional provisions on the supply of digital content or digital services.

Customer personal data recognised as form of payment

The consumer’s personal data are considered to have economic value for the trader, which means that the requirements of consumer contracts can also apply when consumers pay with their personal data instead of currency. The provision of personal data is considered to be a form of payment where the user provides their personal data or is obliged to do so in exchange for digital content or digital services.

Changes to the requirements for sale contracts

  • If the consumer places an order for the production of an item, the transaction is considered a sale of goods and is subject to the provisions of sales contracts.
  • The new provisions add to the concept of goods sold under a consumer contract. A distinct good is a tangible movable object that incorporates digital content or a digital service (or is linked to the latter in such a way that it cannot perform its functions without them); it is defined as a good with digital elements. It is important to note that such goods will not be subject to the new specific requirements for the supply of digital content or a digital service.
  • The new rules provide for more detailed quality requirements for goods sold under a consumer contract. A completely new requirement is that the goods have to be delivered with all accessories and instructions (including installation instructions) as provided for in the sales contract, and the goods are to be delivered with updates as provided for in the sales contract.
  • For goods with digital elements, there are new requirements relating to the provision of updates.
  • The presumption that a defect in the goods sold existed at the time of sale has been extended from six months to one year. This means that within one year of the sale of the goods, it is presumed that an identified defect already existed at the time of the sale, unless the seller can prove otherwise. This puts the burden of proof on the seller, potentially increasing for businesses the burden of dealing with claims that are not always justified.
  • The procedure for ensuring consumers’ rights in the event of a defective product has been clarified: a two-stage system of enforcement of consumer rights has been introduced. The consumer must first ask the seller to repair or replace the product with a product of satisfactory quality (Stage 1) before they can ask for a reduction in the price of the product (in the event of failure by the seller to comply with Stage 1) or termination of the contract on the sale of the product (Stage 2). The consumer can demand an immediate price reduction or termination of the contract where the defect in the goods is material and cannot be remedied, or where the trader fails to ensure the quality of the goods within a reasonable period of time, or where it will cause serious inconvenience to the consumer.
  • In the case of defective goods, the seller is obliged to repair or replace them free of charge, within a reasonable period of time and without causing significant inconvenience to the consumer. The new provisions also address the allocation of costs related to the installation of the goods: if the goods were properly installed before the defect became apparent, the seller’s obligation to repair or replace the goods includes the removal of the goods and the installation of the repaired or replaced goods, or covering the costs of removal and installation.
  • The new rules also give the consumer the right to suspend payment of the price or part of the price of the goods until the seller has fulfilled the seller’s obligations regarding the quality of the goods. They also set out the consumer’s obligation to report defects within two months of discovering them.
  • Provisions relating to the warranties on goods have also been expanded. The duration of the statutory warranty has been clarified in the case of the sale of goods with digital content: if the contract on the sale of goods with digital content provides for the continuous provision of digital content or digital services for a certain period of time, the seller is liable for any defects in the digital content or digital service that arise or come to light within two years of the delivery of the goods with digital content. If the contract provides for a continuous supply of digital content or digital services for more than two years, the seller is liable for any defects in the digital content or digital services that arise or become apparent during the period of supply of the digital content or digital service provided for in the contract.

The law provides that the warranty for used goods may be shortened by agreement between the seller and the consumer, but that the warranty may not be less than one year. This is particularly relevant for sellers of used cars and other used goods.

 

New requirements for providers of e-marketplace services

New responsibilities have been established for e-marketplace service providers (the trader who makes the e-marketplace service available to consumers). Providers of e-marketplace services are obliged to provide general information about:

  • the main parameters that determine the ranking (results) of products offered to consumers in response to a search query and the relative importance of those parameters compared to other parameters
  • whether goods, services or digital content are offered by the trader
  • the fact that consumer protection requirements do not apply to a contract where the person offering the goods, services or digital content is not a trader
  • where relevant, information on the allocation of contractual obligations between the person offering the goods, services or digital content and the provider of the e-marketplace service

 

Our recommendations to businesses

The new amendments impose quite a large number of new obligations on businesses and expand the corresponding rights for consumers. Therefore, if you sell goods or services (including online), you need to make sure that your advertising, information, contracting and quality assurance processes comply with the new requirements.

If you provide digital content or digital services, carefully review the terms and conditions of the contracts you use, and consider where the provision of digital content or digital services is paid for with users’ personal data.

Meanwhile, we recommend e-marketplace service providers to note that they are responsible for fulfilling certain information obligations.