Legal Alerts/31 Mar 2022
New Consumer Protection Provisions to Enter into Force in January 2023
Update: The Finnish Parliament has accepted the amendments set out in government bill HE 14/2022 vp. The new provisions, which will be introduced to the Consumer Protection Act and to the Act on Certain Powers of Consumer Protection Authorities, will enter into force on 1 January 2023. The original alert reflected the situation as of 31 March 2022.
New provisions will be introduced to the Finnish Consumer Protection Act and the Act on Certain Powers of Consumer Protection Authorities at the end of May. These provisions will implement Directive 2019/2161 on the better enforcement and modernisation of Union consumer protection rules, or commonly known the Omnibus Directive.
This arises from the activities carried out by the Finnish Government and from the bill the Government issued last February to implement the Omnibus Directive, the purpose of which is to restrict door to door sales and telemarketing. The reform further aims to improve market compliance with consumer protection regulation, modernise certain aspects of the consumer protection regime and to certain extent decrease unnecessary costs for businesses.
Changes to price reduction advertisements
Earlier, some businesses seemingly have had a habit of raising prices just before announcing a rebate campaign to make the offered discounts seem higher. To curb these practices, in the future businesses will need to indicate the lowest price at which the goods in question have been marketed during a period of 30 days preceding their campaign.
However, when a marketing campaign continuously lasts up to 60 days and the price reduction is gradually increased, the lowest price at which the goods have been marketed during a period of 30 days preceding the first price reduction may still be indicated as the basis of the rebate.
The new provision on price reduction announcements will replace the current Consumer Protection Act’s rule, according to which the price of a consumer good may not be advertised to be reduced by more than by the amount calculated from the actual price that was previously charged by the trader.
These changes are aimed at strengthening the position of the consumer and generating more transparency regarding price information offered to a consumer.
New remedies for consumers
The government bill implementing the Omnibus Directive also introduces new remedies available to consumers. Under the proposal, consumers will be entitled to obtain a price reduction when the business has acted unfairly or aggressively so that this conduct has been likely to affect the consumer’s purchase decision. Aggressive sales tactics include, for example, coercion or pressure.
In addition, the trader would also be obliged to compensate damages caused by the trader’s intentional or negligent use of unfair, misleading or aggressive business-to-consumer commercial practices or breach of certain provisions on obligations to inform.
Other key changes
- Dual quality products
The new government bill introduces a provision regarding the so called “dual quality” products. The dual quality refers to a situation where goods bearing the same brand are marketed as being similar to such goods that are sold in other EU Member States, even if this is not the case. To deal with this issue, the new provision will clarify that false or misleading information could relate, in particular, to the similarity of the goods to those marketed in other Member States, even if the goods differ significantly in composition or other characteristics, unless justified by legitimate reasons.
Such legitimate reasons include, for example, the adaptation of products to meet the national requirements or the availability or seasonality of raw materials. Traders will also be allowed to offer goods of the same brand in packages of different weight or volume in different Member States.
- Introducing a written confirmation procedure in telemarketing
Under the government bill, traders will need to obtain a written confirmation from consumers for any purchases resulting from telemarketing. The new provisions require that after a telemarketing call, the trader should make the offer to the consumer in writing or by any other similar means.
If the consumer has not accepted the offer submitted by the trader in writing or in any other similar manner after the telephone conversation, no contract binding on the consumer will arise. The trader carries the burden of proof showing that it has fulfilled the formal requirements.
- Extending a consumer’s right to cancel the agreement in door-to-door sales
Under the new provisions regarding door-to-door sales, the consumer will have the right to cancel the agreement made in connection with a home visit without the consumer’s invitation, as a premise, within 14 days of the date when the contract was concluded.
Moreover, the agreement would not be binding on the consumer if the trader has not provided the mandatory information prior to the conclusion of the contract, provided that the consumer informs the trader of the same within 12 months.
New penalty provisions
The Finnish consumer legislation already contains provisions of potentially extremely high penalty payments that could be imposed by the Finnish Market Court. Under the current regulation, the penalty could be ordered on the basis of the Consumer Ombudsman application against traders that have intentionally or negligently breached the provisions of the defined key provisions of the Consumer Protection Act.
Under the Omnibus Directive, the cap on penalty has been set at 4% of the turnover of the previous financial year. Pursuant to the government bill implementing the Omnibus Directive, the scope of the penalty fee will be extended to cover the new provisions, including the breaches of price reduction advertisement regulation and trader’s obligation to provide written offers following telemarketing calls.
In addition, the government bill introduces the penalty fee as a remedy in cases of continuous breach of certain provisions of the Consumer Protection Act or continuous application of unfair contract terms, provided that the Consumer Ombudsman or the Market Court have already prohibited such activities.
The reform is expected to come into force on 28 May 2022, with the exception that the provisions on written procedure in telemarketing would take effect on 1 December 2022.
Considering the heavy risk position created by the penalty provisions, traders operating in the business to consumer market should ensure compliance with the new provisions.
Borenius’ lawyers are available to assist in addressing any questions you may have regarding the legislative amendments.