Legal Journal: Legislative Compass - May 2024

NEW CONSUMER PROTECTION ACT

From 1 July 2024, the Act on Consumer Protection and on the Amendment of Certain Acts, which regulates consumer relations, enters into force. Its aim is to modernise the existing consumer legislation and align it with European legislation.

The new law is intended to eliminate duplication in consumer law and bring general legislation in the field of consumer protection, but it is not intended to represent a codification of the entire consumer law. The regulation of consumer contracts remains preferentially regulated in the Civil Code.

In addition to the modernisation targets, the aim is also to strike a balance between the rights and obligations of consumers and traders:

• the rights and obligations of consumers, traders and other persons in the offer, sale and provision of products, in the conclusion and performance of a consumer contract and in connection with it, and
• the competence of public authorities in the field of consumer protection and the position of consumer organisations in resolving consumer disputes.

News for the consumer:

• extension of the period for withdrawal from the contract without giving a reason, from 14 to 30 days in the case of contracts concluded during a sales event or in the event of an unsolicited visit to the trader's home (so-called door-to-door sales);
• increasing protection against artificially inflating prices against various discounts and sales in order to lure consumers into a discount that is not actually a discount; traders are ordered to calculate a discount from the lowest price at which they have offered goods in the last 30 days); The obligation to indicate the previous price in each reduction notice does not apply to goods that are subject to rapid deterioration or perishability (such goods may be, for example, cut flowers and other live flowers, food and beverages with a short shelf life or minimum durability, but this is not a case of degradation and perishability only from a commercial point of view, for example in the case of seasonal goods such as seasonal clothing; sunscreens, etc.);
• introducing remedies for injured consumers in cases where the trader commits an unfair commercial practice against them (an unfair practice is always the display of a credibility mark, a quality mark or their equivalent without obtaining the necessary authorisation, a claim in the commercial practice that the trader will offer a competition or advertise a prize without awarding the described prize or providing adequate compensation, and others specified in the Annex No. 1;
• improving protection in the online environment against non-transparent purchases and fake reviews (the trader must ensure that the ratings of the products it sells or provides come from consumers who have actually bought or used the product, if the trader provides consumers with access to product reviews);
• prohibition of marketing promoting goods as identical to goods in another EU Member State - this is a prohibition of misleading conduct (as an unfair commercial practice), which means such marketing of goods that present goods as identical to goods marketed in other EU Member States, if these goods have a substantially different composition or characteristics (however, the law also lists exceptions, where the commercial practice is not considered unfair);
• guarantee of faster redress and compensation for consumers.

News for the trader:

• Harmonization of terms - introduction of the term "trader" instead of the previously used terms "seller" (in the Consumer Protection Act) and "supplier" (in the Civil Code). The introduction of this new concept ensures terminological uniformity at both national and European level;
• Extension of information obligations – e.g. the obligation to inform the consumer about the after-sales service, including the obligation to provide the trader's contact details where it will be available to the consumer (phone number and e-mail) or the obligation to inform the consumer about a reduction in the price of goods (discount);
• Deletion of obligations that impose an excessive burden on traders (without any real contribution to consumer protection) – e.g. deletion of duplicate modification of the elements of proof of purchase or deletion of the obligation to publish a notice of planned temporary closure of an establishment at least 24 hours in advance;
• The introduction of a 'second chance' mechanism – i.e. the introduction of a number of institutes aimed at refraining from imposing a penalty in cases where traders voluntarily cease infringements and make remedies for the benefit of injured consumers;
• Introduction of new principles for imposing penalties to prevent the imposition of liquidation fines, with the penalty rates also determined by a percentage of the trader's turnover – e.g. the supervisory authority may impose a fine of between EUR 200 and 2% of the trader's turnover for the previous accounting period, up to a maximum of EUR 200 000, on a trader for a breach of a legal obligation;
• Introduction of a new type of sanction (for e-shops) – removal or change of content published in the online interface or deletion of the domain.

Impact of the new regulation on the Civil Code

At the same time, the new Consumer Protection Act also amends the Civil Code. These changes are mainly taking place. Change of terms – the term "supplier" used so far has been replaced by "trader".

New definitions:

• digital content = "data that is created and supplied in digital form,"
• digital service = "a service that allows the consumer to create, process, store or access data in digital form, or that allows the exchange or any interaction of data in digital form uploaded or created by users of the service,"
• digital goods = 'any movable property which contains or is linked to the digital content or digital service in such a way that the absence of the digital content or digital service would prevent the item from fulfilling its functions.'

Regulation of liability for defects (so-called complaints) - currently this issue is contained in the Civil Code and the regulation of the complaint procedure was in Act No. 250/2007 Coll. on Consumer Protection. In order to simplify and harmonize this issue with European law, the parallel regulation of the complaint procedure in the Consumer Protection Act will be deleted and only the regulation in the Civil Code in the new wording will be retained.

Together with the new Consumer Protection Act, a draft law on general product safety was approved, which brings an amendment to the safety requirements for consumer non-food products. To date, there has been no specific regulation for these products, and it is a precisely undefined set of diverse products - such as furniture, bicycles, children's clothing, playground equipment, school supplies. Its aim is to increase the protection of consumer health and effective supervision of products so that dangerous products are identified as soon as possible and then consumer protection measures are implemented.

THE PROPOSED AMENDMENT TO THE INFORMATION ACT MAY MAKE ACCESS TO INFORMATION MORE DIFFICULT

An amendment to the Act on Free Access to Information has been submitted to the parliament, which is to introduce an authorization into the law that will allow the obliged person to request the reimbursement of purposefully incurred costs for an exceptionally extensive search for the requested information.

According to the proponents, the aim of this amendment is to manage the process of providing information more efficiently and to protect obliged entities from the abuse of the right to information in the form of requests that require disproportionately large efforts and time for processing. This is supposed to be a response to long-lasting problems arising in cases where obliged entities are overwhelmed by frequent or excessive requests for access to information that are of a vexatious nature. According to the proponents, the proposed legislative step should be based on Czech legislation, which in this way eliminates the abuse of submitting information requests.

The proposed solution is very vague and unclear in terms of terminology, which may lead to obliged authorities interpreting 'particularly extensive search' in a non-uniform and purposeful way, which may lead to more difficult access to public information.

The changes are to be discussed at the June meeting and, if approved, should take effect from December 1, 2024.

CHANGES IN EARLY RETIREMENT

From 15 May, the conditions for entitlement to an early retirement pension will be tightened. First of all, it will no longer be enough to work for an early retirement pension, as the necessary period of service will be gradually extended for younger age generations depending on the retirement age. There is a new rule according to which it is necessary to have worked for as many years and months as the general retirement age minus 23 years.

Example: if the general retirement age for the class of 1967 is 64 years and 2 months, the age group of 1967 will have to have worked for 64 years and 2 months minus 23 years = 41 years and 2 months.

Secondly, in the case of early retirement pensions for the necessary period of service, the amount of the pension will no longer be reduced only by 0.3% for each 30 days that are missing until reaching the retirement age, but by 0.5% for every 30 days that are missing until reaching the retirement age.

AMENDMENT TO THE ACT ON SECURITIES AND INVESTMENT SERVICES

The government has approved an amendment to the Securities and Investment Services Act, which brings substantial changes to the regulation of financial instruments based on distributed ledger technology (DLT). One type of this technology is blockchain. The move is a significant extension of existing legislation, reflecting the growing importance of digital technologies in the financial sector.

This amendment to the law will allow Slovakia to take over into its legal system European Regulation related to DLT. This technology, which also includes blockchain, is the basis for various cryptocurrencies like Bitcoin. At the same time, it allows for decentralized registration of property rights, which is a big step forward for the transparency and security of financial transactions.

The amendment also contains knowledge gained from application practice and experience with the implementation of various European directives. One of the main innovations is the possibility for the exchange to trade securities with a low risk profile that are not included in a regulated market or in a multilateral trading system organized by the exchange.

Furthermore, the amendment to the Act deals with measures that reduce the risk of money laundering and terrorist financing. Under the new law, a legal entity that is not a regulated entity or an entity whose shares are not publicly traded does not require the submission of a prospectus when issuing bonds.

Most of the amendment to the Securities and Investment Services Act will enter into force on 1 June 2024, with the exception of some points that have been postponed until 1 January 2025.