WARNING – major updates in consumer protection

Schaffer News

European regulations seek to further increase consumer protection. This will also be reflected in Czech legislation. Stricter rules on consumer protection will also affect businesses that (at least in some cases) enter in contracts with customers – consumers. They must then react to the changes by altering their contracts, general terms and conditions and their website content. An insufficient or late response could lead to sanctions in the hundreds of thousands of crowns, at the least.

Consumers should in future have the right to lodge complaints against traders to bodies offering independent, impartial, transparent, effective, fast and fair alternative (out of-court) dispute resolution. At the same time, this should not prevent the subsequent initiation of legal proceedings in the same case. Nevertheless, the aim is to lighten the courts' load on the condition that businesses will have to cooperate and will not be able to block an out-of-court resolution.

Businesses that operate internet stores/e-shops and that sign purchase contracts and service contracts with consumers on-line (typically consumer loans, the manufacture of goods to order, etc.) also have to set up a platform for the resolution of disputes on-line. This platform will then forward the complaint on to the appropriate alternative dispute resolution body. Traders must refer to the platform on their website and must also publish their e-mail address. Because it is a European regulation it will also be directly binding for Czech businesses, from 2016. Violations would then be heavily fined – up to CZK 1 million.

A typical example of alternative dispute resolution would be unrecognised claims and liability for defective goods sold to a consumer via an e-shop.

Businesses will not be able to avoid an out-of-court resolution if it is sought by a consumer. On the contrary, they must consistently place the relevant information (identification of the alternative dispute resolution body – as well as the Czech Trade Inspection Authority ("CTIA"), other institutions may also be appropriate, such as the Czech Telecommunication Office) on their website and keep consumers thoroughly informed, including through their general terms and conditions. Some information must even be provided to consumers in documentary form or on a durable medium (CD/DVD/flash disc, etc.). If a business does not fulfil its obligation to inform or fulfils it only in part, it again risks a fine of up to CZK 1 million.

The amendment to the Consumer Protection Act also expands the competence of the CTIA which should be qualified to provide an alternative resolution in the majority of disputes between traders and consumers. This, of course, also increases the risk of checks by the CTIA, which could simultaneously use complaints as "suggestions" for checks and possible sanctions. Already in recent months we have seen a growing tendency for checks and penalties imposed by the CTIA, which severely fines deficiencies in compliance with the rules on consumer protection.

Mgr. Šárka Gregorová, LL.M.