2020. Amendments concerning consumer protection regulations were published in two separate issues of Magyar Közlöny, the official government gazette, at the end of last year. The most important new developments include that starting from 1 January 2021, procedures before dispute resolution bodies has been conducted electronically; and from 28 May 2022, consumer protection authorities will impose fines equal to 4% of the turnover for selling dual quality products, the prior price will have to be disclosed in price promotions, and the rules applicable to contracts between consumers and businesses will be significantly modified.
Act CXXXVI of 2020 on the Modification of Certain Acts Associated with Consumer protection, which was published in issue No. 275 of Magyar Közlöny on 11 December 2020, introduces major modifications in the Consumer Protection Act and the Unfair Commercial Practices Act (UCPA), whereas Government Decree 712/2020. (XII.30), which was published in issue No. 296 of Magyar Közlöny on 30 December 2020, modifies many provisions of Government Decree No. 45/2014. (II.26.). Although there is ample time to prepare for most of the changes, we briefly outline the new rules that will take effect on 28 May 2022 so that preparations for them can start as soon as possible.
- Authorities will have the power to impose a hefty fine equal to at least 4% of the net turnover on a company that engages in a misleading practice by selling “dual quality” products, and if the net turnover cannot be determined, the amount of the fine will be at least two million Euros. The relevant regulations were first advocated by the Visegrad 4 countries in the European Union. A practice will qualify as misleading if it involves the marketing of a good, in one Member State, as being identical to a good marketed in other Member States, while that good has significantly different composition or characteristics, unless this is justified by legitimate and objective factors.
The good news with regard to the modification is that the Ministry of Innovation and Technology has promised to inform the companies that could be affected by the new rules about what they should change in their practices in order to avoid the fine. Therefore, it is expected that the Ministry will shortly contact each of the retail chains where the Ministry’s lab took samples from products, typically cosmetics and household chemicals, and found that they contained less active ingredients than the same products in other countries, despite their label being the same. The aggregate figures determined in the lab tests are expected to be published in the spring of 2021.
- Another major change in the Consumer Protection Act is that a number of additional aggravating and mitigating factors have been defined with regard to legal consequences. For example, a consumer protection authority will be able to take into account the value of products and, in cross-border cases, any penalties that may have been imposed on a company in another Member State for the same infringement. These modifications will bring the consumer protection authorities’ procedures under the UCPA closer to the more familiar way in which the Hungarian Competition Authority conducts its procedures concerning consumer protection matters pursuant to the UCPA. Therefore, misleading or aggressive marketing or selling practices, and B2C communications that do not rise to the level of a competition law infringement are likely to be subject to higher fines after 28 May 2022.
- • The infamous “black list” in the UCPA will be expanded to include four new prohibited practices:
- providing search results in response to a consumer’s online search query without clearly disclosing any paid advertisement or payment specifically for achieving higher ranking of products within the search results;
- reselling events tickets to consumers if the trader acquired them by using automated means to circumvent any limit imposed on the number of tickets that a person can buy or any other rules applicable to the purchase of tickets;
- untruthfully stating that reviews of a product are submitted by consumers who have actually used or purchased the product; and
- submitting false consumer reviews or endorsements.
- providing search results in response to a consumer’s online search query without clearly disclosing any paid advertisement or payment specifically for achieving higher ranking of products within the search results;
- The government has had enough of fictitious discounts, and therefore a decree on the sales prices and unit prices of products has also been modified. Under a general and rather drastic requirement, when a price reduction is promoted, the prior price(s) will also have to be stated after 28 May 2022, except in the case of foods and other goods that are liable to deteriorate or expire rapidly. The modification states that any announcement of a price reduction must indicate the prior price applied by the company for a “determined period of time” prior to the application of the price reduction. Therefore, the prior price will be the lowest price applied by the company during a period of time not shorter than 30 days prior to the application of the price reduction.
- As a result of a modification of Government Decree No. 45/2014 on contracts between consumers and businesses, which was promulgated on 30 December 2020 and will take effect on 28 May 2022, the Government Decree will define many key new terms (e.g. digital content/service and online market) and, in a new development, it will also be applicable to contracts concerning water, natural gas, electrical power and central heating supply. Under the new rules, additional information will have to be disclosed to consumers prior to the conclusion of a contract (e.g. information about the key parameters that determine the ranking achieved in the results of an online search query).
If you need help with your preparations, please contact us and our consumer protection experts.
Our contact details:
Dezső & Partners 1011 Budapest, Fő u.14
Tel: +36 1 4578040 E-mail: office@cerhahempel.hu
Andrea Magdolna Nagy, attorney, Consumer Protection Practice Leader
