Product Regulation & Consumer Protection partner, Wendy Hederman explains how the newly-passed Consumer Rights Act 2022 has radically overhauled Irish consumer law with its expanded range of obligations on traders and increased penalties for infringements.

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The Consumer Rights Act 2022 (the Act) was enacted on 7 November 2022 and makes widespread changes to consumer protection laws in Ireland, aligning them more closely with rules across the EU. It creates clearer rules for businesses but introduces new obligations on traders selling to consumers. It also strengthens the remedies available to consumers and increases the penalties for traders who breach the law.

The Minister of State with responsibility for Consumer Protection legislation, Robert Troy TD previously described it as “the biggest overhaul of consumer rights law in 40 years… modernises and consolidates existing consumer protection law and significantly strengthens the enforcement powers of [Irish] agencies responsible for ensuring consumer rights...”

The Act implements each of the following EU Directives:

• The Digital Content Directive
• The revised Sale of Goods Directive, and
• The Omnibus (or “Modernisation and Enforcement”) Directive which itself amends:
  – Unfair Contract Terms Directive
  – Unfair Commercial Practices Directive
  – Consumer Rights Directive
  – Price Indication Directive [1]

As the Omnibus Directive updates and strengthens four existing consumer protection laws, the combined effect of these legal changes is that traders now have six strengthened or new laws to comply with, depending on what goods or services the trader sells, and whether online and/or offline.

The most significant effect of the Omnibus Directive, and therefore the Act, is the increased enforcement powers. These powers include increased penalties for widespread breaches of the laws of up to 4% of turnover in the relevant Member State or Member States, or up to €2 million.

Overview of changes under the Act

We outline the changes to Irish consumer law made by each part of the Act

• Parts of the Sale of Goods & Supply of Services Acts 1893 & 1980
• Part of the Package Holidays and Travel Trade Act 1995
• Parts of the Consumer Credit Act 1995
• All of the Unfair Terms in Consumer Contracts Regulations
• All of the Consumer Goods and Associated Guarantees Regulations 2003
• All of the Consumer Information Rights Regulations 2013
• A section of the Arbitration Act 2010
• All of the Trading Stamps Act
  

and amends:

• The Consumer Protection Act 2007
• The Sale of Goods & Supply of Services Acts 1893 & 1980
• The Acts referred to in Parts 10 to 13
• And the Cooperation Regulation 2020, by the addition of turnover based fines / €2million for widespread infringements (section 173(2) and Part 2 of Schedule 6)

Tips for Traders

Tip 1

The Act introduces an after-sales obligation on traders to ensure that consumers are informed of and supplied with updates that are necessary to maintain the goods in conformity with the original sales contract. In the case of goods with digital elements, the obligation is on the trader to ensure that customers are informed of and supplied with the relevant updates, including security updates. The trader is not obliged to provide upgrades, new functionality, or improvements to the goods, only to supply updates that are necessary to keep the goods in conformity with the contract.

Even where a trader sells third party manufactured goods to consumers, the responsibility to provide updates is placed solely on the trader. We recommend that traders obtain contractual commitments and/or indemnities, as appropriate, from third party producers in order to manage this risk. The contract with the producer should clearly detail how and when the producer will supply digital content, digital services, as applicable, and updates for the duration required. The contract should also note the producer’s assistance to the trader for bringing goods back into conformity where the consumer is entitled to a remedy.

Tip 2

The Act places additional transparency requirements on traders in respect of customer reviews. Traders will need to ensure that any customer reviews they display are genuine and authentic. Submitting or commissioning fake reviews or endorsements by customers will be prohibited. Traders will need to justify the reasonable and proportionate steps they have taken to ensure that their customer reviews are genuine, for example, by displaying reviews of verified purchasers only.

Tip 3

The Act also addresses personalised pricing. It requires that the consumer should be informed when the price of a product is personalised on the basis of automated decision making. If a trader personalises prices on the basis of automated decision making, it is advisable to implement a process to disclose this to consumers.

Tip 4

Traders who provide search query functionality to consumers for the sale of goods/products will need to indicate whether any of the results displayed contain any paid advertisements or whether it has received any payment to display the product or service higher in its search results. This does not however apply to the providers of online search engines generally.

It introduces several enhanced statutory protections for consumers, including:

• New rights for digital content contracts, for example audio, video files and computer games
• New rights for contracts for the supply of services, for example streaming services, cloud computing and social media
• Rights where the consumer does not pay a monetary price but gives personal data that the trader can commercialise
• Consumers are entitled to know whether the seller they are buying goods or services from on a platform, for example Ebay or Amazon, is a private seller or a trader
• An increased ‘black list’ of contract terms that are always unfair
• New enforcement powers for the Competition and Consumer Protection Commission (CCPC) to ensure consumer rights are upheld

Additionally, it strengthens consumer rights relating to quality, fitness for purpose and other aspects of services. Consumers have statutory remedies where services supplied by traders do not comply with the legal requirements. Traders should familiarise themselves with the additional obligations placed on them in respect of sales to consumers.

Pricing Regulations

Alongside the Act, revised Pricing Regulations have been adopted, which introduce stricter rules on how pricing discounts are displayed. All announcements of a reduction in the selling price of a product must indicate the prior price of the product. The product must have been on sale at that prior price for at least 30 days before the reduction in the price was made or announced. These Pricing Regulations will require greater rigour in how discounts and price cuts are shown. The CCPC has started a proactive campaign of informing traders and enforcing the Pricing Regulations.

Enforcement powers in Ireland

The CCPC also gains new enforcement powers regarding traders who infringe the law, with radically increased penalties available for prosecutions of EU-wide infringements. As required by the Omnibus Directive, GDPR style fines (of up to 4% of the trader’s annual turnover in Ireland and relevant Member States, or up to €2 million) now apply to EU wide infringements of several parts of the Act.

Collective redress and representative actions

On 22 March 2022, the Irish Government approved the drafting of legislation to transpose the EU Directive 2020/1828 on representative actions for the protection of the collective interests of consumers (EU Directive on Representative Actions). This is effectively an EU-style of class action, which will be available for losses suffered by consumers arising out of breaches of over 60 existing EU Regulations and Directives.

The EU Directive on Representative Actions was published on 4 December 2020. Ireland and the other Member States were required to adopt implementing measures by 25 December 2022 which would apply from 25 June 2023.

Once it comes into effect by national legislation, the EU Directive on Representative Actions will harmonise the regime for collective actions to be brought on behalf of EU consumers. It also aims to balance the availability of the mechanism across Member States while providing safeguards to prevent frivolous claims against traders as detailed in our previous article available here.

Conclusion

Now that the Act has been passed, Irish consumer law has been radically overhauled, obligations on traders have expanded, and the penalties for certain infringements have increased significantly.

Traders operating in Ireland are advised to consider the impact of the Act and the changes that may be needed in their sales practices to ensure compliance.

For more information and expert guidance on the likely impact of the DSA and its obligations on your business, contact a member of our Technology team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] The amendments to the Price Indication Directive have been implemented by Irish Pricing Regulations adopted the end of November 2022