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New consumer protection against unfair commercial practices in the Czech Republic

New consumer protection against unfair commercial practices in the Czech Republic

This article is devoted to the new consumer protection law in the Czech Republic, which follows from the novelization of the Czech Consumer Protection Act (Act No. 634/1992 Coll.) and which became effective on 28th December 2015.

The aim of this novelization is to provide for correct and full transposition of the Directive 2005/29/ES dated 11th May 2005 concerning unfair business-to-consumer commercial practices in the internal market (the „Unfair Commercial Practices Directive“) and ensure the same level of protection to all consumers irrespective of the place of purchase or sale in the EU.

The new legislation brings more detailed and exact definition of illegal actions defined as unfair commercial practices, brings definitions of the statutory terms “trader”, “products”, “commercial practice” and defines other statutory terms (see below).

Unfair commercial practice

Unfair commercial practices are according to the new regulation those which do not comply with the requirements of professional diligence and are likely to materially distort the economic behaviour of the average consumer.

The above actions are always measured in relation to average consumer. As average consumer is considered a consumer, who is sufficiently informed and has reasonable level of care and attention, with respect to social, cultural and language factors.

It is desirable that the impact of the commercial practice whether it is capable of materially exploiting the economic behaviour of an identifiable group of consumers whose characteristics make them particularly vulnerable to unfair commercial practices (because of their mental or physical infirmity, age or credulity), is assessed from the perspective of the average member of that group.

The Consumer Protection Act newly distinguishes the following unfair commercial practices: misleading as set out in § 5 or misleadingly omitted as set out in § 5a and aggressive as set out in § 5b. Annex I and II of the Consumer Protection Act contains the list of those commercial practices which shall in all circumstances be regarded as unfair.

Unfair commercial practices are prohibited, prior to the actual decision of the consumer about the purchase as well as during the decision making process and after its completion (e.g. during warranty claim).

The new Consumer Protection Act defines also other terms in consistent with the Directive such as „invitation to purchase“, „transactional decision“, „to materially distort the economic behaviour of consumers“, „undue influence“, „cross border dispute“ and „consumer competition“.

To materially distort the economic behaviour of consumers pursuant to the Consumer Protection Act means using a commercial practice to appreciably impair the consumer’s ability to make an informed decision, thereby causing the consumer to take a transactional decision that he would not have taken otherwise.

New rules of proving the correctness of the factual allegations

The Consumer Protection Act newly lays the burden of proof of the factual allegations onto the seller. According to the new provision of § 5c, the supervisory authority is entitled to require the seller to prove within the administrative proceedings the accuracy of any factual allegations in relation to the questioned commercial practice. If the seller does not carry this burden of proof, i.e. does not submit the required evidence, or if the supervisory authority finds it inadequate, will be factual claims deemed incorrect.

Conclusion

The new consumer protection legislation should bring support to the honest businesses and also protection of their position within the internal business market against dishonest businesses, whose position (and the use of misleading and aggressive business practices), on the other hand, should be weakened. What will be the actual effects of it, we will be able to see with time.

By Jiří Spousta & Magda Stárková

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