New Provisions to Be Introduced by the New Consumer Protection Act in Slovenia

Author: Nina Ličen

On July 12, 2022, the Government published a proposal for a new Consumer Protection Act (“ZVPot-1“), which is proposed to be adopted under the urgency procedure. The Act is on the agenda of the National Assembly for September 2022.

ZVPot-1 will combine the provisions of the current Consumer Protection Act (“ZVPot“) and the Consumer Protection against Unfair Commercial Practices Act (“ZVPNPP “).

The new provisions in ZVPot-1 will mainly result from the transposition of three new directives adopted at the EU level, which will be transposed into the Slovenian legal order by ZVPot-1. These directives are:

• Directive (EU) 2019/770 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the supply of digital content and digital services;
• Directive (EU) 2019/771 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the sale of goods, amending Regulation (EU) 2017/2394 and Directive 2009/22/EC, and repealing Directive 1999/44/EC; and
• Directive (EU) 2019/2161 of the European Parliament and of the Council of 27 November 2019 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU of the European Parliament and of the Council as regards the better enforcement and modernization of Union consumer protection rules.

Legal protection of consumers will be adapted to the digital age with the introduction of ZVPot-1, which will bring certain novelties for companies. These relate in particular to the introduction of a new legal framework for the contract for the supply of digital content or a digital service which will include, inter alia, the provision of updates of digital content or services, and for goods with digital elements. At the same time, adequate consumer information when purchasing digital content or services and additional consumer information when purchasing via online platforms will be introduced.

Many of the changes to the legal system implemented by ZVPot-1 will be due to the introduction of digital content and services, and the provisions of ZVPot-1 currently in force will also apply to digital content and services. Other changes mainly concern the following legal areas:

1. Price Reductions

ZVPot-1 will, like ZVPot, stipulate that in the event of a price reduction, both the previous price and the reduced price must be indicated. However, ZVPot-1 will specify in more detail the definition of the previous price, which will be defined as the lowest price used by the company during a period of not less than 30 days prior to the application of the currently reduced price. This is to prevent companies from increasing the price of a product for a short period of time before the price reduction, thus making the reduction appear more significant than it actually is.

Specific rules will be laid down for cases where the product will be on the market for less than 30 days before the reduction, where the company will offer the same goods again after an interruption period, and in the case of a continuous gradual price reduction.

2. Misleading Practices and Misleading Omissions

Cases where goods which are marketed in a Member State but in reality have a substantially different composition or characteristics which could consequently cause, or have caused, the average consumer to make a purchase that they would otherwise not have made, will also count as a misleading commercial practice under ZVPot-1.

There will also be new regulations for online interfaces which allow consumers to search for products offered by different companies or consumers by searching for a keyword, phrase, or other input.

Consumers increasingly rely on other consumers’ reviews and recommendations when making purchasing decisions. ZVPot-1 will therefore stipulate that a company which provides access to product reviews given by consumers will be required to inform consumers whether it has processes or procedures in place to ensure that the reviews published are genuinely given by consumers who have bought or used the products. Information on how a company carries out these reviews will also be considered essential; in addition, the company will have to provide clear information on the processing of reviews (whether it publishes all reviews, if they are sponsored, if they are in connection with any contractual relationship, etc.), and companies will be prohibited from influencing the results of reviews, for example, by deleting negative comments. Consequently, ZVPot-1 will contain additional examples of misleading practices relating to the provision of search results, the provision of ratings and recommendations from other consumers, etc.

Consumers who will be harmed by unfair commercial practices will have the right to proportionate and effective compensation and, where appropriate, a reduction in the purchase price or withdrawal from the contract, and a claim for a refund of the money paid.

If the consumer requests a reduction in the purchase price or withdraws from the contract and asks for a refund, the company will have to refund all or part of the purchase price within 14 days of receiving the request, provided that (i) it is not disputed that the company has engaged in an unfair commercial practice, or (ii) the unfair commercial practice is established by a final decision of a court or an inspecting authority. The time limit for bringing a claim will be six months from the date on which the unfair commercial practice has been established.

3. Sales Contract

The provisions regarding the sales contract will also apply to digital content or a digital service, namely when digital content or a digital service are incorporated in or interconnected with the goods in such a way that the goods cannot perform their function without digital content or a digital service and will be provided with the goods in accordance with the sales contract, regardless whether such digital content or digital services will be supplied by the seller or a third party. In case of doubt, digital content or a digital service will be deemed to be included in the sales contract.

ZVPot-1 will contain several new provisions relating to compliance requirements for goods (what characteristics the product must have, the effects of notification of non- compliance, the time limit for returning the goods, etc.). These provisions will be very similar to the current provisions of ZVPot-1 and the Obligations Code, but with some important exceptions regarding the time limit and the procedure to be followed in the event of non- compliance.

ZVPot-1 will also contain additional requirements on the content of the warranty document and will shorten the time limit for the repair of defects to 30 days from the current 45 days.

4. Contract for the Supply of Digital Content or a Digital Service

ZVPot-1 will completely redefine the area of digital content and digital services. The provisions of this Chapter will also apply to contracts which were concluded before the date of application of ZVPot-1 and provide for the supply of digital content or a digital service over a longer period, either continuously or in a series of individual supplies, but only in relation to digital content or a digital service supplied from the date of application of the relevant provisions of ZVPot-1.

A contract for the supply of digital content or a digital service will be defined in ZVPot-1, with certain exceptions (e.g., healthcare contracts, financial services contracts and contracts relating to certain types of gambling), as a contract under which a company undertakes to supply digital content or digital services to the consumer and the consumer undertakes to pay the purchase price to the company. Under ZVPot-1, the foregoing will also apply to cases where the consumer undertakes to provide personal data to the company in lieu of payment of the purchase price. The new provisions will also apply to contracts under which digital content or services are developed in accordance with the consumer’s instructions.

In cases of bundling practices, the provisions on digital content or services will apply only to the elements of the bundle contract relating to digital content or digital services. If a consumer opts out of an element of a bundle contract under the conditions set out in ZVPot-1, the consumer will also be able to opt out of the other elements if the consumer cannot reasonably be expected to keep the other elements of the bundle contract without paying a termination fee or other costs and penalties. The consumer will also have the choice between reimbursing the company an amount corresponding to a proportion of the total value of the goods received and consequently keeping the goods received or returning the goods to the company in the condition they were delivered to the consumer at the consumer’s expense, whereby the company will be obliged to refund the purchase price to the consumer.

The compliance requirements for digital content or services will be largely the same as those for goods. In addition, digital content or a digital service will have to comply with any trial version or preview of digital content or a digital service that the company will make available before the conclusion of the contract for the supply of digital content or a digital service.

In addition, the seller will have to ensure that the consumer is informed about the functionality of the digital item, digital content or digital service, including the applicable technical protection measures, about the information on the compatibility and interoperability of the digital item, digital content or digital service, and about the updates, including security updates, that will be necessary to maintain the compatibility of the digital item, as well as that these updates will be delivered to the consumer within a reasonable period of time.

Digital content or a digital service will have to be delivered in the latest version available at the time of the conclusion of the contract unless the parties agree otherwise. In cases where a continuous supply is agreed, digital content or a digital service will be deemed compliant if it is compliant throughout the duration of that period. ZVPot-1 will contain additional requirements regarding the obligations of companies and consumers to update digital content or digital services.

The company will be liable for any non-delivery of digital content or digital services. If a single supply or a series of individual supplies is specified, the company will be liable for any non-compliance of digital content or digital services that exists at the time of supply and becomes apparent within two years of the supply of digital content or digital services. In the case of a continuous supply, the company will be liable for any non-conformity that will arise and manifest itself during the period in which the supply of digital content or digital services was agreed.

The burden of proof of non-compliance will be on the company to prove within one year of a single or individual supply or during the duration of a contract for continuous supply of digital content or a digital service. The company may be exempt of liability if it proves that the consumer’s digital environment is incompatible with the digital requirements for the digital content, provided that the company informs the consumer of such requirements in a clear and comprehensible manner before the conclusion of the contract. After the expiry of the one-year period, in the case of a one-off or individual supply, as well as in cases where the consumer will not cooperate with the company in establishing whether non-compliance is a consequence of the consumer’s digital environment, the burden of proof will be on the consumer.

In the event of non-compliance, the consumers will have rights similar to those they would have in the event of non-compliance of goods (request for establishing compliance; request for a proportionate reduction of the purchase price or withdrawal from the contract). These rights will expire after two years from the date on which the consumer notifies the company about the non-compliance of digital content or digital services.

The consumer will also have the right to seek compensation for damages, in particular for damages to hardware or digital content or services owned by the consumer, provided that the damages suffered will not be caused by the consumer’s acts or omissions. The consumer will be entitled to retain the relevant part of the purchase price until the company fulfills its obligation.

The consumer will be able to request that compliance is restored, unless it is impossible to do so or causes disproportionate costs to the company, taking into account all the circumstances of the case, including the value that digital content or services would have if it were compliant and the significance of the non-compliance. The company that will be obligated to establish compliance based on the foregoing will be required to establish it within a reasonable time and free of charge.

The consumer will be able to claim a proportionate reduction of the purchase price if (i) it is impossible or disproportionate to establish compliance; (ii) the company fails to bring it into compliance; (iii) digital content or services remain non-compliant despite the company’s attempts to establish compliance; (iv) non-compliance is of such a serious nature that it will justify an immediate proportionate reduction of the purchase price or withdrawal from the contract; or (v) the company states that it will not establish compliance or the circumstances indicate that compliance will not be established.

If the consumer undertakes to provide personal data to the company in lieu of payment and then withdraws the consent to process personal data or objects to the further use of personal data, the company will be able to terminate the contract for the supply of digital content or a digital service . The contract will then be terminated with immediate effect if the statutory or contractual time limit imposes a disproportionate burden on the company. However, the company will not be able to claim damages against the consumer for withdrawing said consent. After the withdrawal, the consumer’s personal data will have to be returned to the consumer or, in agreement with the consumer, deleted or otherwise destroyed.

ZVPot-1 will specify the obligations of the company and the obligations of the consumer in the event of withdrawal. It will be provided, inter alia, that after the withdrawal, the company will not be allowed to use any content other than personal data provided or created by the consumer when using digital content or digital services supplied by the company, unless (i) that content is not useful outside the context of the digital content or digital services supplied by the company; (ii) that content only relates to the consumer’s activity in using the digital content or digital services supplied by the company; (iii) the company combines this content with other data and it is no longer possible to separate it or if it would be a disproportionate effort to do so, or (iv) the content is created jointly with consumers and other consumers are able to continue using that content.

Consumers will also have specific rights if digital content or services change. This will be possible if the contract itself allows or justifies changes, if these changes are free of charge for the consumer who has to be informed of them in a clear and comprehensive manner, and if the consumer is informed of the nature of the change and the time of its implementation in advance within a reasonable period of time and on an appropriate medium, as well as of the consumer’s right to withdraw from the contract.

The consumer will have the right to withdraw from a contract for the supply of digital content or a digital service if such changes have more than a negligible negative effect on the use of or access to digital content or digital services, whereby withdrawal will be free of charge for 30 days after receiving notice of the change or until the company changes digital content or services, whichever occurs later. However, the consumer will not have the right to withdraw from the contract if the company allows the consumer to keep unchanged digital content or digital services with no additional cost and the compatibility of that digital content and service is ensured.

In case of non-delivery or non-compliance of digital content or service due to an act or omission of the upstream company, the company will have recourse. The downstream company will not have recourse against the upstream company for digital content or digital services that will be composed or built on software that the company will receive free of charge and under a free and open-source license. The provisions on the burden of proof will apply mutatis mutandis for the latter, while the provisions of the Obligations Code will apply mutatis mutandis to liability for damages.

5. Additional Consumer Rights in Distance or Off-Premises Contracts

In cases of distance or off-premises contracts, the consumer will also have to be provided with additional information, e.g. about the other means of online communication and possible price adjustments based on automated decision-making. Additional notification obligations for online marketplace providers will also be introduced.

ZVPot-1 will change the rights of consumers in the event of withdrawal from contracts for the supply of digital content which will not to be supplied on a tangible medium.

6. Penal Provisions

The fines will range from EUR 500 to EUR 5,000 (the ZVPot currently sets the fines for the same offences as those listed in ZVPot-1 at EUR 1,200 and in the range from EUR 3,000 to EUR 40,000), while the fines for more serious offences will range between EUR 5,000 and EUR 50,000 (the ZVPot currently sets the fines for the same offences as those listed in ZVPot-1 in the range from EUR 3,000 to EUR 40,000).

The responsible person of a legal person, the responsible person of a sole proprietor or the responsible person of an individual who carries out an activity on their own will also be liable to a fine of between EUR 300 and EUR 1,500 for the offence.

ZVPot-1 will also introduce new fines for the most serious offences, which will include a fine of between 0.5 and 5 percent of the annual turnover of the company in the relevant EU Member State(s) in the preceding business year, if (i) the company fails to set out the terms of the contract in clear and understandable language, (ii) the company imposes unfair contract terms in its dealings with consumers, (iii) the company uses unfair commercial practices; or (iv) the company uses digital content or digital services after the withdrawal from a contract for the supply of digital content or a digital service or the withdrawal from a contract for digital content or digital services concluded at a distance or off-premises. Such fines will be imposed on legal persons, sole traders and self-employed individuals. Should information on annual turnover not be available, such offences will be punishable by a fine of between EUR 5,000 and EUR 2,000,000 for a legal person, a sole proprietor and a self-employed individual.

The responsible person of a legal person, the responsible person of a sole proprietor or the responsible person of an individual who carries out an activity on their own will also be liable to a fine of between EUR 4,000 and EUR 8,000 for such an offence.

7. Sub-Legislative Acts

A number of sub-legislative acts are also foreseen to be updated based on ZVPot-1.