Presentation - YES, sale - NO. Changes in consumer rights legislation.

Surely there is someone (or someone you know) in your family or friends who has been persuaded to buy a pot made of metal alloy from the space shuttle or a set of non-dull knives at a bargain price. Such ‘unique’ products are often offered at trade fairs, shows, organised presentations or during home visits by sales representatives. To date, the President of UOKIK has already imposed several record high fines on entities that violate the collective interests of consumers during such events. Mention may be made here of the recent decision of the aforementioned authority of 15 June 2022, number RBG - 4/2022 imposed on New Life spółka z ograniczoną odpowiedzialnością with its registered office in Suchy Las.

It was the increase in preventive protection of consumers, especially those who are elderly, that gave rise to legislative changes aimed at introducing provisions implementing the Omnibus Directive into Polish law.

UOKiK at war with dishonest traders

As the proponent of the amendments to the Act of 30 May 2014 on Consumer Rights (hereinafter: ‘the Act’) itself notes, decisions issued by the President of UOKiK are not always effective. Often there is a situation in which, in order to avoid liability, entrepreneurs make entity transformations, as a result of which, either at the time of issuing the decision or later, in the course of court proceedings or enforcement of a fine, the entity no longer exists. It is also problematic that several entities are involved in the whole process of manipulating the consumer to sell a product. One is responsible for inviting potential customers to the shows, another conducts the shows and another concludes contracts with the consumer. This diffused responsibility makes it difficult not only for the President of the OCCP to act, but also for consumers to pursue individual claims. The aforementioned authority also points out that the effectiveness of its actions is also affected by the lengthiness of judicial review of administrative decisions, which in both instances is on average about four years after its issuance. At the same time, there is no denying that the types of unfair actions of traders in this market are evolving all the time and are becoming more and more sophisticated and thus more difficult to define and challenge on the basis of the current legal regulations.

Extension of the application of the Act 

The amendment to the Act is intended to be a remedy for these ‘ills’ of the Authority. It extends the definition of an off-premises contract to include the circumstances surrounding a fair or show organised by a trader (Article 2(2)(e) of the Act).

With the changes in the law, the era of paying sales representatives or tour leaders directly for products sold during tours is coming to an end. In the case of the conclusion of a contract during a tour or an unsolicited visit of the trader to the customer's place of residence or usual stay, the trader may not accept the payment before the expiry of the withdrawal period, which in this case is 30 days and not 14 as before (art.17a in connection with art.27(2) of the Act).

Invalidity of a contract involving financial services

A milestone is the introduced prohibition on the conclusion of financial services during a show or tour (this also applies to the offering of products on so-called 0% instalments). If the demonstration does not take place at an express invitation (or if the trader is not able to prove this), the contract concerning financial services is additionally invalid. In this case, the invalidity applies to the financial contract itself, not to the sales contract, which complicates the entrepreneur's relationship with the bank or other entity that granted the credit.

Representative by invitation 

The amended regulations provide for one exception allowing entrepreneurs to remain in direct sales. This is the aforementioned explicit invitation of the sales representative by the consumer to the home. However, this means that the said representative will only be able to appear at the consumer's place of residence if he or she has obtained confirmation of the invitation or express consent to visit the potential buyer's home. In order to prove that such an invitation actually took place, the trader will have to document this fact. However, the law does not introduce a rigour as to the form of this confirmation. It may be in the form of an email, a written questionnaire filled in by the consumer during the fair, or confirmation by SMS, etc. With these requirements in place, the trader will be able both to conclude a financial agreement with the consumer concerning, for example, credit for a purchase, and to accept payment from the consumer before the expiry of the 14-day withdrawal period (Article 7ab of the Act).

Wider catalogue of contracts with right of withdrawal 

When the trader goes to the consumer's home for an unscheduled visit and enters into a contract with the consumer, the purchaser may withdraw from the contract:

1. for the provision of services for which the consumer is liable to pay the price, where the trader has performed the service in full with the express and prior agreement of the consumer, who has been informed before the performance of the service by the trader that he will lose his right of withdrawal after the trader has provided the service, and has acknowledged it;

2. in which the price or remuneration depends on fluctuations in the financial market which are not under the trader's control and which may occur before the end of the withdrawal period;

3. in which the object of the performance is a non-refabricated item, produced to the consumer's specifications or intended to meet the consumer's individual needs;

4. where the object of the performance is an item supplied in sealed packaging which cannot be returned after opening for health or hygiene reasons, if the packaging has been opened after delivery.

This is a novelty introduced in Article 38 of the Act, which radically improves the situation for consumers.

‘Have you considered installing photovoltaic panels?’

The Omnibus also influenced the introduction of two small but important amendments to the Telecommunications Act. According to the amended wording of Article 172 of the aforementioned Act, it is prohibited to use telecommunications terminal equipment and automatic calling systems for the purposes of direct marketing or sending unsolicited commercial information within the meaning of the Act of 18 July 2002 on the provision of services by electronic means. Therefore, if the consumer (subscriber or end-user) has not expressly agreed in advance to be sent offers to purchase photovoltaics, no trader may solicit him with such offers. Sending unsolicited commercial communications will therefore be prohibited. Moreover, under the above-mentioned legislation, such behaviour constitutes an act of unfair competition.

The trader will only be able to avoid liability if he can demonstrate the customer's prior consent to a certain form of contact.

Costs greater than benefits?

The new rules are intended to protect those most vulnerable to aggressive sales techniques. People who, often by taking on financial obligations in order to buy a super-comfortable massage bed, have fallen into a spiral of debt and bankruptcy proceedings. On the other hand, the regulations introduced are part of a pattern observed for many years of a gradual restriction of economic freedom through the introduction of ever more far-reaching rules on how an entrepreneur is to conduct his or her business. The legislator wants, in a way, to force entrepreneurs to behave ethically and honestly. However, we will be able to see the effects of these actions only in a few years, looking, among other things, at the number of penalties imposed by the Office of Competition and Consumer Protection (UOKiK) for violations of the currently introduced regulations.