A number of companies in the digital economy operate applications with the same or similar setup throughout the EU. These platforms, especially when operated by new entrants, can often be found lacking in clarity and transparency, which in turn can lead to consumer protection infringements. In such cases, it is in the interest of both businesses and consumers not to launch proceedings in each of the Member States separately to investigate these shortcomings. A joint European action against the popular second-hand clothing marketplace Vinted and the well-known dating app Tinder has recently been concluded. With the help of CERHA HEMPEL expert Boglárka Priskin, we take a look at what businesses operating online marketplaces and apps should be wary of.
Purpose of the CPC network
In order to eliminate and remedy problematic practices for the future, an infringing business can offer a commitment package to the Consumer Protection Cooperation Network (CPC), which brings together the European Commission and national authorities. The CPC will engage in negotiations with the business concerned if coordinated action at the EU level is warranted with regard to the conduct in question to address cross-border consumer protection problems affecting a wide range of consumers. Where this is deemed necessary, the authorities involved in the coordinated action will invite the business that has engaged in the problematic commercial practice with an EU dimension to offer commitments to remedy the infringement within a specified time limit.
Joint action against Vinted
On 18 June 2024, the European Commission announced that, as a result of such joint action, Vinted had made a commitment to change its price communication practices. Vinted is an online marketplace that allows users to trade with each other selling and buying certain products. Negotiations between the Lithuanian-based company and the Lithuanian consumer protection authority, which coordinated the joint European action, started in 2021.
The joint action was prompted by a number of complaints about Vinted’s price communication practices, including the automatic addition of a charge to the total amount of the purchase price (the so-called “buyer protection fee“), which consumers were not informed about in advance. According to the assessment of the authorities involved in the joint action, this practice could constitute a breach of the Unfair Commercial Practices Directive.
Vinted’s commitments
As a result of the concerted European action, Vinted has agreed that both its website and its mobile app will
a) inform consumers in advance and in a timely manner of the total price of the products offered for sale, including, in particular, the buyer protection fee, which is automatically added to each purchase. In the case of Vinted, the buyer protection fee might be viewed as a consideration for using the platform. Pursuant to Vinted’s policy, when it comes to Hungary, this fee is a flat fee of HUF 280 plus 5% of the product’s price (including VAT). Similar practices, known as “drip pricing” in consumer protection jargon, have previously been addressed by the GVH, Hungary’s competition authority, in proceedings against various companies such as Viagogo, Eventim, and Airbnb. Drip pricing is a practice whereby consumers are only made aware of the full price of a product or service at the very end of the purchase process, which is clearly a matter of concern from a consumer protection perspective;
b) refrain from advertising or promotions that give consumers the false impression that Vinted is free of charge;
c) provide more accurate and transparent information to users regarding
i. the process for requesting a refund under its customer protection policy, which is applicable if the purchased products are not delivered or are damaged;
ii. the process for reviewing counterfeits, including the steps consumers should take to claim a refund if the product they have purchased is found to be counterfeit;
iii. the identity verification process (including, in particular, the documents and information to be submitted), which is a prerequisite for users to be able to sell products on Vinted;
iv. Vinted’s rating policy (“Feedback Policy”), including how average user feedback (“average star rating”) is calculated, the difference between automatic feedback from Vinted and feedback posted by users, and how users can report inappropriate feedback (for example, feedback that contains personal information or an unlawful element).
“Compliance with the commitments will be monitored by the CPC network, and if the authorities find that the commitments are not being met in practice, national enforcement proceedings could be launched against the company operating Vinted, potentially resulting in sanctions” notes CERHA HEMPEL’s Boglárka Priskin.
According to the Commission’s press release, Vinted did not agree with the CPC’s request to inform consumers at the beginning of the purchase process that the prices indicated do not include delivery charges and, where possible, to inform consumers in advance of the minimum delivery charge to be applied. Vinted presumably assumed that the average, reasonably informed and reasonably observant consumer would be aware that delivery charges are payable in addition to the product price and the buyer protection fee, depending on the delivery method chosen.
The commitments offered by Vinted go well beyond the original price communication problem, and as a result of the joint action, the company has made a commitment to implement a package of various measures that will affect a number of areas of its operations, from refunds to rating. In doing so, Vinted will provide users with more transparent communication, policies and operations (e.g. more transparent rules on price refunds).
Such a comprehensive intervention is likely to benefit not only consumers (by addressing a wide variety of consumer protection issues) but also businesses and national authorities by avoiding the need to launch a costly consumer or competition supervision procedure or to pay fines that often reach millions of euros. However, the Commission has highlighted that this is not the case for Vinted, which is currently the subject of supervision proceedings in more than one Member State, probably due to other issues detected.
There was a similar case in Hungary when the GVH did not join the joint action of the CPC in the Booking.com case but fined the company HUF 2.5 billion in its own enforcement proceedings. The lack of joint action in such cases is clearly detrimental to large companies operating in many European countries.
Online marketplaces should pay particular attention to legal compliance, in particular, to ensure that their policies applicable to consumers are in line with EU law and that they are drafted with professional diligence, as new EU rules (e.g. the DSA) offer highly effective tools to take actions against companies that do not comply with the law (e.g. product liability rules). Starting from 28 May 2022, thanks to the transposition of the Omnibus Directive into Hungarian law, online marketplaces have additional obligations to provide consumers with information prior to the conclusion of distance contracts concerning the matters described in Article 11/A of the Government Regulation on Web Shops (for example, whether or not the third party from whom the consumer is buying on the online marketplace is a business).
Commitments by Tinder
Alongside Vinted, Tinder (one of the most popular dating apps) was also targeted by the CPC after a Swedish study published in 2022 concluded that Tinder’s pricing practice was not transparent and that it offered the same service to different consumers at different prices. As a result of the network’s collective action, Tinder agreed to provide more accessible and clear information to consumers on its personalised pricing practices. By mid-April 2024, Tinder agreed
i. not to apply age-based personalised pricing without clearly informing consumers in advance;
ii. clearly inform consumers that it is personalising discounts on premium service prices through the use of automated software and why it is offering personalised discounts to the consumer concerned (for example, because the consumer did not wish to subscribe to Tinder premium services at the normal price).
“Pursuant to Article 11 (1) q) of the Government Decree on Web Shops, Hungarian businesses are now required to inform consumers in a clear and comprehensible manner before concluding a distance contract as to whether the consideration for the products or services under the contract is personalised on the basis of automated decision-making. Although this requirement may at first sight appear to be a subsidiary rule, it is nevertheless an important obligation to provide information, since the CPC’s joint action against Tinder was, in fact, based on a breach of this rule“, points out Ms Priskin.
Authors: Dr. Boglárka Priskin
