Search
Contact
09.03.2020 | KPMG Law Insights

Consumer protection and corporate compliance

Consumer protection and corporate compliance

The EU is modernizing consumer protection. The directive in question readjusts the existing EU consumer protection in many places and subjects it to regulatory control. The introduction of sanctions and the associated location in regulatory offence law makes consumer protection compliance-relevant. For companies and traders, it is advisable to adapt their compliance management systems and to check their offer practices and T&Cs in the B2C area for conformity.

The EU is reorganizing consumer protection with the amending Directive EU 2019/2161 (hereinafter referred to as the “Consumer Protection Compliance Directive”, or “VC-Directive” for short). The directive aims to modernize national consumer rights, strengthen them in e-commerce and enforce them by means of fines. It entered into force on January 7, 2020, and must be transposed into national law by member states by November 28, 2021. In doing so, the German legislator must observe the minimum harmonization prescribed in the Directive, but may also go beyond the Directive’s rules in terms of the level of protection.

EU consumer protection in German law
The VC Directive amends and supplements several existing EU consumer protection directives, specifically the Directives on the protection of consumers against unfair terms (Directive 93/13/EEC), on the indication of prices (Directive 98/6/EC), against unfair commercial practices (Directive 2005/29/EC) and on credit, distance and doorstep selling (Directive 2011/83/EU). In German law, these directives are reflected, among other things, in the provisions on general terms and conditions, on rights of withdrawal, on information requirements for doorstep or distance selling transactions, on sales law regulations, and on consumer loans. Other examples include the Unfair Competition Act (UWG) and the Price Indication Ordinance (PangV).

The scope of application of the VC Directive is limited to the B2C sector. Companies that operate exclusively in the B2B sector are therefore generally not affected by the changes. Geographically, the scope of application is limited to the EU member states – this includes, on the one hand, companies that have their registered office in a member state and, on the other hand, non-EU companies that offer their consumers goods or services in an EU member state.

The Directive introduces a number of new rules into consumer protection, for example:

– Different products may not be marketed as identical products.
– Aggressive or misleading marketing and sales practices in door-to-door sales and “coffee runs” are prohibited.
– The supplier must provide special information about atypical payment, delivery and service conditions.
– The information requirements for online markets will be expanded.
– Price reductions and personalized prices must be indicated.
– For unfair business practices, remedies such as repair or replacement are newly regulated.

The directive also introduces new rules for rankings in online search engines and for consumer ratings on offer pages. The providers and operators are to be subject to far-reaching disclosure and verification obligations.

Introduction of sanctions
A paradigm shift for German law is the introduction of sanctions. Up to now, German law has only stipulated legal consequences under civil law for violations of consumer protection standards: cease-and-desist proceedings and warning letters. Example: If general terms and conditions violate consumer protection rights, they are merely invalid, § 305 f. BGB. This is changing with the VC-RL.
Just as in the case of the GDPR, it now requires member states to introduce appropriate and dissuasive sanctions for violations of regulations that have already been or will be transposed into national law under the directives.

As part of the so-called minimum harmonization, the German legislator must therefore ensure that far-reaching violations of consumer protection regulations can be punished with a maximum amount of at least four percent of the trader’s annual turnover. If the annual turnover cannot be determined as the basis for assessment, a maximum fine of at least two million euros must be provided for instead. The VC-RL also introduces a list of circumstances to be taken into account when determining the fine. This includes the type, severity and duration of the violation as well as repeat offenses, restitution and financial benefits obtained. The national legislator must guarantee this catalog as a minimum, but may go beyond it.

Integration of consumer protection into compliance
The VC-RL moves consumer protection into the German Administrative Offenses Act (OWiG) and thus into the core area of corporate compliance. For companies, this means that they should anchor consumer protection in their compliance management system in the future. In particular, the new regulations will receive attention in the training and monitoring of sales and marketing in e-commerce.

The directive requires the adaptation of previously typical processes and competence allocations. Thus, until now, compliance with consumer protection and, in particular, the rules on general terms and conditions, has been the business of contract drafting in the legal department. As a result of the directive, companies should now integrate these tasks into the monitoring and control mechanisms of all operationally relevant business processes in order to prevent a supervisory law obligation (Section 130 OWiG) that could result in a fine.

Explore #more

25.04.2025 | KPMG Law Insights

Coalition agreement: The plans for supply chain law, EUDR and GTC law

In the coalition agreement, the CDU/CSU and SPD agreed: “We will also abolish the National Supply Chain Due Diligence Act (LkSG).” At first glance,…

17.04.2025 | KPMG Law Insights

What the coalition agreement means for the financial sector

The coalition agreement between the CDU/CSU and SPD also has an impact on the financial sector. Here is an overview. Increasing the energy supply The…

17.04.2025 | KPMG Law Insights

AWG amendment provides for tougher penalties for sanction violations

Due to the ongoing Russian war of aggression against Ukraine, the EU wants to make it easier to prosecute violations of EU sanctions. The corresponding…

16.04.2025 | KPMG Law Insights

What the new digitization plans in the coalition agreement mean

The coalition agreement shows how the future government wants to shape Germany’s digital future. What do the plans mean for companies in concrete terms? Here…

14.04.2025 | KPMG Law Insights

How the new coalition wants to accelerate investment in infrastructure

The coalition agreement between the CDU/CSU and SPD marks a fundamental new beginning in German infrastructure policy. In view of a considerable investment backlog, the…

14.04.2025 | KPMG Law Insights

Coalition agreement 2025 and NKWS: Booster for environmental and planning law?

In the current coalition agreement, environmental and planning law is mentioned at various points throughout the coalition agreement, highlighting its great importance. However, the…

11.04.2025 | KPMG Law Insights

What’s next for foreign trade? The plans in the 2025 coalition agreement

Foreign trade and foreign trade have become particularly explosive in view of the new US tariffs. The CDU/CSU and SPD have agreed on the following…

11.04.2025 | KPMG Law Insights

Coalition agreement 2025: What the plans mean for the economy

The CDU/CSU and SPD have agreed on a coalition agreement. The central theme is the renewal of the promise of the social market economy. The…

10.04.2025 | KPMG Law Insights

Coalition agreement 2025: Housing construction on the move

In the coalition agreement, the CDU/CSU and SPD have agreed comprehensive reform plans in the area of housing construction. The aim is to speed…

10.04.2025 | KPMG Law Insights

Energy in the 2025 coalition agreement: what the future government is planning

In the coalition agreement, the CDU/CSU and SPD commit to the German and European climate targets and Germany’s climate neutrality by 2045. To this…

Contact

Dr. Philipp Asbach

Senior Manager

Fuhlentwiete 5
20355 Hamburg

Tel.: +49 40 3609945170
pasbach@kpmg-law.com

Dr. Bernd Federmann, LL.M.

Partner
Stuttgart Site Manager
Head of Compliance & Corporate Criminal Law

Theodor-Heuss-Straße 5
70174 Stuttgart

Tel.: 0711 781923418
bfedermann@kpmg-law.com

© 2024 KPMG Law Rechtsanwaltsgesellschaft mbH, associated with KPMG AG Wirtschaftsprüfungsgesellschaft, a public limited company under German law and a member of the global KPMG organisation of independent member firms affiliated with KPMG International Limited, a Private English Company Limited by Guarantee. All rights reserved. For more details on the structure of KPMG’s global organisation, please visit https://home.kpmg/governance.

 KPMG International does not provide services to clients. No member firm is authorised to bind or contract KPMG International or any other member firm to any third party, just as KPMG International is not authorised to bind or contract any other member firm.

Scroll