The Omnibus Directive is a combination of consumer protection regulations in the European Union. The introduction of this law has significant implications for store owners across all e-commerce platforms in the EU and requires stores to comply with the regulations in a very specific way.
Let's take a look at the law in more detail.
What Is the Omnibus Directive in Retail?
The Omnibus Directive is a set of regulations in the EU designed to improve many aspects of EU commerce law. The term "omnibus" means that this directive combines various legal measures into one, comprehensive legislative package.
The Omnibus Directive applies to all EU member states. The overall goal of this law is to create a more organized commercial regulatory framework by streamlining and updating existing laws. It enacts notable changes in a wide range of areas, such as:
- Digital services
- Consumer rights
- Data protection
- Privacy liability
- Pricing transparency
At its heart, the Omnibus Directive aims to level the playing field by establishing a fair and consistent regulatory environment for businesses throughout the entire European Union.
Who Is Affected by the Omnibus Directive?
The Omnibus Directive applies to all kinds of businesses in the EU, including both online and traditional (brick and mortar) businesses. The scope of the directive is not limited to any particular industry — rather, it includes a broad range of provisions intended to address a myriad of issues affecting businesses in many different fields. If you own or operate a business in the EU, you are required to comply with the Omnibus Directive.
Likewise, the EU Omnibus Directive impacts businesses of all sizes. Whether you own a small boutique or a massive e-commerce enterprise, you need to be aware of the ways this directive affects your store’s operations.
What Are EU Omnibus Directive Mandates for E-commerce?
The Omnibus Directive introduces several key considerations for store owners. Some of the most notable changes in the directive focus on digital services and online platforms, so if you’re an e-commerce business owner, it's especially important to be aware of what the directive means for your store’s operations. Here are the most important changes for business owners to know about:
1. Transparent Price Indication
According to the Omnibus Directive, e-commerce businesses must inform consumers of each product’s base price (per unit) and prior prices, including the lowest price in 30 days*. The intention here is to avoid fraud and ambiguity as well as discourage artificial “promotions” that simply raise the regular price of a product to make it appear discounted.
*What Does "Lowest Price in 30 Days" Mean? In the omnibus directive, "lowest price in 30 days" means finding the cheapest cost observed in the last 30 days. It helps figure out the least expensive option during that time for better decision-making.
2. Authenticity of Reviews
The Omnibus Directive also prohibits fake reviews from appearing in online stores. E-commerce businesses in the EU are required to verify the authenticity of the customer reviews that appear in their stores to prevent fake or intentionally misleading reviews from influencing consumers.
3. Detailed Seller Information
To promote transparent business practices and better customer support, the Omnibus Directive requires e-commerce businesses in the EU to make up-to-date contact information available to consumers at all times. Moreover, the law expects e-commerce EU businesses to inform customers whether the seller is an individual or a company.
4. Product Return and Refund Rights
The Omnibus Directive also includes new rules on consumer rights, including the right to cancel a purchase within 14 days and return faulty goods. To legally sell goods or services online, you need to effectively manage returns.
5. Sorting Criteria Disclosure
According to the Omnibus Directive, e-commerce businesses must also clearly inform customers about the sorting criteria the business uses in search results. Doing so makes it easier for customers to understand how search results are organized and promotes more efficient and equitable online shopping experiences for everyone.
7 Steps for Complying With the Omnibus Directive
Here are the critical steps you should take to make sure your e-commerce store is fully compliant with the Omnibus Directive:
1. Follow the New Consumer Rights
The most important points to address include pricing transparency and your store’s terms and conditions, shipping information, and refund or return policies. Check if they are clear and easy to understand. Also, make sure they are communicated to your consumers when they are logging in or making a purchase. (Consider implementing a Custom Form).
2. Provide Business Information
Offer clear information about your platform's sellers or your own business. Give legal address, legal name, and contact information, including phone numbers that operate in the countries you state you serve. Knowing who your customers are buying from makes for more informed purchasing decisions and promotes greater honesty and transparency between sellers and buyers.
3. Make Sure Your Sorting or Ranking Algorithms Are Visible
Stay transparent about how you rank and display content. Always include intuitive UX text in your filtering or navigation website sections. Alternatively, consider extensions similar to Improved Layered Navigation or Mega Menu to ensure compliance.
4. Ensure Transparent Pricing
First, make sure to provide clear information about the price of your products or services. Include price per unit (or base price) alongside the actual selling price in an easy-to-read way. Also, provide history pricing data with the lowest price in 30 days for customers' reference.
The easiest way to comply with these Omnibus pricing regulations is to use extensions like Price per Unit or Omnibus Price Tracker. Such extensions add the functionality of unit price calculators or price tracker history on your product pages and don't require any development efforts from your side.
Price Per Unit
Price per Unit extensions help your stores to comply with the Omnibus Directive, FPLA, and Weight and Measures laws by:
- Automatically calculating and displaying base prices
- Showing unit prices based on weight, volume, or length
- Letting you create custom units and modify base price templates
- Placing 'price per unit' information on multiple pages
Omnibus Price Tracking
- Highlight the lowest product price in the past 30 (or N) days
- Show historical prices for all or only discounted items
- Track price changes over certain time periods in a cozy grid
- Automatically optimize and clean your price log to avoid database overload
5. Enhance Your Store’s Data Protection Practices
The Omnibus Directive places special emphasis on data protection. Ensure your store complies with the EU's General Data Protection Regulation (GDPR) by maintaining clear privacy policies and obtaining explicit consent for processing customer data. You should also provide more information about the advertisers who use your platform.
6. Keep Yourself Informed About Updates
Remember to keep yourself informed regarding updates or amendments to the Omnibus Directive. As the EU’s regulatory landscape evolves, it’s imperative to stay up-to-date on the latest changes so you can keep your business practices compliant.
7. Seek Legal Advice if Necessary
The Omnibus Directive is a complex, multi-faceted piece of legislation. Whenever you’re in any doubt about what the directive requires from your business or whether or not your store is compliant, seek advice from a legal professional. Qualified legal advice is the best way to be certain you fully understand the implications of the Omnibus Directive for your commercial operation.
Consequences of Non-compliance With the EU Omnibus Directive
If your EU store does not comply with the Omnibus Directive, it could result in penalties. The EU has implemented enforcement measures to ensure the new rules are followed. Here are some of the possible consequences of not complying with the directive:
If you breach the Omnibus Directive, you may be fined. The fines can be substantial and may vary depending on the severity of the breach and the size of your business.
Consumers who feel their rights violated under the Omnibus Directive may take legal action against your business. This could result in additional costs, such as legal fees and damages.
Loss of reputation
Today’s consumers are increasingly conscious of their rights, and negligence in this area on a business’s part is more likely than ever to erode consumer trust in that business. If your business breaches the Omnibus Directive, it could damage your reputation and erode customer trust, leading to a loss of sales and revenue.
Suspension or closure of your online store
In extreme cases, your online store may be suspended or closed down. This will occur if you're in serious breach of the Omnibus Directive.
Ensure Omnibus Directive Compliance of Your Store
The Omnibus Directive is an important set of rules that e-commerce operators need to know. The directive aims to make e-commerce more transparent and consumer-friendly.
If you're running an online store or marketplace, it's important to understand how the Omnibus Directive will change e-commerce and what steps you need to take to comply with the new rules. It may take some time and effort to adapt to the new regulations, especially Omnibus pricing laws, but you can stay ahead of the game by doing so. It will also allow you to grow your e-commerce business responsibly and sustainably.
Stay transparent about your pricing, your sellers, and your platform's ranking algorithms. By doing this, you can help build trust with your customers and ensure that your business operates fairly and competently.