New Consumer Protection Regulations to Prevent False Promotions!
Good news for consumers, more work for businesses – From now on, clever stores and online shops can no longer make their discounts seem more attractive by temporarily inflating prices just before a promotion. From now on, when announcing price reductions, retailers must always indicate the product's previous price, which can only be the lowest price from at least 30 days before the price reduction.
In recent years, the European Union has focused on strengthening consumer rights. As a result, it decided to amend the EU directive regulating the display of prices for consumer products. The applicable provisions clarify how retailers should indicate discount levels on their websites, advertisements, catalogs, window displays, and shelves.
The Hungarian Consumer Protection Act (1997 CLV. Act) already required that the sale price, unit price, and service fee be clearly visible, easily identifiable, and legibly displayed. According to the consumer protection authority's practice, this obligation also means that the original sale price, the discount amount, and the final price that the consumer actually has to pay must be included in the information.
The EU directive (European Parliament and Council Directive (EU) 2019/2161, dated November 27, 2019) has been transposed into Hungarian law by the detailed rules on product sale prices and unit prices, as well as service fees, in Government Decree 4/2009 (I. 30.) NFGM-SZMM. This decree now provides clear and new standards regarding price display.
If a retailer is running a promotion, they are required to include the previous price (the price before the promotion) on price tags, for a specified period, prior to the promotion.
How to Define the "Previous Price" and Which Retailers Are Affected
The definition of the "previous price" and which retailers are affected can be determined as follows:
Defining the Previous Price:
- As a general rule, the "previous price" is the lowest price applied for the product during the period of at least 30 days before the discount was announced.
- If the discount increases gradually, then the previous price is the price applied before the first discount (e.g., if the promotion first offers a 10% discount, then 20%, and eventually 30% within 30 days).
- These rules do not apply to perishable goods or products with a short shelf life (e.g., fruits, short shelf-life beverages).
- If the product has been on sale for less than 30 days, the previous price is the lowest price applied during at least the 15-day period before the promotion.
For example, if the discount is "50% off" and the lowest price in the previous 30 days was 100,000 HUF, the seller must list the previous price as 100,000 HUF when calculating the 50% discount, even if the last sale price before the promotion was 160,000 HUF. If 30 days pass between price changes, we can confidently use the higher price.
The purpose of this 30-day reference period is to prevent retailers from manipulating prices to present fake discounts, such as temporarily raising the price just to significantly reduce it afterward.
Which Retailers Are Affected:
The new rules apply to retailers who actually enter into contracts with consumers, i.e., sellers of goods. If a seller operates through an online shop, the rules apply to them as well.
However, the new rules do not apply to intermediaries who only enable retailers to sell their products on their platforms or simply aggregate and display price information provided by other sellers (price comparison websites). These intermediaries are still subject to the general rules concerning responsibility and professional care. In summary, online store operators only fall under the new rules if they sell on behalf of another retailer.
The most important rule regarding price display is that retailers must always ensure it is clear to consumers what each label on the price tag means or why previous prices are listed.
Otherwise, the retailer may face scrutiny from the relevant authority regarding unfair commercial practices against consumers.
Summary
Price labeling and packaging are essential in trade, as consumer protection relies on providing consumers with accurate product information. Price labeling must always be clear, especially when indicating discounts and offers, so that consumers' rights are not violated. Under the EU directive, the discount amount must be clearly displayed on both websites and price tags. Retailers are obliged to inform consumers so they are aware of both the previous price and the discount level.
Consumer protection aims to prevent false promotions and ensure that price reductions genuinely reflect the discount. Retailers cannot use false promotions by manipulating previous prices to make discounts appear more attractive. According to the EU directive, the discount is only valid if the previous price corresponds to the actual price applied. The consumer protection authority strictly monitors whether retailers comply with these regulations.
The price labeling rules also apply to online stores, so to protect consumers' rights, the previous price must be listed for every promotion. The consumer protection authority continuously monitors retailers' activities to prevent unfair practices that violate consumers' rights. The authority aims for transparent price reductions and ensures that consumer information is always complete.
Correct labeling of packaging and price tags is fundamental to protecting consumers' rights. According to both the EU directive and national regulations, all retailers must clearly indicate the discount level. The regulation requires that alongside the sale price and unit price, the previous price must also be displayed in both online stores and physical shops. The consumer protection authority rigorously monitors whether retailers comply with these regulations and whether consumer information is provided properly.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
