New EU rules designed to protect consumers from online fraudsters have come into effect, as Facebook and eBay both pledged to cut down on fake reviews in the UK.
The legislation pledges to bring greater transparency to online marketplaces, compelling sellers to make clear whether they are a trader or a private individual.
It will also prohibit the submission of fake reviews and advertisement of fake price reductions as well as place new obligations on price comparison sites to inform consumers about ranking criteria.
There will also be provisions for compensation of victims of unfair commercial practices.
Member states will have two years to transpose the directive into national law.
Věra Jourová, VP for values and transparency, said: “The new rules will increase protection for consumers in digital world, which they rightly deserve. The EU is also saying no to products sold as identical in other Member States, when this is clearly not the case.
“But these new rules won’t protect consumers from rogue traders and online tricksters unless they are strictly implemented on the ground. I strongly encourage all Member States to ensure that the new rules are implemented without delay.”
Didier Reynders, commissioner for justice, added: “Today we are sending a strong warning to traders that they should play by the rules, not bend them. Breaking EU consumer rules on large scale may cost a company a big fine of at least 4% of annual turnover.
“This will be a sufficiently dissuasive and effective penalty to prevent dishonest traders from cheating. I welcome this new legislation, as it is setting truly European consumer protection standards.”
This week also saw the UK’s Competition and Markets Authority (CMA) gain assurances from social media site Facebook and marketplace eBay that they would look to police reviews on their platforms.
The CMA said that social media site Facebook and eBay had banned a number of users and groups while introducing more robust systems to prevent fake content from appearing.
Andrea Coscelli, CMA CEO, said: “Fake reviews are really damaging to shoppers and businesses alike. Millions of people base their shopping decisions on reviews, and if these are misleading or untrue, then shoppers could end up being misled into buying something that isn’t right for them – leaving businesses who play by the rules missing out.”
Our view: Surveys show that the majority of consumers look at and trust online reviews when purchasing products.
However, investigations such as that of consumer protection watchdog Which? have shown the large quantity of online misinformation. For the consumer, there is little means to distinguish between genuine and fake reviews.
Top-down intervention from regulators and legislators helps to establish frameworks, but they will have to continually update rules and guidelines to cope with new ways of distributing misinformation. This is where the collaboration with the platforms themselves and their knowledge will be vital.