There have been significant changes in consumer protection in recent years. The commercial sector is voluntarily adapting its practices to the needs of customers in the interest of businesses, but legislative changes are also needed to enforce fair trading. Inspections are still ongoing; in recent weeks it has been the season to check poor string lights and Christmas tree lights: many products that may cause electric shocks, burns and home fires have been withdrawn from the market, Nikoletta Keszthelyi, Deputy State Secretary for Consumer Protection at the Ministry of Innovation and Technology (ITM) said in an interview with növekedés.hu.
What measures did the government introduce in the area of consumer protection?
Five years ago, in 2016, we started to strengthen consumer protection by regulating online commerce. At that time, we amended the Consumer Protection Act by increasing the range of possible fines. The fines of between 15,000 and 500,000 forints, which were imposed if a business repeatedly deceived consumers, were no longer a deterrent.
Given the low penalty, it was not surprising that the non-compliance rate was 54 percent even in the case of repeated inspections.
This is a huge number for second round checks.
What could you do about this?
We increased the amount of the fine to between 200,000 and 2 million forints in order to encourage companies to comply with the law. At the same time, we also launched inspections in e-commerce from 2017.
Were these stricter measures effective?
Yes, they were. The previous non-compliance rate of 54 percent is now down to 10 percent. I think this is a remarkable change; there's been a lot of improvement in discipline in online trading.
Within ITM, we also set up an IT laboratory in 2017 to monitor this area specifically.
We publish and regularly update our database of offending online stores, which is very helpful to customers and encourages companies to correct any mistakes they may have made as soon as possible.
Where is this database available?
At www.jogsertowebaruhazak.kormany.hu. The list includes online shops that have been condemned by the consumer protection authority, the Hungarian Competition Authority (GVH) or the court.
The website also informs you if the web store was cooperative and complied with the ruling of the authority.
The information about this in the database is displayed in green: "The company has subsequently rectified the deficiencies and complied with the ruling of the authority." If this sentence appears in the database it means that the infringements in the ruling have already been eliminated by the company, so the business is considered compliant from a consumer protection point of view and you can use it for purchases, but due to legal requirements, the ruling will be publicly available for two years.
Nikoletta Keszthelyi: The biggest change was the comprehensive revision of warranty regulations in 2021
What kind of shortcomings and infringements are we talking about?
Problems with accessibility, for example. These include, for example, when the shop cannot be contacted or will not respond; the name or address of the business is not indicated on the website; or the web shop does not provide information about the conciliation body. There can also be infringements in relation to delivery. For example, if the online shop does not specify a delivery date; provides no or inadequate information about the right of withdrawal, about warranty or guarantee conditions. Infringements related to "miracle products" can be searched for separately.
In these cases the online shop offers products that promise significant improvements in a short period of time without any reasonable justification.
Such products are diet pills that are usually ineffective, muscle building supplements, or products that promise super fast language learning, for example.
Should online stores be monitored most closely because the number of online orders shot up?
As a result of the coronavirus epidemic, people who had never shopped online before also started to buy things on the internet. It is no surprise that there is an increasing number of fraudulent web stores.
Are you using mystery shopping for your checks?
Of course, we are checking web stores this way too, not just on request.
Where there is some kind of criminal activity going on, consumer protection is no longer enough and the police must be involved.
What other major changes have been made to the legislation?
For example, the consumer protection authority has the possibility to block a website, but of course, only if the business does not take action, remove or clarify the problematic content after having been warned several times. Another strict regulation states that logistics service providers also have a certain responsibility in the area of product safety.
What does that mean?
If we find a dangerous product during a laboratory test, it is not necessarily the fault of the distributor or the retailer. The manufacturer must be contacted first and, if this is unsuccessful, then comes the liability of the logistics service provider, who will have to take responsibility for product safety. This is an EU regulation, as in many cases goods arrive from the Far East through an EU logistics service provider. In such cases, the product can be prevented from being marketed at that stage.
In other words, we don't have to go as far as China; we can take action here at home instead of starting a cumbersome procedure with Asian manufacturers.
The logistics service provider can be prosecuted more efficiently and can be held more easily liable.
What government reorganizations were needed for efficiency?
The biggest change was the comprehensive revision of the warranty from the beginning of 2021. This was prompted by the fact that most consumer complaints have long been about shortcomings in warranty management. We therefore started a new era in the warranty rules from last January. The provisions in this area, which had been unchanged for 17 years, were revised to improve the situation for customers and make the obligations of businesses clearer. This means that the warranty period can now be two or three years instead of the previous one year, the repair and replacement periods are clearer, and the warranty card can also be issued electronically.
How did the warranty period change?
Buyers rightly expect manufacturers to take responsibility for the quality and usability of more expensive products for a longer period of time. From January 1, 2021, for goods purchased between 10,000 and 100,000 forints the guarantee period can continue to be one year, but for goods over 100,000 forints it is two years, while for those over 250,000 three years. This change also serves sustainability objectives, as it encourages the production of more durable products, thus reducing the amount of electronic and other waste. In addition, repair deadlines have also changed.
What do we need to know about repairs?
The failure of products despite proper use inevitably causes annoyance. It may take several attempts to get it back and so you may have to do without a given household appliance or phone for a long time. In the experience of the consumer protection authority, some products may have taken up to 70-100 days to be repaired.
Shorter deadlines, mandatory replacement or refund after up to three repairs save customers from having to wait for long periods.
The provisions clarify that the existence of the original packaging cannot be required for the enforcement of warranty and guarantee claims. Until recently, a recurring problem was that products ran out of their warranty period due to lengthy or multiple repairs. As of 1 January last year, the warranty period has been extended by the time the customer is unable to use their device due to servicing. The warranty period will not resume until the customer has been notified that the fault has been repaired and the product is in working order again.
Repair services were a priority at the Conciliation Board, weren’t they?
Yes. In many cases, customers turned to the board precisely because of issues related to warranty and guarantee periods. It is no longer possible now for a washing machine to be in service for 60 days.
We introduced a 30-day repair deadline.
These amendments significantly strengthen consumer rights. Of course, before making these changes we kept consulting with commercial operators.
New strict measures?
From the beginning of 2022, manufacturers who offer a voluntary guarantee for the durability of their product, even when advertising the product, are obliged to provide a so-called warranty statement to the consumer, with prescribed content and clear wording, in Hungarian language.
By durability, the legislation means the ability of a product to retain its required functions and performance under normal use.The manufacturer's guarantee statement must have the name and address of the business required to provide the guarantee, indicate the goods covered by the guarantee and specify the procedure to be followed by the consumer to enforce the guarantee, and specify the conditions of the guarantee, in addition to clearly informing the consumer that this commercial (manufacturer) warranty does not affect their rights under implied warranty.
What do the inspections show?
Last year alone, my colleagues did a thousand mystery shopping purchases. While the year before last the non-compliance rate was 44 percent, in the first months of 2021 it rose to well over 50 percent. Violations are typically related to warranty cards.
Consumers usually find out about their rights from the warranty cards - so it is important to get these right.
Traders are trying to catch up, and our aim with the checks is not to fine them, but to reinforce compliance with the law and acceptance of the new rules. In order to help proper enforcement, we have prepared a sample warranty card and made it publicly available, which has already been downloaded more than 1,400 times.
What other problems do you encounter?
The European Union has started to address the issue of dual quality on the initiative of Hungary. The related directive will enter into force in the member states from this summer.
From the end of May, companies that use dual quality may be penalised for misleading information.
It is important to note that NÉBIH is responsible for checking food products, while the ITM laboratory tests household chemical products.
What is your experience with this group?
We imported goods from Germany, Austria and Italy, 420 items in total.
The rate of dual quality was 34 percent, while the active ingredient content showed a difference of 24 percent.
We also looked at the packaging, where most differences were found related to the labels indicating shelf life, which were often missing from the Hungarian packaging. This surprised us too. It also happens that the product is of dual quality in terms of distribution.
For example, a more upmarket item from a product range is available in Vienna but not in Budapest. This does not constitute deception or infringement, it is a matter of commercial policy by the manufacturer, but we believe that there should be no distinction here either. However, it is a bigger problem if a certain bleach sold in an Austrian shop has a higher active ingredient content while the same product sold under the same name and in the same packaging in Hungary has a much lower content.
Have you contacted the manufacturers?
Of course, we have already discussed the issue with some manufacturers and some of them are open to correction.
From May 2022, when the new rules come into force, we will be approaching manufacturers in an official procedure.
For the time being, there is a grace period, but we are already trying to make everyone aware of the upcoming changes.
A recurring problem year after year is the poor quality of Chinese products, especially at Christmas. Do you see any improvement because of the regular inspections?
We specifically look for these penny products for sampling. We go to markets and other outlets and try to detect dangerous goods. Of course, we are also present in the online market, and we also visit the big supermarket chains.
What do the latest results show?
In 2021, we also carried out seasonal inspections of light strings and other lighting products for decorative purposes.
More than three-quarters of the sample products did not meet the safety requirements.
The problem goods were found to be substandard in up to seven or eight aspects at a time.
What kind of defects did you find in these light bulbs and string lights?
By mid-December, the laboratory had tested 31 different string lights and decorative lighting products, 24 of which were found to present an electric shock and /or fire hazard.
A common problem was that wires were not fixed properly, that it was only provided with a basic insulation instead of a double one, or that the cross-section did not reach the thickness required by the standard. In many cases, because of the small size of the plug the user's hand could come into contact with live parts when plugging in. Also, products not made water resistant were often recommended for outdoor use.
In recent weeks, a total of 35,000 pieces of dangerous decorative lighting devices have been detained at customs.
How is your cooperation with NGOs?
We involve them in our work; we consult with them regularly. We have also incorporated their recommendations into the amendments to the warranty rules. Civilians also took part in the EU-level consumer panel discussion at the end of October 2021, where we talked about the green transition, the digital switchover and the changing consumer trends in Hungary.
We also work together with the Association of Conscious Customers, the Hungarian Association of Consumer Protection, the Consumer Protection Referent Association, and the Association for the Protection of Consumer and Patient Rights.
We also meet at workshops; we invite them to the Consumer Protection Council meetings, the last of which took place in November. The Jász-Nagykun-Szolnok County Consumer and Patient Rights Association (FÉBÉSZ) also uses our laboratories for its tests. It is also clear from this list that we are trying to improve consumer protection as efficiently and in as many ways as possible.
Does the development of technology and innovation present new challenges?
Of course, as newer and newer electronic devices appear. So last year, for example, we tested humidifiers, evaporators and aroma diffusers alongside electric scooters.
Here, too, we have a high non-compliance rate, so we will continue our inspections in 2022, but new types of products will also be added to our range.
We will be looking at robot vacuum cleaners and other alternative transport devices such as segways. We need to keep up with developments, and we cannot start early enough to educate consumers about conscious consumer behaviour.
How can you do that?
We try to educate students about consumer awareness. We have set up a competition for which educational institutions can apply every year.
The "School for Consumer Awareness" title is awarded to institutions that have consistently high standards of consumer education.
Teachers and students have an important role to play in promoting a consumer-friendly entrepreneurial mindset and sustainable consumption. Already, 100 schools have undertaken to raise students’awareness of internet use and e-commerce. It is important that young people learn at school how to be protected from deception as consumers. This is also the easiest way for a prospective entrepreneur to adopt a consumer-friendly approach. The program contributes to the development of Hungary and further strengthening of the economy by raising awareness of conscious consumer and entrepreneurial behaviour.