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Image credit: Netherlands Authority for Consumers and Markets (ACM)

With the growing popularity of purchasing goods and services online, consumers must also be safeguarded from the dangers of digitisation. To safeguard consumers in the digital economy, the Dutch Authority for Consumers and Markets (ACM) introduced additional regulations for online merchants on May 28, 2022.

According to the regulation, there will be a clear prohibition on publishing fraudulent reviews, and retailers that make online offers to customers based on their profiles or prior purchases must disclose such practices. 

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Online platforms or marketplaces where companies list their items for sale must also make it clear to consumers for what issues they are responsible and for what concerns consumers should contact the seller that makes use of the platform or marketplace. Besides, the restrictions on discounts have also been tightened.

Wish bans its merchants from offering false discounts

In response to steps taken by the Netherlands Authority for Consumers and Markets (ACM), online marketplace Wish announced on Tuesday that it has banned its merchants from offering false discounts on its platform.

Since May 25, 2022, Wish has also prohibited the use of tailored pricing in the EU. This is the outcome of the measures made by ACM. In these actions, ACM collaborated with the European Commission and other European consumer agencies.

Edwin van Houten, Director of ACM’s Consumer Department, says, “It is important that consumers are able to make online purchases with confidence. In the ever more digital world too, online retailers must be transparent about the way in which prices are set. Consumers must be able to base their choices on correct information. The rules fully apply to businesses that originate from outside the EU but that also target consumers inside the EU. Therefore, we welcome Wish’s commitments.”

ContextLogic.Inc, the parent company of Wish, sells goods online to customers in many European nations as well as other regions, including fashion, home goods, and technology. The company also works with payment service providers to handle payments and does not stock the products themselves or manage returns.

What was Wish’s case about?

ACM claims that Wish lured customers with large discounts on prices that it probably had not billed. With such discounts as bargains, consumers were persuaded to make purchases that they otherwise might not have done if they had the necessary knowledge. That is not acceptable. Any discount must always be valid, for instance, on a price that was actually charged in the past.

Additionally, personalised pricing on Wish’s platform was also being used. These prices were determined, among other things, by the consumer’s buying history and geographic location. But according to ACM, Wish had not fully disclosed this practice. 

According to ACM, personalised pricing is only permitted by businesses under rigorous transparency guidelines. For instance, merchants must clearly indicate the use of such practices prior to the purchase, and consumers must also understand in what ways their personal information affects prices.

Wish decided to discontinue using tailored pricing as of May 25 when ACM clarified the terms. “We will closely monitor Wish over the next months to see if they follow their promises,” says ACM in a statement. 

Read here in detail about ACM’s stricter rules for online sellers.