CTIA vs. Corporate E-shop

Why is a ČOI inspection a real risk? Alarming figures from practice

According to press releases from the Czech Trade Inspection Authority (ČOI), in the first quarter of 2024, for example, violations of legal regulations were detected in 78.48% of the inspected e-shops. In other monitored periods, the error rate even exceeded 87%. These numbers do not mean that eight out of ten business owners are fraudsters.

Above all, this statistic shows that consumer legislation, especially the Consumer Protection Act, is so complex and rapidly changing that many companies fail to implement all changes correctly in time. Errors are thus often the result of omission, not direct intent.

Inspections can be initiated based on a complaint from a dissatisfied consumer, but the ČOI also conducts its own extensive monitoring. It commonly uses the "control purchase" method to verify the entire process from order to delivery and potential withdrawal from the contract.

Our Czech legal team at ARROWS has extensive experience with the methodology of ČOI inspections. We know how inspectors proceed, what details they focus on, and what their decision-making practice is. For an immediate assessment of your situation and preparation for an inspection, write to us at consultation@arws.cz.

What does an e-shop have to comply with? From terms and conditions to the order button

ČOI inspectors know exactly what to look for. They focus on a clear checklist of obligations that every e-shop must meet under Czech legislation.

ČOI statistics for the first quarter of 2024 clearly defined the three most common offenses:

1. Insufficient information about the complaints process (92 cases).

2. Use of unfair commercial practices (71 cases).

3. Insufficient information on the conditions of withdrawal from the contract (45 cases).

Let's look at the details where companies make mistakes most often.

Information obligation: Complaints, withdrawal, and ADR

An e-shop must actively and clearly inform consumers about the scope, conditions, and method of filing a complaint. The same applies to the statutory 14-day period for withdrawal from a contract when purchasing remotely. A very common and easily detectable error is the failure to provide a model withdrawal form.

Another massive offense is the lack of information on alternative dispute resolution (ADR). E-shops have a legal obligation to state information on their website and in their terms and conditions about the ADR entity, which for most e-shops is the Czech Trade Inspection Authority (ČOI).

Technical requirements: Watch out for the order button

Due to European legislation, the order button must be formulated in such a way that it is completely clear to the consumer that by submitting the order, they commit to payment.

The recommended, though not the only permissible, formulation is "Order with obligation to pay". Simple texts such as "Order" or "Buy" are highly risky, and the ČOI actively fines them as a violation of the law.

These formal requirements are the basics that every corporation and smaller company must have in order. The Prague-based legal team at ARROWS will prepare complete terms and conditions for you, containing all legal requirements, including correct information about ADR and the withdrawal process. Get in touch with us at consultation@arws.cz to get a tailored legal solution.

Basic obligations and terms and conditions

Here is a brief overview of the risks you face if your basic documentation is not in order.

Unfair commercial practices: When discounts and reviews become a nightmare

Now we come to the area where the ČOI imposes the highest fines. This is where the line between administrative omission and intentional deception of the customer lies.

Unfair commercial practices is a broad term that includes both misleading actions (Section 5 of the Consumer Protection Act) and misleading omissions (Section 5a). It refers to any conduct that may induce a consumer to make a transactional decision they would not have otherwise made.

New ČOI focus 1: Fake discounts (Omnibus Directive)

The new rules introduced by the European Omnibus Directive have fundamentally changed the rules of the game for marketing campaigns. When announcing a discount (e.g., "Now -20%"), you must state the lowest price at which you offered the product in the last 30 days as the reference price.

The era of calculating discounts from "original prices", "recommended retail prices", or prices just before the discount has ended. This is not only a legal but also a technical issue for e-shop settings. Incorrectly displaying discounts carries a fine of up to CZK 5,000,000; if it is also a misleading practice addressed in a cross-border action by EU supervisory authorities, the fine can be up to 4% of annual turnover.

New ČOI focus 2: Fake reviews

The era of fake reviews is ending. It is now explicitly forbidden to publish fake or distorted reviews. E-shops are now obliged to state whether and how they ensure that reviews come from real consumers who actually purchased the product.

Case study: The case of LUNZO s.r.o. (Fine of CZK 750,000)

This is not just theory. LUNZO s.r.o. was fined CZK 750,000 in a final decision. The reason was that it engaged in an unfair commercial practice by actively deleting negative reviews and modifying ratings.

As part of a control purchase, a ČOI inspector gave a product a 1-star rating with a negative comment. The e-shop subsequently modified this review to 5 stars. The intent to deceive the consumer was thus clearly proven.

Your e-shop's marketing must know its legal limits. The Prague-based legal team at ARROWS will provide professional training for your employees (including a certificate) so that your marketers and managers know exactly how to work with discounts and reviews in compliance with the Omnibus Directive. Write to us at consultation@arws.cz.

Aggressive practices and obstruction: When an inspection turns into a disaster

There are offenses that the ČOI punishes exemplarily because they go directly against the basic principles of fair trade. These include aggressive commercial practices, such as sending unsolicited goods and subsequently demanding payment.

Case study: The case of Mincovní obchod (Fine of CZK 400,000)

The e-shop Mincovni-obchod.cz received a fine of CZK 400,000. The reason was the repeated sending of unsolicited shipments as part of a so-called "collector's service" that consumers had not ordered.

Case study: The case of Deal Extreme Czech (Fine of CZK 100,000)

This case is a warning for every IT manager or director. The company received a fine of CZK 100,000, which consisted of two parts. One was for unfair practices, but the second (amounting to CZK 50,000) was imposed because the operator actively blocked ČOI inspectors' access to the website (likely based on IP addresses) and failed to cooperate during the inspection.

Obstructing an inspection is a procedural foul that only convinces the authority that you have something to hide, and it leads to a separate, easily provable fine.

If the ČOI contacts you, it is crucial to respond professionally and factually. Our lawyers will provide complete representation before administrative authorities. We will take over communication with the inspectors and ensure that the inspection and any administrative proceedings are conducted correctly. For an immediate solution to your situation, write to us at consultation@arws.cz.

Unfair practices and procedural errors

Here are the risks associated with marketing and the inspection process itself. They are often higher because they can prove intent.

Selling in the EU? International reach of inspections and ARROWS International

The issue of compliance with consumer law does not end at the Czech border. If you, as a Czech e-shop, sell goods to consumers in other EU countries, you must also face cross-border complaints. These complaints are primarily handled by the network of European Consumer Centres (ECC). Crucially, the European Consumer Centre Czech Republic operates directly within the Czech Trade Inspection Authority.

Thus, if a German consumer complains about your e-shop to the German ECC, this complaint is forwarded to the Czech ECC, which is based at the ČOI. The path to initiating an inspection of your e-shop is therefore very short and institutionalized.

Resolving issues with an international element is daily practice for us at ARROWS. Thanks to our ARROWS International network, built over ten years, we are able to provide legal advice and representation not only in the Czech Republic but also in other European jurisdictions.

If you sell to Poland, Germany, or Hungary, you must address not only local consumer law but also the risk of cross-border inspections. For comprehensive security of your international sales, contact us at consultation@arws.cz.

Prevention is key: How ARROWS comprehensively protects your business

Experience from our practice shows that the best defense is prevention. Waiting for an inspection report is unnecessarily expensive and stressful.

Our experience speaks for itself. The ARROWS portfolio includes more than 150 joint-stock companies, 250 limited liability companies, and 50 municipalities and regions to which we provide long-term legal services. We pride ourselves on speed and high quality.

We provide a comprehensive legal service for e-shop operators:

• Drafting internal guidelines (e.g., for marketing, how to correctly work with discounts and reviews).

• Preparing and reviewing terms and conditions and complaints policies.

• Legal audit of the entire purchasing process (including button wording and information obligations).

• Professional training for employees (marketing, sales, customer care).

• Representation before administrative authorities (ČOI) and courts.

Moreover, we are more than just lawyers. We can effectively connect our clients if they have interesting investment or business opportunities. We would be happy to hear your business idea as well. Operating an e-shop is a legally demanding discipline. Leave the worries about the ČOI to us. For a comprehensive legal audit of your e-shop, do not hesitate to contact our Prague-based legal team at consultation@arws.cz.