Partly thanks to the corona crisis, e-commerce is more than ever a “booming business”. In conjunction with the exponential growth of this relatively young distribution channel, the regulatory jumble is also increasing. In this article, we discuss the latest legislative changes that may be important for you as a company.
2. Consumer Protection
2.1Modernisation of consumer rights
With its Directive (EU) 2019/2161 on the modernisation of consumer rights, the EU wants to better protect its consumers by taking stricter action against infringements of consumer law and by imposing additional information requirements for online purchases. The Directive envisages a high degree of maximum harmonisation and only affects B2C. Member States have to transpose the directive into national legislation by 28 November 2021 with entry into force as of 28 May 2022. There is currently a draft bill on the table that has to go through the parliamentary process.
The Directive stipulates that Member States must take effective, proportionate and dissuasive measures in the case of, inter alia, non-compliance with the information requirements for online sales and the exercise of the right of withdrawal. When the Economic Inspectorate or the courts impose sanctions, a non-exhaustive list of indicative criteria, such as the nature, seriousness, extent and duration of the infringements and the existence of previous infringements must be taken into account. The concrete interpretation of this list by the Belgian legislator is not yet known, but deserves close monitoring.
What has already been established is that in the case of cross-border and widespread infringements – e.g. a blatant disregard of the right of withdrawal by a webshop operating in several Member States – a fine must be able to be imposed by the competent national authority (i.e. the Economic Inspectorate) of up to 4% of the annual turnover of the seller in the Member State(s) in question. If the annual turnover is unknown, or is of an exceptional size, a fine can be imposed up to a maximum of EUR 2 million.
Additional information requirements for sales through online platforms
The Directive also contains a number of additional information requirements for sales through online platforms:
- The online platform must make available to consumers general information about the main parameters used to rank offers when performing a search, as well as the relative importance of one parameter compared to others. This information should be made available in a specific section of the online interface which is directly and easily accessible from the page on which offers are made.
- The online platform must make it clear to consumers whether they are buying the product directly from the online platform or from a third-party seller active on that platform. After all, the consumer must know to whom he can turn in the event of questions or difficulties.
When the contract is concluded with a third party, the online platform must inform the consumer whether the third party offering the products is a company or a private individual. This information is important for consumers since consumer legislation (right of withdrawal, statutory warranty) only applies in a B2C context. If the third party vendor is not a company, the consumer must be informed of the inapplicability of consumer protection legislation. This information must be provided in a clear and comprehensible manner, and not merely in the general terms and conditions or in similar contractual documents.
2.2 New rules on consumer sales of both goods and digital content and services
The Directive (EU) 2019/771 on consumer sales replaces the old Directive of 1999 with a view to further harmonising consumer protection. The Directive (EU) 2019/770 on the supply of digital content and digital services introduces a specific regime for the sale of digital products, such as software, music, e-books, etc., and digital services, such as cloud storage or access to social media. Both directives complement each other and only apply in a B2C environment.
These directives had to be transposed into national law by 1 July 2021 and entered into force on 1 January 2022. They only apply to contracts concluded thereafter. The directives envisage maximum harmonisation of national legislation, but leave some leeway for the Member States on certain points. As usual, the Belgian legislator has not yet finished its homework. There is currently a preliminary draft law on the table that is of course still subject to amendments after advice from the Council of State and intervention by Parliament.
Duration of the statutory warranty, conformity deficiencies and reversal of the burden of proof
Every seller is liable to a consumer for a conformity deficiency that exists at the time of delivery of the goods and that comes to light within two years of delivery. This period also applies to digital elements that are part of a physical good e.g. software on a computer. The Directive allows Member States to provide for a period longer than two years. However, it appears from the preliminary draft law that the statutory warranty period of two years will be maintained in Belgium.
The Directive provides for a rebuttable presumption whereby a conformity deficiency that becomes apparent within one year of delivery already existed at the time of delivery. In other words, the seller is automatically liable without the buyer having to provide evidence. This reversal of the burden of proof is changed in the preliminary draft of the Belgian law to two years (previously six months). The seller has to prove that this presumption is incompatible with the nature of the goods (e.g. perishable goods such as flowers and food) or with the nature of the conformity deficiency (e.g. caused by the buyer’s fault) in order to be released from liability. The Belgian Government thus goes further (for the time being) than the European Directive, which provides for a minimum period of one year.
The aforementioned presumption of reversal of the burden of proof also applies to the sale of digital products, but is limited to one year with no possibility for Member States to extend this period in national legislation.
Durability becomes an objective criterion for assessing the conformity of products. In order to be conform, products should have the durability normally expected for goods of the same type, which the consumer may reasonably expect, taking into account the nature of the specific goods, including the possible need for reasonable maintenance of the goods, such as regular inspection or replacement of the filters of a car, and public announcements (advertising) made by or on behalf of a person in the transaction chain. The assessment should also take into account any other relevant circumstances, such as the price of the products and the intensity or frequency with which the goods are used.
When selling digital products, the seller must supply to the consumer the updates, including security updates, which are necessary to maintain the conformity of the products, for a period which the consumer may reasonably expect. That period varies according to the nature and purpose of the goods, its digital elements, and the circumstances and nature of the contract.
The Directive provides for the possibility for Member States to set a maximum period of two months from the identification of the deficiency within which the consumer must notify the seller of a lack of conformity in order to be able to exercise their consumer rights. The preliminary draft law introduces this notification requirement and imposes a two-month time limit from the establishment of the deficiency.
In the event of a conformity deficiency, the buyer has the following options (in the following order):
- Request that the product be brought into conformity with the contract by means of repair or replacement;
- Request for a proportional price reduction;
- Demand the termination of the purchase agreement. The products shall then be returned at the seller’s expense and the buyer shall receive a full refund.
The Directive also allows Member States to subject the exercise of consumer rights to a prescriptive period. The preliminary draft law stipulates a prescriptive period of one year for the consumer’s legal action from the moment the conformity deficiency is established.
Right of recourse of the final seller
Where the seller is liable to the consumer because of a conformity deficiency resulting from an act or omission by a person in an earlier link in the transaction chain, the seller may seek recourse against the person or persons liable in the transaction chain.
Since 12 July 2020, European rules (Regulation (EU) 2019/1150 also known as the Platform to Business Regulation) apply to sales via online B2C platforms (e.g. Amazon), but also appstores (e.g. Applestore) and price comparison websites (e.g. Skyscanner). These rules seek to create a balance between the sellers active on the platform (and dependent on it) and the platform itself.
The key points are:
- Platforms should disclose the key parameters that influence the ranking of search results on the platform. They must also inform sellers in what way the platform’s own products or services are treated or ranked differently (better) than those of sellers active on the platform;
- The platform must communicate the reasons for limiting, suspending or terminating its services to a seller. In the case of termination, a period of at least 30 days must be respected before the seller is denied effective access to the platform;
- The general terms and conditions must be drafted in easily understandable language and be easy to consult. They shall contain, inter alia, information on the ranking of search results, cases of termination of service, and whether or not alternative sales channels are permitted. Changes to the general terms and conditions must be announced at least 15 days in advance so that a seller has the opportunity to accept or reject them and, if necessary, to terminate the platform’s services.
- Platforms with more than 250 employees and/or a turnover of more than 50 million EUR must set up an internal complaint handling system and an external mediation process to handle complaints from sellers.
4. Prohibition of geo-blocking
Since 3 December 2018, a ban on geo-blocking applies to cross-border transactions of online shops within the EU (Regulation (EU) 2018/302). The ban on geo-blocking puts an end to online price and product offer discrimination based on a customer’s nationality, place of residence or IP address. The ban applies to both B2C and B2B as far as end customers are concerned.
What is not allowed (anymore)?
- You may no longer deny a Dutch customer access to your Belgian webshop or automatically redirect him to your Dutch webshop unless the customer has given his consent;
- You may no longer adjust your prices automatically on the basis of a customer’s nationality, place of residence or IP address (so-called price discrimination);
- You must use the same payment and delivery modalities for all EU customers e.g.: you, as a Belgian shop, may not refuse a credit card payment from Dutch customers if you accept it for Belgian customers;
- You may not refuse a customer from another EU country, even if you do not target that country or do not deliver there. The customer must always have the possibility of picking up the product in the country where you do can make the delivery.
What is (still) allowed?
- You may limit your delivery range (e.g. delivery only in Belgium and the Netherlands);
- You are allowed to differentiate your products’ prices i.e. the prices of the products available on your Belgian webshop may differ from those on your Dutch webshop;
- The product range may also differ per national webshop due to e.g. local, national product requirements;
- You may also make the shipping costs dependent on the country of delivery. It is only natural that shipping to a neighbouring country is cheaper than to one further away;
- The payment options may also differ from one national webshop to another as long as the webshop itself does not make any distinction based on the customer’s nationality or place of residence.
The Economic Inspectorate (FPS Economy) monitors compliance with the geo-blocking ban and can impose administrative fines.
5. Implementation and To Do’s
We strongly recommend to audit your e-commerce processes to bring them into line with these new rules. We identify the following areas of interest:
- Review of your general conditions, both B2B and B2C;
- Evaluating the order process ;
- Evaluating the information on your webshop;
- Re-evaluating your warranty procedure.