cee overview - business to consumer protection

2020 | roadmap

Consumer protection as a strategic goal of the EU

The European Consumer Agenda is the European Commission's strategic vision on consumer protection. It identifies key measures to empower consumers and to maximise their participation, outlining 62 action points grouped around four pillars: (i) promoting consumer safety; (ii) enhancing knowledge of consumer rights; (iii) strengthening the enforcement of consumer rules; and (iv) integrating consumer interests into key sectoral policies. As a long-term objective, the Commission also works to empower consumers through choice, information and awareness of consumer rights and means of redress.

2019 was centred around the below-mentioned Directives and the year to come will too, since harmonisation is aimed at by 2021. In the overview which follows, we set out the scope of the directives stemming from this Agenda, as well as country specific highlights in this respect.

The Digital Content Directive and Sale of Goods Directive

Directive (EU) 2019/770 on certain aspects concerning contracts for the supply of digital content and digital services ("Digital Content Directive") | Directive (EU) 2019/771 on certain aspects concerning contracts for the sale of goods ("Sale of Goods Directive")

1. Scope of the Directives

The Sale of Goods Directive and the Digital Content Directive entered into force on 11 June 2019 to provide European consumers a high level of protection and legal certainty and to create common warranty rules in the EU. By 1 July 2021, Member States are obliged to adopt necessary regulations into their national laws to comply with these Directives, which will apply from 1 January 2022.

The Sale of Goods Directive will apply to sales contracts between a consumer and a seller for goods, including goods with a digital element (e.g. smart TVs, smart fridges or smart watches) regardless whether concluded physically in shops or online.

The Digital Content Directive will apply to any contract where the trader supplies digital content (e.g. movies, photos, e-books) or digital service (e.g. apps, cloud storage, streaming services) to the consumer. Remarkably, the Digital Content Directive may also apply when the consumer does not pay for the service but provides its personal data in return for the digital content or service as a "payment", except where the personal data is exclusively processed for the purpose of supplying the digital content/service or for allowing the trader to comply with its legal obligations.

The Directives were drafted by different working groups, as can be seen from the fact that different terminology has been used where the intended meaning is the same. For instance, the Sale of Goods Directive uses the phrase "…between a consumer and a seller" while the Digital Content Directive uses "… the trader supplies … to the consumer". Despite the wording, this does not of course mean that the Sale of Goods Directive also applies between consumers. It will therefore always be necessary to consider both Directives when interpreting certain terminology.

Country-specific highlights
Every country listed below has highlighted the main changes that will occur to its current national legislation, once the new Directives regulations are adopted.

Note: This does not mean that the changes highlighted by other countries do not apply.

Austria, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Slovenia
Burden of proof: Any lack of conformity which becomes apparent within one year upon delivery will be presumed to have existed at the time of delivery. This one-year long reversal of the burden of proof is a substantial extension compared to the six-month period under the current warranty laws in those Member States.

Austria, Czech Republic
Warranty period: Contracts with a single act of supply of digital content or services are subject to a warranty period of two years from the date of supply. On the contrary, for contracts with continuous supply of digital content and services (e.g. streaming services) over a period of time, the warranty obligation applies for the entire term of the contract.

Austria
Updates: The trader is obliged to provide updates for digital content or services if this is necessary to maintain conformity with the contract.

Czech Republic
Updates: The trader is obliged to provide updates for digital content or services agreed in the contract, and to provide the purchaser with the updated digital content at least to the extent necessary for the digital content to retain its original features for a period of time which may be reasonably expected by the purchaser.

Poland, Slovakia
Limitation of the seller's liability: Under Polish and Slovak law, the period of the seller's liability may be limited to one year with respect to second-hand goods.

Bulgaria
Digital content and digital service: Unlike the Directive, which provides a very broad definition of digital content ("data produced and supplied in digital form"), the Bulgarian Consumer Protection Act provides a more specific definition of digital content: "digital content is data produced or supplied digitally, such as computer games, antivirus programmes, applications, films, music, programmes, text, electronic books, papers, magazines, software or online games, database, internet sites for gambling or other, regardless of whether they are accessible through downloading or real-time broadcasting, on physical copy (hard copy or electronic form) or any other means." Since the listing may not cover all possible digital content available (especially considering the potential creation of new forms of digital data), the Directive should ensure a wider scope of protection of any possible digital content.

Next, the Bulgarian Consumer Protection Act does not provide a definition of "digital service". Thus, it is left unclear whether digital services are encompassed within the term services as a somewhat broader term, and whether consumers engaging in these are granted equal protection.

Remedy for the failure to supply: The Directive provides for restoration of conformity (as primary remedy) and price reduction and termination of contract (secondary remedy). The Bulgarian Consumer Protection Act provides the same hierarchy. However, under the Bulgarian law, restoration of conformity is due within one month, while in the Directive it is due "without undue delay or within an additional period of time as expressly agreed to by the parties".

Croatia
Definition of digital service: Whereas the Croatian Consumer Protection Act defines the term "digital content" in the same manner as the Directive, the respective Act does not provide the definition of "digital service", thus it is left unclear whether digital services are encompassed within the term services as a somewhat broader term, and whether consumers engaging in these are granted equal protection. The implementation of the new Directives should unambiguously ensure that digital services are afforded equivalent consumer-favouring remedies in cases of nonconformity.

Lack of conformity: In comparison to the Directives, the Croatian Consumer Protection Act does not regulate lack of conformity of goods / digital content and services explicitly and in such detail. Nevertheless, traders are generally obliged to perform their obligations in accordance with the contractual provisions and the Consumer Protection Act and Civil Obligations Act, thereby ensuring the required standard of consumer protection.

Hungary
Commercial guarantee: It will also appear as a novelty that producers will be bound with respect to commercial guarantees made in advertisements. Pursuant to the new regime, if the conditions laid down in the advertisement are more advantageous for consumers than those laid down in the commercial guarantee statement, the advertised conditions will be binding (unless the advertisement was duly corrected before the conclusion of the contract).

Repeated nonconformities: Pursuant to the new EU regime, if a lack of conformity appears again despite the trader's attempt to bring the product or digital content/service into conformity, the consumer is free to terminate the contract. This is currently not clearly regulated in Hungarian law. It is more limited under current court practice in Hungary, whereby a repeated nonconformity entitles the consumer to terminate the contract only if the nonconformity repeats multiple times in a short timeframe and thereby results in loss of interest on the consumer's side.

Poland
Compliant with the Directives: Polish consumer protection law is in many aspects compliant with the Directives, e.g. with respect to the burden of proof (one-year period) or the seller's liability under warranty for movables (two years from delivery).

Protection of entrepreneurs: From 1 June 2020, individual entrepreneurs entering into agreements connected with their business activity will enjoy protection similar to consumers, provided the agreements are not related to their professional activity.

Romania
Repairing the goods because of lack of conformity: Under the Directives, the seller is allowed to repair the goods within a reasonable period of time from the moment the consumer reported the lack of conformity. However, under Romanian law as currently in force, the seller has a maximum of 15 days to carry out such repairs. When implementing the Directives, it will be interesting to see if the Romanian legislator will consider a period of 15 days to be reasonable.

Definition of "digital service": The Directives provide a much needed definition of the term "digital service" as (i) a service that allows the consumer to create, process, store or access data in digital form, or (ii) a service that allows the sharing of or any other interaction with data in digital form uploaded or created by the consumer or other users of that service. Romanian law utterly lacks such a definition (so far it only defines the term "digital content") and will have to be updated.

Author: Oana Vodă

Slovakia
Definition of goods: Under Slovak consumer law, the definition of goods does not explicitly cover digital content or digital services.

Slovenia
Definition of "digital service": While current consumer protection legislation defines goods as including digital content, it is left somewhat ambiguous whether services include digital services, and thus whether consumers engaging in these are granted equal protection. The new Directives should unambiguously ensure that digital services are afforded equivalent consumer-favouring remedies in cases of nonconformity.

Remedy hierarchy: The Directives envisage price reduction and termination as remedies for nonconformity that are secondary to the primary restoration of conformity (repair/replacement). This is contrary to the current consumer protection legislation, which views restoration of conformity, price reduction and termination of contract as equivalent and alternative remedies, subject to the consumer's choice.

2. Comments

It is questionable whether the sought-after full harmonisation will be achieved. There are numerous opening clauses which Member States can use. It remains to be seen how they will implement the Directives and which opening clauses they will use as well as how the new warranty law will impact the business environment and how consumers will benefit from it. It seems traders will continue to face a variety of consumer protection rules in the EU.

Consumer protection in non-EU countries

Serbia
Implementation of the Directives:

As part of the EU accession process, the Republic of Serbia aims to align its consumer protection regulation and strategies with that of the EU. Chapter 28 of the acquis communautaire related to consumer and health protection is yet to be open.

The current Consumer Protection Act regulates among others consumer rights, safety, consumer education, judicial and out-of-court dispute resolution mechanisms and consumer representation. Serbia is expected to adopt a new Consumer Protection Act with a focus on e-commerce and online consumer protection, along with a five-year consumer protection strategy, by the end of 2019. It will introduce new consumer protection mechanisms, such as a misdemeanour warrant upon request of a consumer protection organisation. The scope of implementation of the new EU Directives is yet to be confirmed.

Compliance with the Directives:

Serbian consumer protection law only complies with some aspects of the Directives, e.g. the seller's liability under warranty for movables (two years from delivery), while reversal of the burden of proof is still limited to the six-month period. The seller's liability period may be limited to one year with respect to second-hand goods.

E-commerce

Serbia only adopted a new Commerce Act in July 2019. It now includes definitions of e-commerce shops and platforms, while the somewhat rudimentary E-commerce Act uses "information society services" as an umbrella term for all IT-related services from e-commerce, to internet search engines and user data storage.

Turkey

Effect of EU Legislation:

Turkish law, including consumer law, has continued to align with the EU acquis as part of the country's accession process to the EU.

The promulgation of the Turkish Law on Consumer Protection in 1995 resulted from Turkey's accession to the customs union, while amendments to consumer law have usually followed the trends of EU Consumer Law. Therefore, the current version of the Turkish Law on Consumer Protection ("TKHK") is aimed at harmonising Turkey's standards with EU norms. In addition to the TKHK, secondary legislation has been introduced to ensure compliance with the EU, such as the Regulation on Distant Sales Contracts, the Regulation on Commercial Advertising and Unfair Commercial Practices, the Regulation on Certificate of Warranty and the Regulation on Liability for Damages Caused by Defective Goods.

Definition of "digital service":

There is no separate legislation regulating disputes arising from contracts for the supply of digital content and digital services. However, the definition of digital content is regulated under the Regulation On Distant Sale Contracts as "any kind of data produced and supplied in digital form; such as computer programme, application, game, music, video and text" and it is not numerus clausus.

Obligation to apply to Consumer Arbitration Committee:

Under the Turkish Law on Consumer Protection, before filing a lawsuit it is mandatory to apply to the Consumer Arbitration Committee in accordance with the value of the dispute. In 2019:

  • Disputes below TRY 5,650: application to the District Arbitration Committee;
  • Disputes between TRY 5,650 and TRY 8,480 in cities with metropolitan status: application to the City Arbitration Committee;
  • Disputes below TRY 8,480 in the centre of cities without metropolitan status: application to the City Arbitration Committee;
  • Disputes between TRY 5,650 and TRY 8,480 in the districts of cities without metropolitan status: application to the City Arbitration Committee.

 

Wolfgang Tichy

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Serap Aydin

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Galina Petkova

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Ana Marjančić*

Associate Vlahov Buhin i Šourek d.o.o. in coop. with Schoenherr

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Stanislav Bednář

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