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Legal tips on moving your business online

Legal tips on moving your business online

Authors: Cristiana Fernbach, Partner & Flavius Florea, Senior Manager, KPMG Legal – Toncescu și Asociații

ACCORDING TO THE DIGITAL ECONOMY AND SOCIETY      STATISTICS      RELEASED      BY      EUROSTAT,  BY  2019,  the  share  of  EU-27  households with internet access had risen to  90%,  some  26  percentage  points  higher  than  in  2009  (64%),  while  broadband  internet  access  was  used by 88% of the households in the EU-27 in 2019; 33 percentage points higher than in 2009.

Further, the proportion of individuals aged 16 to 74 in the EU-27 who ordered or bought goods or services over the internet for private use stood at 60% in 2019, 14 percentage points higher than in 2014.

While it is clear that there has been steady growth in online sales of goods and services throughout the last few years, the Covid-19 pandemic has accelerated this growth even more.

However,  we  have  seen  that  the  household  saving  rate in the EU recorded its all-time highest year-on-year increase in the first quarter of 2020, showing a 3.5  percentage  points  increase  compared  with  the  first quarter of 2019.

The  main  reason  seems  to  be  the  year-on-year  decrease      in      household      final      consumption      expenditure (-1.7%), in stark contrast with its recent increases above 2%.

Under these unprecedented circumstances, with a rise    in    online    sales    and    a    decrease    in    final    consumption    expenditure,    there    is    a    general    stringent  need  to  move  businesses  into  the  online  environment in order for them to remain relevant on the market.

However,   operating   an   online   business   poses   several legal challenges and companies that operate in  this  field  must  abide  by  all  applicable  laws  in  relation   to   this   highly-regulated   and   consumer-facing area.

We  will  present  here  the  most  relevant  Romanian  legal   provisions,   generally   derived   from   the   EU   legislative   framework,   that   need   to   be   observed   while operating an online business.

1. MANDATORY INFORMATION TO BE PROVIDED TO CLIENTS

The first piece of legislation that needs to be brought into this discussion is the Romanian Law no. 365/2002 on   electronic   commerce   (the   E-commerce   Law),   which regulates the general obligations of information society  services  providers.  Companies  which  market  their  products  and  services  online  fall  under  this  category  and  they  are  required  to  provide  recipients  of the products or services and public authorities with means to allow easy, direct, permanent and free access to at least the following information:

a) The name of the company.

b) The headquarters of the company.

c)  Contact  information  -  telephone  numbers,  fax  numbers,    e-mail    address    and    any    other    data    necessary   to   contact   the   company   directly   and   effectively.

d)  The  registration  number  or  other  similar  means  of  identification,  if  the  company  is  registered  in  the  trade register or in another similar public register.

e) The tax registration code.

f)  The  fees  related  to  the  offered  services  and/or  products,   specifying   the   exemption,   inclusion   or   non-inclusion   of   value   added   tax,   as   well   as   its   amount.

g) The inclusion or non-inclusion in the price of the delivery costs, as well as their value, if applicable.

Online businesses need to display this information in a clear, visible form, and the information must be permanently available on their website. As a practical way   to   make   this   information   available,   it   is   recommended that it should be included in the terms and conditions, available on each relevant website.

In   terms   of   language   requirements,   while   the   E-Commerce Law does not establish any conditions relating to the language in which the online business must    present    the    information,    all    information    targeted   to   consumers   must   be   provided   in   the   Romanian   language.   This   does   not   preclude   the   possibility   to   provide   information   in   a   different   language, if the company chooses to.

Further, if the online shop targets clients located in other    jurisdictions,    we    recommend    that    the    information  should  be  provided  to  customers  in  an  appropriate language so that the information is clear and easy to understand. Moreover, specific language requirements should be verified in each jurisdiction where customers are targeted.

2. PLACING THE ORDER AND CONCLUSION OF THE CONTRACT

According   to   the   E-commerce   Law,   contracts   concluded   by   electronic   means   produce   all   the   effects  that  the  law  recognizes  for  contracts,  when  the conditions required by law for their validity are met. Moreover, for the validity of contracts concluded by electronic means, the prior consent of the parties on the use of electronic means is not required.

Before the client places the order, online businesses must  provide  the  client  with  at  least  the  following  information,  which  must  be  expressed  in  a  clear,  unambiguous manner and in accessible language:

a) The  technical  steps  to  be  followed  in  order  to  conclude the contract.

b) Whether  or  not  the  contract,  once  concluded,  is  stored by the seller and whether or not it is accessible.

c) The  technical  means  that  the  online  business  makes available to the recipient for the identification and correction of errors which have occurred during data entry.

d) The   language   in   which   the   contract   can   be   concluded.

e) The relevant codes of conduct by which the online business abides, as well as information on how these codes can be consulted by electronic means.

As  a  practical  way  of  delivery,  it  is  recommended  that this information should also be included in the terms and conditions, available on the website.

The general terms and conditions of the proposed contract must be made available to the recipient in a way  that  allows  him  or  her  to  store  and  reproduce  them.  Moreover,  online  businesses  are  required  to  offer   the   recipient   the   opportunity   to   use   an   appropriate,    effective    and    accessible    technical    procedure  to  identify  and  correct  errors  in  data  entry, prior to accepting the offer.

The moment from which the contract is considered concluded  is  deemed  to  be  when  the  acceptance  of  the offer to contract (order) has been acknowledged by the seller.

Online  businesses  are  required  to  confirm  receipt  of the offer (order) in one of the following ways:

a) By  sending  a  proof  of  receipt  by  electronic  mail  or  other  equivalent  means  of  individual  communication,  to the address indicated by the recipient, without delay.

b) By   equivalent   means   to   that   used   to   send   acceptance of the offer (order), as soon as acceptance (the order) has been received by the online business, provided by the recipient.

3. INFORMATION TO BE PROVIDED TO CONSUMERS

While the requirements presented in the first two sections above are applicable both in B2B (business-to-business)   and   in   B2C   (business-to-consumer)   sales,    there    are    certain    specific    requirements    applicable solely in relation to B2C sales.

As such, according to the Romanian Government’s Emergency  Ordinance  no.  34/2014  on  consumer  rights   in   contracts   concluded   with   professionals   (Consumer   Rights   GEO),   online   businesses   must   provide the consumer with the following information in  a  clear  and  comprehensible  manner,  prior  to  the  time when the contract takes effect:

a) The  main  characteristics  of  the  products,  taking  into  account  the  communication  environment  and  the products concerned.

b) The identity of the company operating the online business, such as its trade name.

c) The postal address at which the online business is established,  as  well  as,  if  any,  its  telephone  number,  fax  number  and  e-mail  address  at  which  it  can  be  effectively contacted.

d) If it is different from the postal address at which the online business is established, the postal address of the place where the online business carries out its activity   to   which   the   consumer   can   send   any   complaints.

e) The  total  price  of  the  products  with  all  taxes  included   or,   if   the   price   cannot   be   reasonably   calculated   in   advance   given   the   nature   of   the   products,  the  method  of  calculating  the  price  and,  where  applicable,  all  additional  costs  of  transport,  delivery, duties, postal services or costs of any other nature or, if they cannot be reasonably calculated in advance,  an  indication  that  these  additional  costs  could be borne by the consumer, including the period of validity of the offer or prices.

f ) The methods of payment, delivery, execution, the date  by  which  the  online  business  undertakes  to  deliver  the  products  and,  as  appropriate,  the  online  business’s procedure for resolving complaints.

g) If  there  is  a  right  of  withdrawal,  the  conditions,  terms  and  procedures  for  exercising  that  right,  as  well  as  the  standard  withdrawal  form,  contained  in  the annex to the Consumer Rights GEO.

h) Where applicable, information that the consumer will have to bear the cost of returning the products in case of withdrawal and, if the products, by their very nature,  cannot  normally  be  returned  by  post,  the  cost of returning the products.

i) Information  according  to  which  the  consumer  is  required  to  pay  to  the  online  business  reasonable  costs  if  the  consumer  exercises  his  or  her  right  of  withdrawal.

j) If  the  right  of  withdrawal  is  not  provided,  the  information  according  to  which  the  consumer  will  not   benefit   from   a   right   of   withdrawal   or,   as   appropriate,    the    circumstances    in    which    the    consumer loses his or her right of withdrawal.

k) A  statement  concerning  the  existence  of  a  legal  guarantee   in   relation   to   the   conformity   of   the   products to the applicable requirements.

l) Where applicable, the existence and conditions of after-sales   assistance   provided   to   the   consumer,   after-sales services and commercial guarantees.

m) The  existence  of  relevant  codes  of  conduct  and  the manner in which copies of them may be obtained, as appropriate.

n) The duration of the contract, as appropriate, or, if the contract is concluded for an indefinite period or is  to  be  automatically  extended,  the  conditions  for  termination   of   the   contract,   including   applicable   penalties, if relevant.

o) Where applicable, the minimum period of validity of the obligations incumbent on the consumer under the contract.

p) Where applicable, the possibility and the manner of having recourse to an out-of-court mechanism for the   submission   and   settlement   of   complaints   to   which the online business is subject.

As a practical way of providing the information, it is recommended that this should also be included in the terms and conditions, available on the website of the online business, where possible.

However,  the  Consumer  Rights  GEO  offers  sellers  the  possibility  to  provide  the  information  in  letters  g),  h)  and  i)  above  using  the  standard  withdrawal  information form provided by law.

If the online business does not inform the customer about  possible  additional  costs,  or  the  costs  related  to  the  return  of  products,  the  consumer  should  not  bear those costs.

Moreover, online businesses are required to present on the home page of online stores a visible link to the official  web  address  of  the  National  Authority  for  Consumer Protection (www.anpc.gov.ro).

4. WITHDRAWAL RIGHT

According  to  the  Consumer  Rights  GEO,  the  consumer is allowed a period of 14 days to withdraw from   the   contract   without   having   to   justify   the   decision  to  withdraw  and  without  incurring  costs  other than those detailed below.

The withdrawal period expires 14 days from:

  • The day on which the consumer or a third party, other than the carrier and which is indicated by the consumer, takes physical possession of the products.
  • The day on which the consumer or a third party, other than the carrier and which is indicated by the consumer,takesphysical possessionofthelastproduct,iftheconsumerordersbyasingleordermultiple products which are delivered separately.
  • The day on which the consumer or a third party, other than the carrier and indicated by the consumer, takes physical possession of the first product, in the case of contracts for the periodic delivery of products for a specified period of time.

During  the  withdrawal  period,  the  parties  must  fulfil their contractual obligations.

If  the  right  of  withdrawal  is  applicable,  and  if  the  online business does not inform the consumer about the    conditions,    deadlines    and    procedures    for    exercising  this  right,  as  well  as  about  the  standard  form, the withdrawal period expires 12 months after the end the initial withdrawal period of 14 days.

If the online business has provided this information within 12 months of the date on which the withdrawal period   is   calculated,   the   withdrawal   period   will   expire  within  14  days  of  the  date  on  which  the  consumer receives that information.

The provisions of the Consumer Rights GEO allow online businesses to give the consumer the option to complete  and  submit  in  electronic  format,  in  the  online  stores,  either  the  model  withdrawal  form  provided   by   the   Consumer   Rights   GEO   or   an   unequivocal  statement  of  any  other  type.  In  these  situations,   online   businesses   must   communicate   without delay, on a durable medium, the confirmation of receipt of the withdrawal form.

Based on the provisions of Art. 13 of the Consumer Rights   GEO,   in   the   case   of   withdrawal,   online   businesses  are  required  to  reimburse  all  amounts  received  as  payment  from  the  consumer,  including,  where   applicable,   delivery   costs,   without   undue   delay,  but  not  later  than  14  days  from  the  date  on  which they are informed of the withdrawal decision. Reimbursement   must   be   made   using   the   same   payment methods as those used by the consumer for the   initial   transaction,   unless   the   consumer   has   agreed  to  another  payment  method  and  provided  that he or she is not responsible for the payment of fees following the refund.

However,   in   the   event   that   the   consumer   has   explicitly chosen a different type of delivery than the standard delivery offered by the professional, online businesses   are   not   required   to   reimburse   the   additional costs.

Online  businesses  must  bear  the  costs  related  to  the return of the products if they have not informed the  consumer  that  these  costs  are  borne  by  the  consumer  or  if  the  online  business  has  chosen  to  bear these costs.

5. ONLINE INTERMEDIATIONS SERVICES (PLATFORMS)

The     EU     Regulation     on     platform-to-business     relations (P2B regulation), which became applicable in  July  2020,  is  the  first-ever  set  of  rules  creating  a  fair,      transparent      and      predictable      business      environment  for  smaller  businesses  and  traders  on  online platforms.

The   P2B   regulation   contains   rules   for   online   intermediation    services    (online    platforms)    and    online   search   engines   that   aim   to   connect   EU   businesses   and   professional   websites   with   EU   consumers,   in   order   to   limit   unfair   commercial   practices.    Verification    of    the    fulfilment    of    the  obligations imposed by the P2B regulation is carried out by the Competition Council.

The relationship of the platform providers with the companies   using   online   intermediation   services   (professional  users)  will  be  regulated  contractually,  through   the   terms   and   conditions   (or   a   similar   document).

To   fulfil   the   obligations   imposed   by   the   P2B   regulation, online platform providers must:

  • Ensurethattheirtermsandconditionsforprofessionalusersareeasytounderstandandeasyto find.
  • Specifyinadvancethepossiblereasonsforrestricting, suspending or terminating their services.
  • Notifytheirprofessionalusersatleast15daysbeforeanychangeintheirtermsandconditions,unlesstheyaresubjecttoaspecificlegalobligationor to address unforeseen and imminent cybersecurity risks-failuretocomplywiththisobligationwouldmean that any changes are void.
  • Act in good faith, by refraining from implementing retroactivechangestothetermsandconditions,offeringarightofterminationtotheirprofessionalusersandstatingwhethertheymaintainaccesstoprofessionalusers’dataaftertheterminationoftheir contract.
  • Explainwhethertheyreserveanyrightswithrespecttotheintellectualpropertyoftheirprofessionalusersorintermsoftheplatform’sabilitytomarketthegoodsorservicesoftheirprofessional users outside the relevant platform.
  • Provideprofessionaluserswithadetailedstatementofthereasonsfortherestriction,suspensionorterminationoftheirservices-inthecase of general termination, this statement must be provided 30 days in advance.
  • Ensurethattheidentityoftheirprofessionalusers is clearly visible.

The terms and conditions must include:

  • Themainparametersthatdeterminetheirrankingandtheirrelativeimportanceinrelationtoallotherparameters-thisdescriptionincludesanypossibility to influence the ranking against direct or indirectremuneration(inadditiontoonlineplatforms, online search engines must also determine the main parameters that determine the ranking).
  • Whereapplicable,adescriptionofanyancillarygoods or services that the online platform may offer itself as a complement to the goods or services of its professional users.
  • Adescriptionofanydifferentialtreatmentgiventothegoodsandservicestheplatformownersprovide themselves (or goods and services provided by the professional users they control), compared to thetreatmenttheygivetothegoodsandservicesprovidedbyotherprofessionalusers.(Thisrequirementappliessimilarlytoonlinesearchengines).
  • Adescriptionofthetechnicalandcontractualaccessofprofessionaluserstopersonalorotherdatathatbusinessusersorconsumersprovidetoonline intermediation services or that are generated through the use of these services.
  • Whereapplicable,thelegal,economicorcommercial consideration for any restriction on the ability of professional users to provide their goods or services on different terms through other channels.
  • Informationontheaccessandoperationoftheinternalcomplaintsmanagementsystem,aswellasone or more mediators that business users can turn toinordertotrytoresolveanydisputeswiththerelevant provider of the online platform.

The obligations described above, as well as the P2B regulation as a whole, apply to online intermediation services and online search engines offered for supply to   traders,   whether   individuals   or   legal   entities,   established  or  resident  in  the  European  Union,  and  offering   goods   or   services   within   the   Union   to   individual consumers.

As  described  above,  operating  an  online  business  can  pose  significant  legal  challenges  and  complying  with all applicable laws in this area can be particularly difficult,  especially  when  the  need  to  move  your  business  online  arises  overnight.  Appropriate  legal  advice  should  be  sought  in  all  cases,  particularly  in  relation to the information that needs to be provided to consumers, as well as in relation to the regulation applicable to online intermediation platforms, which is still new and rather uncharted territory.

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KPMG LEGAL – TONCESCU șI ASOCIAțII