Newsletter: EU regulation on online dispute resolution in force | Information requirements for e-commerce and e-distribution

In detail:

On 9 January 2016, EU Regulation No 524/2013 on online dispute resolution for consumer disputes amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC entered into force (“Consumer Dispute Resolution Regulation”).

It provides for the establishment, on the European Union level, of a central contact point for consumers and traders based in European Union territory that will help to settle any disputes resulting from online transactions out of court. The intention here is not to replace the “alternative dispute resolution entities” (so-called “ADR entities” pursuant to Article 4(1)(h) of Directive 2013/11/EU) set up at EU member state level, but to simplify access to these national arbitration procedures.

Traders based in European Union territory who sell goods and/or services to consumers by means of e-business are now required to provide explicit information about the possibility of using this arbitration body.

The most important questions include:

Who is affected?

Traders who are established in the European Union and conclude online sales contracts or online service contracts with consumers resident in the EU. This includes online traders and service providers, and of course hotels and travel companies are no exception.

The Consumer Dispute Resolution Regulation defines ‘consumers’ as natural persons who “are acting outside their trade, business, craft or profession” when concluding the contract.

The following applies to “dual purpose contracts”:

If the online B2C contract is concluded by a natural person for purposes partly within and partly outside the person’s trade, that person is also considered a ‘consumer’ if the trade purpose is so limited as not to be predominant in the overall context of the supply.

The regulation applies both to conflicts across borders inside the EU as well as to the resolution of disputes between contracting parties both based in the territory of one member state.

Both sides should be able to consult the online dispute resolution platform. The Consumer Dispute Resolution Regulation also applies explicitly to the out-of-court resolution of disputes arising from online sales contracts or online service contracts which are initiated by a trader against a consumer, in so far as the legislation of the member state where the consumer is habitually resident allows for such disputes to be resolved through the intervention of an alternative dispute resolution entity (ADR entity, see above).

Online marketplaces that allow traders to offer their goods and services to consumers, such as eBay, are also expressly covered by the Consumer Dispute Resolution Regulation.

Who isn’t affected?

• Contracting parties who perform transactions involving no consumers (B2B);
• parties involved in purely private transactions;
• parties involved in contracts not concluded via a website, online marketplace or other electronic means (so by wire, by radio, by optical means or by other electromagnetic means), i.e. locally in a retail store;
• parties involved in transactions that are concluded across the borders of the EU Single Market;
• unpaid transactions (e.g. gift, exchange, donation)

Which sectors are affected?

All providers who conclude B2C sales contracts and/or B2C service contracts by electronic means must comply. The term ‘sales contract’ is understood as any contract under which the trader transfers or undertakes to transfer the ownership of goods to the consumer and the consumer pays or undertakes to pay the price thereof, including any contract having as its object both goods and services.

‘Service contract’ is understood as any contract other than a sales contract under which the trader supplies or undertakes to supply a service to the consumer and the consumer pays or undertakes to pay the price thereof.

As such, this primarily affects online traders, even if they operate via portals/online marketplaces. We assume that the meaning of ‘service’, as employed in the Consumer Dispute Resolution Regulation, is based on the broad European legal understanding of the term, which means that even contracts which are actually classified as a work (Werk), the management of the affairs of another (Geschäftsbesorgung) or rent (Miete) under German law are also covered by this interpretation of ‘service’. However, we have yet to find any explicit reference to this.

What needs to be done?

Traders are required to provide, on their websites, an easily accessible link to the online dispute resolution platform. Furthermore, a trader must also provide an email address on their website as a “first point of contact” for consumers – this is probably old hat to any vendors who are required to comply with Germany’s Telemedia Act (TMG).

If you offer your websites in several languages, then the information must also be translated into the respective target languages, since it is precisely the settlement of cross-border disputes between traders and consumers which the regulation is supposed to facilitate.

It may also be necessary to add the link to general terms and conditions or customer information.
If you already participate in other arbitration procedures or are required by law to do so because you operate in a particular sector, you will still be required to provide any mandatory information to those other entities in the manner stipulated by the relevant regulations. In other words: The Consumer Dispute Resolution Regulation does not replace any rules, be they national or under European law, but merely complements these.

In such cases it may be advisable to present the different information on European, national or other dispute resolution entities together in one place on your website, e.g. by creating a separate button (“Dispute resolution”) which contains the information on all procedures and can be easily located and accessed on the website.

What are the consequences if someone fails to provide the mandatory information?

The Consumer Dispute Resolution Regulation establishes mandatory information requirements in the interest of consumers. According to Article 18 of the Consumer Dispute Resolution Regulation, the member states now have a duty to establish appropriate penalties in cases of non-compliance with the obligation to provide information. As long as the EU’s dispute resolution portal – which the link leads to – is not yet live, it is likely that a ‘grace period’ will also apply to traders. After such period, notice could however be served on traders who fail to comply.