Obligations on service providers in Directive 2000/31/EC

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Obligations on service providers in Directive
2000/31/EC

• Gábor Csiszér
• Ministry of National Development
• Department of
• Electronic Communications,
• Postal Services and
• Information Society
• Belgrade, 26.10.2010.

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Content

• Introduction
• General information to be provided (Art 5-6.)
• Importance of information in e-commerce
• Detailed information requirements
• Commercial Communications
• Contracts (Art 9-11.)
• Electronic contracts
• Information to be provided concerning contracts
• Placing orders on-line
• The PPO Case

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General information to be provided

• Information Society services are provided at a
  distance
• the service is provided without the parties being
  simultaneously present
• Compared to conventional services this involves
  certain risks for recipients
• They dont know, who is on the other side
• In case of distant selling they arent able to
  convinced about the quality of the product
• They cannot make sure of what will they paying
  for
• Etc
• If consumers feels that shoping online is risky
  theyll loose their confidence in that

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General information to be provided

• Why is this important?
• A Commission survey last May showed that 90 of
  the web shops are putting misleading information
  on their website
• Misleading information on consumer rights,
  products, prices, etc
• In many countries (for example in Hungary) the
  biggest obstacle of spreading e-commerce is the
  lack of confidence of consumers
• In the beginning the greatest problem was the
  poor infrastructure, high price of internet
  access, etc, today its clearly the lack of
  confidence
• Misleading information wont help this situation
• Providing information is important in order to
  protect consumers and facilitate the spreading of
  infosoc services

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General information to be provided

• Information regarding the Service Provider
• Name, geographic address
• Details, including an e-mail address
• Trade registry number (or any other similar
  registry number, if there is such)
• Grants, licenses if its activity is subjected to
  that
• VAT identification number
• In case of regulated professions the body where
  its registered, the granted title, reference to
  the applicable rules in the MS of establishment

• Information regarding the service itself
• Prices indicated clearly and unambiguously
• Taxes, delivery costs
• Information on contracts

• Information regarding advertisement (commercial
  communication)
• It shall be clearly identifiable
• the natural or legal person on whose behalf the
  commercial communication is made shall be clearly
  identifiable
• Promotional offers, promotional games shall be
  clearly identifiable, detailed and clear
  conditions shall be easy accessible

• These are minimum requirements, sectorial
  legislation requires more information to be
  provided
• These information shall be provided easily,
  directly and permanently accessible

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Commercial Communications

• Article 7 on Commercial Communications of ECD was
  overruled by Article 13. of Directive 2002/58/EC
• When the subscriber is a natural person, prior
  consent is required in all cases where an
  automated calling or communication system is
  applied for direct marketing (opt-in scheme)
• The only exception is where the service provider
  is in contract with the natural person in
  question the service provider can market its
  own product or service for its client if the
  client did not refuse this at contracting
• The service provider must ensure the possibility
  of objection free of charge and in an easy manner
  (opt-out)

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Commercial Communications

• Article 7 on Commercial Communications of ECD was
  overruled by Article 13. of Directive 2002/58/EC
• The Directive leaves the option open for Member
  States to expand the scope of this article to
  different kind of communications
• In Hungary the opt-in regime is applied to almost
  all commercial communications, it covers
  political and non-profit advertisements as well
• Article 13. prohibits unidentifiable commercial
  communications
• Not having a valid address for receiving
  objections is also illegal
• All this shall apply for natural persons,
  however, Member States shall ensure that
  non-natural persons shall also enjoy similar
  protection

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Contracts

• Main rule Member States shall ensure that their
  legal system allows contracts to be concluded by
  electronic means.
• Member States shall in particular ensure that the
  legal requirements applicable to the contractual
  process neither create obstacles for the use of
  electronic contracts nor result in such contracts
  being deprived of legal effectiveness and
  validity on account of their having been made by
  electronic means
• This is a general rule, but it doesnt mean that
  contracts concluded by electronic means are fully
  equivalent with non-electronic contracts
• It means basically that where theres no special
  obligation regarding the form of a contract, an
  electronic contract will also do
• I.e. retail trading you wont conclude a formal
  written contract in a normal case
• When ordering online, the electronic placement of
  the order however establishes the contract,
  therefore parties, MS authorities shall accept
  this as a normal contract
• Electronic contracts are not always considered as
  written contracts
• I.e. in Hungary signing with electronic signature
  is a requirement for that
• Electronic contracts have not always the same
  evidentiary force as paper contracts
• Depends on Member States civil law legislation,
  but usually an electronic document with qualified
  electronic signature and time-stamp has the same
  force before jurisdictional or same proceedings

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Contracts

• E-commerce directive allows some exceptions for
  Member States MS can decide they wont accept
  the following contracts in electronic form
• contracts that create or transfer rights in real
  estate, except for rental rights
• contracts requiring by law the involvement of
  courts, public authorities or professions
  exercising public authority
• contracts of suretyship granted and on collateral
  securities furnished by persons acting for
  purposes outside their trade, business or
  profession
• contracts governed by family law or by the law of
  succession
• Member States shall report the Commission the
  exceptions they apply, they shall do this in
  every five years regarding point b).

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Contracts

• Information to be provided regarding electronic
  contracts
• the different technical steps to follow to
  conclude the contract
• whether or not the concluded contract will be
  filed by the service provider and whether it will
  be accessible
• the technical means for identifying and
  correcting input errors prior to the placing of
  the order
• the languages offered for the conclusion of the
  contract.
• Information on relevant code of conducts
• These requirements shall apply only to services
  where the recipient is consumer.
• The requirements above shall not apply to
  contracts concluded exclusively by exchange of
  electronic mail or by equivalent individual
  communications
• Contract terms and general conditions provided to
  the recipient must be made available in a way
  that allows him to store and reproduce them.

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Contracts

• Placing the order via electronic means
• In case when the recipient is customer, the
  service provider has to acknowledge the receipt
  of the recipient's order without undue delay and
  by electronic means
• Hungarian legislation requires this within 48 hrs
• the order and the acknowledgement of receipt are
  deemed to be received when the parties to whom
  they are addressed are able to access them
• The requirements above shall not apply to
  contracts concluded exclusively by exchange of
  electronic mail or by equivalent individual
  communications

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The PPO Case

• Hungarian service provider PPO provided a single
  access and paying point service to various other
  services (e.g. online purchasing motorway
  sticker, parking tickets, cinema tickets, etc.)
• PPO had more than 200 000 clients
• Clients provided their credit card number to PPO
  ? PPO was entitled to withdraw money from the
  cards
• The majority of clients used the free service of
  PPO, but 1 year after starting of the service PPO
  decided to introduce a yearly registration fee
  (10 Euros)
• PPO amended its General Terms of Contract
• PPO informed its clients about the change, and
  provided a couple of weeks to consider whether
  they need the service with this condition
• If a consumer did not cancel the registration
  during this period, PPO deemed this as a consent,
  and automatically charged the yearly fee from
  his/her credit card
• It seems OK, but
• PPO used an internal message-service (they
  havent sent a normal e-mail), clients needed to
  log in in order to have access to PPOs messages
• Most client logged in only 2-3 times a year, they
  just simply missed this message
• PPO charged this 10 Euro from more than 150 000
  clients, most of them were not aware of the
  amendment of the General Terms of Contract
• It became to a huge scandal, PPO went to
  bankrupt.
• Authorities and courts are still analyzing this
  case now in principle the behavior of PPO might
  be legal, but its clear that it is not fair at
  all.

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• Thank you for your attention!
• gabor.csiszer_at_nfm.gov.hu