Sale Of Refurbished Products Under Turkish Law - Dodd-Frank, Consumer Protection Act

INTRODUCTION

The importance of technological products in our lives has been increasing in recent years. With this increasing importance, especially in Turkey, issues such as the use, sale and renewal of second-hand technological products have become very popular, as the prices of technological products have reached very high figures.

In this Article, we will discuss the development of the second-hand technological product market in Turkey and the rights and obligations of the buyer and seller in this market. We will particularly emphase the liability of refurbishment centers and sellers within the scope of the "Regulation on the Sale of Refurbished Products", published in the Official Gazette No. 31221 on 22.08.2020.

1. DEVELOPMENT OF THE REFURBISHED PRODUCT USE IN TURKEY

Multiple factors have contributed to the increase in the use of second-hand goods in Turkey in recent years. The most influential of these are economic reasons, the rising sustainability trend and the increasing number and use of online second-hand sales platforms.

Fluctuation in exchange rates raise the costs in the technological product market, which is dominated by imported products or products manufactured in Turkey by importing parts from abroad. Beside this, with the tax policies implemented, it has become quite difficult to buy a brand new technological product. Since the use of technological devices such as phones and computers has become almost a necessity at the level of basic needs today, it has become impossible for individuals to give up these products. For this reason, the current economic situation has caused people to turn to lower cost products. The fact that second-hand products are sold at much more affordable prices than new products, their suitability for consumer budgets and the fact that they allow consumers to save money have enabled them to be preferred.

The fact remains that increasing environmental awareness among consumers also increases the popularity of second-hand products. The sustainability trend and environmental protection activities encourage the use of second-hand products. The reuse of second-hand products has highly effective results for the environment, such as more efficient use of natural resources and reduced waste generation from production. Carbon emissions and chemical use in production processes are also reduced.

2. REGULATIONS ON SALE OF REFURBISHED PRODUCTS IN TURKISH LAW

Understanding the sale of refurbished products under Turkish Law requires a solid foundation in the general principles of product sales as governed by the Turkish Code of Obligation and the specific rights and liabilities granted to consumers under Turkish Consumer Law. Before delving into the intricacies of refurbished product sales, it's essential to grasp these two essential regulations.

2.1. Code Of Obligations

Under the Turkish Code of Obligations No. 6098 ("TCO"), the sale of products is guided by fundamental principles such as offer and acceptance, delivery obligations, and warranties.

Under the Article 219 of the TCO, the seller is liable if the promised qualities of the product are not present in the product sold. However, this liability is not limited to the condition of promise. It is also responsible for the existence of material, legal or economic defects that are contrary to the quality or quantity of the technological product, which eliminate or significantly reduce its value in terms of its intended use and the benefits that the buyer expects from the product. The seller's ignorance of the existence of defects related to the product shall not eliminate this responsibility.

The seller shall not be liable for defects known to the buyer at the time of conclusion of the contract of sale. The buyer has the responsibility to inspect the goods sold. If he sees a defect that requires the seller's liability, he must notify him within an appropriate period of time. Otherwise, the buyer is deemed to have accepted the product with the defect. However, the defect in the sold technology product must be of a nature that can be revealed by review. Otherwise, the existence of the duty to inspect cannot be asserted in accordance with the Article 223 of the TCO.

One of the common situations we encounter in the second-hand sales of technological devices is that the product is mostly purchased through a distance sales contract. Especially in online sales, it is highly likely that the seller does not have any representative at the location of the buyer. In this case, the buyer who claims that the product is defective is obliged to take the necessary measures to protect the product. As a matter of fact, it has the responsibility to protect the product in case of return.

2.2. Consumer Protection Law

Turkish Consumer Law provides a robust set of rights and protections for consumers, including provisions on warranty periods, return policies, and mechanisms for dispute resolution.

The limits of liability under the Consumer Protection Law No. 6502 ("CPL") are in line with the Code of Obligations. Defective goods are goods that are contrary to the contract at the time of delivery to the consumer because they do not conform to the sample or model agreed upon by the parties or do not have the characteristics that they should objectively have. In other words, in accordance with the TCO regulation, the case where the product does not meet the promised specifications is covered by the concept of "defect" within the scope of the CPL.

Defects that appear within six months from the date of delivery are deemed to exist on the date of delivery. In this case, the seller is responsible for proving that the goods are not defective. But this presumption will not apply if it is incompatible with the nature of the goods or the defect. For example, battery problems that frequently occur in second-hand phones during short-term use can be evaluated within this scope.

In the event that the purchased product is defective, some optional rights are granted to the consumer. According to the Article 11/a of the CPL, the consumer may withdraw from the contract by stating that he/she is ready to return the goods, may retain the goods and request permission from the sales price, may request the free repair of the goods at the seller's expense, if it does not require an excessive expense, and, if possible, may request the replacement of the goods with a defect-free equivalent.

The new Article titled "Refurbished Products" added to Article 57/A of the CPL on March 24, 2022. By this way, refurbished products are defined as used goods that are offered for sale again by improving their hardware, software or physical characteristics. Particularly, a minimum one-year warranty for refurbished products from the date of delivery to the consumer has been granted by this Article.

2.3. Regulation On The Sale Of Refurbished Products

The Ministry of Trade has been introduced the "Regulation on the Sale of Refurbished Products" ("Regulation") numbered 31221 on 22.08.2020. According to this regulation, refurbished products are presently categorized as mobile phones, tablets, smartwatches, computers (laptops, desktops), gaming consoles, modems. It's important to note that the Ministry of Trade retains the authority to amend or expand the list of eligible products as needed, thereby adapting to evolving market dynamics and technological advancements.

2.3.1. General Principles

Used products can be refurbished by the renovation centers, provided that they comply with the regulations set by the Ministry of Trade ("Ministry") and the standards set by the Turkish Standards Institute ("TSI"). The refurbished products may be offered for sale again after being certified and packaged. During the sales process, advertisements and announcements should include the phrase "refurbished product" and the information of the renovation center should be included in order to provide ease of understanding to the consumer. If all the parts refurbished in the refurbishment process are manufacturer or importer approved parts authorized by the manufacturer, the phrase "refurbished product using manufacturer approved parts" shall be included.

Used mobile mobile phones, tablets, smart watches, computers (laptops, desktops), gaming consoles, modems can be refurbished either by the authorized buyer and delivered to the renovation center or by the renovation center directly from the consumer.

Refurbished products must be offered for sale with a Turkish introduction and user manual. The responsibility for the preparation of the Turkish introductory and user manual lies with the renovation center, and the burden of proof of delivery and delivery to the consumer lies with the authorized dealer. The Turkish introductory and user manual may be provided in writing or via a permanent data storage device.

2.3.2. Renovation Centers

Renovation centers are established to operate in accordance with the regulations set by the Ministry or the standards set by the TSI in order to refurbish, certify and resell second-hand mobile phones, tablets, smart watches, computers (laptops, desktops), gaming consoles, modems . In order for renovation centers to operate, they must obtain a renewal authorization certificate approved by the Ministry. The renewal authorization certificate is granted for 5 years.

Following conditions have been set for the issuance of a renewal authorization certificate:

Having a service place qualification certificate obtained in accordance with the specifications in the regulations or standards determined by the Ministry or the TSI,
Being registered in the Chamber of Commerce,
Being a corporate taxpayer,
Persons authorized to represent commercial companies; (i) must be at least eighteen years old, (ii) not have gone bankrupt or, even if they have, must have restored their reputation, (iii) not have been sentenced to more than five years of imprisonment for an intentionally committed crime, or any crimes against the security of the state, the constitutional order and its functioning, national defense, state secrets, such as espionage, embezzlement, misappropriation, bribery, theft, fraud, forgery, abuse of trust, fraudulent bankruptcy, disrupting public procurement, disrupting the performance of an act, money laundering, financing terrorism, smuggling, tax evasion, or unjustly acquiring property, as well as crimes like torture, sexual assault and exploitation of children, sexual harassment, deprivation of liberty, prostitution, providing a place and means for gambling, cybercrimes, or crimes against private life or the confidential sphere of life, and should not have been disqualified from commercial and artistic activities,
Having a paid-in capital of not less than ten million Turkish Liras,
Providing other issues to be announced by the Ministry.

2.3.3. Procedures And Principles Regarding The Liability

2.3.3.1. Responsibilities Of The Authorized Buyer

Authorized buyer is defined as a natural or legal person who receives used goods on behalf of the renovation center for the purpose of renewal and is authorized by the renovation center.

The authorized buyer should check whether the used goods are on the "White List" through the Digital Turkey Portal (e-Government). Also, the authorized buyer should check the warranty certificate, invoice or invoice substitute retail sales receipt, payment recording device receipt, expense voucher and similar documents, if any, and keep the transaction records related to this control.

In the event that the subject refurbished product has a feature of containing personal data; the authorized buyer must obtain the consumer's consent that the data contained in the goods will be destroyed by the renovation center without any data processing and that these data will not be accessed again, and that all legal, administrative and criminal liability before the date of delivery of the goods to the authorized buyer belongs to the consumer, and must give a copy of this statement to the consumer in writing or by permanent data storage. The burden of proof that a copy of the declaration was given to the consumer belongs to the authorized buyer.

The authorized buyer must determine the value of the second-hand products within 3 days following the day of delivery or receipt and obtain the consumer's consent to accept this value. Once the consumer's consent is obtained, the authorized buyer shall make payment to the consumer. The payment period may be extended by up to three working days, provided that the consumer is notified in advance and consents. If the consumer purchases a new product from the buyer, payment may be made by reducing the price of the new product.

2.3.3.2. Responsibility Of The Renovation Centers

The renovation center is obliged to make the used goods ready for sale by refurbishing them in accordance with the regulations or standards determined by the Ministry or the TSI. The relevant Regulation sets some standards for the renewal process. Accordingly, while performing the refurbishing process;

If repair or replacement of parts is necessary, such repair or replacement must be completed.
Destroy all information including personal data of the previous user.
The product must be restored to factory settings.
Test that its performance and all functions are working as they should.

The renovation center must check that the authorized buyer has carried out the necessary checks and paperwork. The renovation center will be responsible for any damages that may occur during the refurbishment process.

The renovation center checks from the records of the ICTA that the used goods with electronic identification information have data, voice or short message usage traffic at least one year ago. Used goods that do not meet these conditions shall not be refurbished. The renovation center shall carry out the certification process of the used goods that it has refurbished by using the hologram certificate form numbered by the TSI and ensuring its security with a QR code containing the trade name, contact information, refurbish authorization certificate and information on the renewal process, and shall ensure that this certificate is given in writing or by permanent data storage with the refurbished product.

In the event that the renovation center ceases to operate, its authorization certificate is not refurbished or is revoked, the authorized dealer and the renovation center shall be jointly and severally responsible for the provision of maintenance and repair services during the refurbished product warranty period.

2.3.3.3. Responsibility Of The Authorized Seller

Authorized seller is defined as a natural or legal person, including public legal entities, who offers refurbished products to consumers for commercial or professional purposes or who acts on behalf or account of the renovation center and is authorized by the renovation center.

Before the product is purchased, the consumer shall be informed by the authorized selller about the operations performed on the refurbished product, the parts replaced and the warranty issues. The burden of proof regarding this information belongs to the seller. The authorized seller is bound by the statements in the advertisements and announcements regarding the refurbished product.

The authorized seller and the relevant renovation center shall be jointly and severally liable for the legal rights of the consumer regarding the refurbished product, even if they have separate legal entities. The authorized seller must ensure that the refurbished product offered for sale is provided to the consumer with a Turkish introduction and user manual.

2.3.4. Refurbished Product Warranty And After Sales Services

Provided that the legal rights of the consumer are reserved, the renovation center is obliged to provide a refurbished product warranty that includes its commitments regarding the replacement, repair, maintenance, refund, price reduction and similar issues regarding the refurbished product. This commitment must include the information that the legal rights of the consumer are reserved, the conditions for benefiting from the warranty, the warranty period, the title and contact information of the guarantor. During the refurbished product warranty period, due to the exercise of the promised rights, the consumer shall not be charged any expenses, including transportation, postage, cargo or transportation costs of service personnel.

In the event that one of the rights of free repair or replacement with a defect-free refurbished equivalent is chosen within the refurbished product warranty period, this request must be fulfilled within twenty working days at the latest after being directed to the renovation center or authorized dealer. This period starts from the date of delivery of the product to the authorized dealer or the renovation center.

In cases where the consumer chooses the right to a refund or price reduction, the full amount of the price paid or the amount of the discount made shall be returned to the consumer immediately. On the date the repair of the refurbished product is completed, the consumer will be notified by telephone, fax, e-mail, registered letter with return receipt or similar means. In case of dispute, the burden of proof regarding the notification belongs to the authorized dealer and the renovation center. The consumer shall not benefit from the refurbished product warranty commitment due to malfunctions arising from the use of the refurbished product contrary to the issues in the promotion and user manual prepared by the renovation center.

CONCLUSION

Every passing day, our consumption habits can show different adaptations in order to adapt to life conditions. Today, the use of second-hand/used products is quite common due to economic concerns and sustainability concept which has become an important part of environmentalism and the efforts in this scope. Therefore, it is evident that regulations are needed not only for the used product market in the context of mobile phones, tablets, smartwatches, computers (laptops, desktops), gaming consoles, modems, but also for other sectors such as fashion and home appliances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Turkey: Sale Of Refurbished Products Under Turkish Law