The steady rise in consumerism in Turkey made it inevitable that Turkish consumer protection standards would evolve to meet EU levels. In response, and also to complement the new Law of Obligations and new Turkish Commercial Code introduced in recent years, the Law on Consumer Protection numbered 4077 (the "Former Law") has been replaced by the new Law on Consumer Protection numbered 6502 (the "New Law") which was published in the Official Gazette on November 28, 2013 and entered into force on May 28, 2014. The predominant difference between the Former and the New Law lies in the scope of application. The New Law governs all kinds of consumer transactions and practices concerning consumers whereas the Former Law governs only consumer transactions in the goods and services market. The New Law also introduces new provisions regarding inertia selling and pyramid sales. (Inertia selling is the illegal practice of sending unrequested goods to householders followed by a bill for the price of the goods if they do not return them.) The New Law amends the definition of, and provisions regarding, defective goods within the framework of article 2 of European Council Directive numbered 1999/44. It also gives more importance to off-business-premises contracts, distance sale contracts, price labels, introductory and user guides, guarantees and after-sale services.
Certain fundamental principles have been introduced by the New Law with a view to ensure that reliable information is given to consumers before the completion of a transaction. These may be summarized as follows:
- All consumer-related contracts and information notes should be in writing and have at least a font size of 12. The language of the contract should be comprehensible, clear, plain, and legible. Copies of such contracts or information notes should be submitted to consumers in physical or electronic form. If a contract does not contain any of the mandatory provisions, such deficiency shall not affect the validity of the contract; however, it will have to be immediately remedied by the drafting party.
- Terms and conditions of a consumer contract cannot be amended to the disadvantage of the consumer during its term.
- No compound interest shall be applied in consumer transactions, even in the event of a consumer's default.
- All information regarding the costs and expenses to be demanded from a consumer with respect to a contract shall be submitted to the consumer in writing as an annex to the contract.
- A negotiable instrument can be drawn for transactions concluded by consumers only in the form of a registered promissory note, separately issued for each installment. Promissory notes drawn contrary to the New Law shall be null, void, and unenforceable against the consumer.
- No additional payment may be required from consumers for any expenses that would rightfully be expected to be included in the relevant goods or services, arise from the performance of the drafting party's legal obligations, and incurred by the drafting party for its own benefit.
- A personal security given in a consumer transaction for the obligations of the consumer shall be deemed an ordinary surety. A personal security given by the counterparty for the receivables of the consumer shall be deemed as a several surety, unless stated otherwise by other legislations.
UNFAIR TERMS IN CONSUMER CONTRACTS
While the Former Law also provides that the consumer shall not be bound by unfair terms, the relevant provisions of the Former Law were not sufficiently detailed. The New Law regulates unfair terms in consumer contracts in a more comprehensive manner. Accordingly, under the New Law, any unfair terms (to the detriment of the consumer) shall be null and void. In such event, the drafting party will not be able to claim that it would not have entered into the contract but for those (onerous) terms.
The New Law amended the provisions regarding defective goods within the scope of European Council Directive numbered 1999/44 and states that the burden of proof that the products are in conformity with the contract of sale is on the seller for six months as of the delivery of goods. Therefore we can say that the period of the notification to the seller regarding defective goods has been increased from 30 days to 6 months.
There has been no change in the New Law regarding the statute of limitations for liability for defective goods. Unless the contract requires otherwise, the statute of limitation is two years starting from the delivery date of the good(s) to the consumer. Whereas the Former Law indicated that the statute of limitation for a claim arising from any damages caused by defective goods was 3 years, the New Law does not provide any statute of limitations.
Pursuant to the New Law, if goods are delivered or services provided without the order or request of the consumer, no claim can be made against such consumer. In this event, the fact that the consumer remains silent or uses such goods or services cannot be interpreted as a declaration of acceptance (tacit acceptance) intending to conclude a contract. The consumer shall not be under the obligation to either return or retain the goods. Whereas inertia selling was previously regulated under the former Regulation on Distance Contracts, it has now been added to the scope of the New Law as well.
SALES IN INSTALLMENTS
Both the Former Law and the New Law regulate sales in installments including, without limitation, financial lease contracts whereby the seller or supplier undertakes delivery of a product or performance of a service and the consumer pays the price in installments. As in the Former Law, the New Law enables the consumer to withdraw from the sale contract within seven days without providing any reason or paying any penalty.
The New Law also keeps the provisions of the Former Law regarding the acceleration rights of a seller/supplier in the event of a consumer's default. However, the minimum notice period required to be given by the seller/supplier to the consumer for the exercise of such rights has been increased from one week to thirty days.
CONTRACTS CONCLUDED OFF-BUSINESS PREMISES
Door step sales regulated under the Former Law are now regulated as off-business premises sales under the New Law. As stated under the reasoning of the relevant article, these kinds of contracts have a high potential of influencing consumers by using marketing strategies and tools and inducing them to conclude off-business premises contract without due regard to consequences thereof. Therefore, the New Law increases the period applicable to the right of withdrawal of consumers from 7 days (as was the case under the Former Law) to 14 days.
Under the New Law, the definition of consumer loan agreements is broadened to cover loans extended through postponement of payments, borrowing or other financing options. In the event of postponement of payments for more than three months, credit card agreements shall be deemed to be consumer loan agreements.
According to the New Law, an information form in respect of the content of the agreement should be submitted to the consumer within a reasonable time before the conclusion of the said agreement. The consumer has the right of withdrawal from the consumer loan agreement within 14 days of conclusion of the same, without any reason or penalty. Moreover, the interest rate applicable under consumer loan agreements should be a fixed rate. Likewise, the New Law states that without the explicit written instruction of the consumer (whether in physical or electronic form), no insurance can be procured for a loan.
The New Law also ensures that consumers are made fully aware of the costs to be charged regarding the consumer loan agreements. Furthermore, the New Law prohibits opening of overdraft accounts without an explicit instruction of the consumer and forces card issuing institutions to offer a credit card type that does not require the payment of any annual subscription fees or similar charges by consumers.
PREPAID HOUSE SALE
A pre-contract information form consisting of the issues determined by the Ministry has to be given to the consumer at least one day prior to the conclusion date of the contract. In addition to that the prepaid house sale contracts cannot be executed with consumers without obtaining a construction license.
TIMESHARE VACATION CONTRACT
The time share vacation contract is defined in the New Law as a contract with a term of more than one year, that a consumer acquires the right to use one or more overnight accommodation for more than one period. Whereas, the contract term is stated as less than three years and the accommodation term is stated as at least one week in the Former Law. The time share vacation contracts cannot be executed with consumers without obtaining a construction license. Also, a pre-contract information form consisting of the issues determined by the Ministry, has to be given to the consumer at least one day prior to the conclusion date of the contract.
UNFAIR COMMERCIAL PRACTICES
The deceptive and offensive activities and the activities set forth in the annex of the regulation are stated as unfair commercial practices and prohibited by the New Law. A commercial practice is deemed to be unfair if it is contrary to the requirements of professional diligence, materially distorts or is likely to distort the economic behavior of the average consumer or the average member of the group that a commercial practice is directed to.
New regulation regarding the regulation of the limitations on commercial advertisements and the methods and principles to be applied to the commercial advertisements is expected to be promulgated by the Customs and Trade Ministry after the effective date of the New Law.
RESOLUTION OF DISPUTES
As was previously provided under the Former Law, consumer disputes over a certain monetary threshold shall be settled by the consumer courts. The New Law increases the amount of such thresholds and accordingly disputes with a value of less than two thousand Turkish Liras shall be submitted to the consumer arbitration committee in districts; disputes with a value of less than three thousand Turkish Liras shall be submitted to the consumer arbitration committee in provinces; and disputes with a value between two thousand Turkish Liras and three thousand Turkish Liras shall be submitted to the consumer arbitration committee in metropolitan areas. In this respect, only disputes with a value above the foregoing amounts are referred to the consumer courts.
The New Law aims to harmonize Turkish consumer protection laws with the European Union legislation. For the most part, the New Law also conforms to America's Uniform Consumer Credit Code and Uniform Commercial Code provisions regarding consumer credit and transactions. Accordingly the changes brought about by the New Law aim to provide further advantages and an enhanced protection to consumers while targeting the elimination of predatory practices by providers of goods and services. There are several matters that are left to be regulated under the secondary legislation to be enacted within six months of the effective date of the New Law. Therefore, all the implications of the enactment of the New Law are yet to be fully appreciated.
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.