The Regulation on Distance Contracts ("New Regulation") has been recently promulgated in the Official Gazette dated 27 November 2014 and numbered 29188 pursuant to the Law on Protection of Consumers No. 6502 ("Law"). Upon the expiry of the three month period as foreseen under the New Regulation, it entered into force on 27 February 2015 and abolished the former Regulation regarding Distance Contracts which was published in the Official Gazette dated 6 March 2011 and numbered 27866 ("Former Regulation").
A distance contract is defined as "any contract concerning goods or services concluded between a supplier and a consumer under an organized distance sales or service-provision scheme, wherein the parties make use of means of distance communication up to and including the moment at which the contract is concluded".
The New Regulation contains newly introduced provisions concerning consumers and distance suppliers including e-commerce companies, as well as companies that make sales or provide services via telephone. In line with the nature of consumer protection legislation, this brings with it further protection for consumers, and imposes further liabilities upon distance suppliers.
Major Provisions of the New Regulation
The New Regulation regulates the performance methods and principles of distance contracts and focuses on delivery processes, prior information of consumers, right of withdrawal and the liabilities of the parties.
Whereas the obligation to provide pre-contractual information was also regulated under the Former Regulation, the New Regulation widens the scope and detail of the information to be declared to the consumer. Accordingly, the supplier of the goods or services must inform the consumer prior to the conclusion of the distance contract or to the acceptance of the offer by the consumer in accordance with the respective methods applicable to contracts concluded via internet, telephone, etc.
This information includes the basic qualities of the goods or services, identity and communication details of the supplier, total price of the goods or services, including applicable taxes, transportation and delivery costs, information on payment, delivery and performance and commitments of the supplier in relation thereto, resolution methods for possible complaints, conditions and details of the right of withdrawal, if it exists, details of the deposit or other financial securities, if any, technical protection precautions for the digital content, if any, information on the hardware or software that the digital content can work with, if any, and information on the consumer's rights regarding any disputes.
The supplier is required to provide that the consumer confirms having been informed through applicable methods, the failure of which would render the contract null and void ab initio, as if the contract has never been concluded. The supplier is the party who is under the burden of proof for prior information. Unlike the Former Regulation, the New Regulation also provides sanctions for several specific failures: For example, upon the supplier's failure to inform the consumer of the delivery, transportation and similar additional costs, the consumer will no longer be responsible for the payment of such.
Finally, just prior to the approval of the order by the consumer, the supplier is required to clearly inform the consumer that the approval of the order will mean a payment obligation; otherwise, the consumer will not be bound by the purchase order.
Right of Withdrawal
Time constraints relating to the exercise of the right of withdrawal have been extended by the New Regulation. The consumer is now entitled to withdraw from the distance contract for convenience within fourteen (14) days (formerly seven (7) days) without being subject to any penalty. The fourteen (14) day period starts running as of the date of conclusion of the contract for provision of services, and as of the date of delivery, in case of sale of goods, without prejudice to the exercises until the date of delivery. Such time constraint does not apply where the consumer was not pre-informed of the right of withdrawal, which, in any case, cannot be exercised after the expiry of the one (1) year period following the end of the withdrawal period (formerly three (3) months).
For the ease of the consumers, a withdrawal form is annexed to the New Regulation, which may as well be included on the websites of the suppliers and used by the consumers to exercise the right of withdrawal, as well as an explicit written declaration in this regard. In contrast to the provision on the pre-contractual information, the consumer is the party who is under the burden of proof with respect to the exercise of the right of withdrawal.
The consumer is required to return the goods to the supplier within ten (10) days following its notification to exercise the right of withdrawal; whereas, at the same time, the supplier is required to return the payment within fourteen (14) days following the aforesaid notification. The consumer will not be charged for any return costs so long as he returns the goods through the carrier determined by the supplier.
The consumer is not liable for any changes and deterioration to the goods within the withdrawal term insomuch as he has used the goods in accordance with their function, technical qualities and user manuals.
Examples that are in favor of the suppliers are that the fourteen (14) day return period for the payment had been regulated as ten (10) days under the Former Regulation; the supplier was required to take back the goods within twenty (20) days, instead of the consumer returning it himself; and the types of contracts that were not subject to right of withdrawal were more limited.
Performance of the Contract and Delivery
Whereas the Former Regulation set forth that the supplier was to perform the order within thirty (30) days following the order, which could be extended with up to ten (10) days upon written notification of the supplier; the New Regulation obliges the supplier to execute the order within the period it is promised, which cannot exceed thirty (30) days. As a novelty, the New Regulation also entitles the consumer to terminate the distance contract in the event of nonfulfillment of the foregoing obligation. In such a case, the supplier is required to return the payment, including the delivery costs and the default interest, to the consumer within fourteen (14) days following receipt of the termination notification, together with the promissory documents obtained from the consumer, if any.
Notification and return periods in the event of impossibility of the performance have also changed, obliging the supplier to notify the consumer within three (3) days following its awareness of the impossibility and to return any payment within fourteen (14) days following its notification. The former Regulation did not contain any specific notification period, and regulated the return period as ten (10) days.
As a newly introduced provision, the New Regulation holds the seller of the goods liable for any damage and loss until the delivery of the goods has been made to the consumer, including the period where the goods are kept by the carrier, unless the consumer requested delivery through a carrier other than determined by the seller.
In order to request additional payments from the consumer aside from the originally agreed amounts arising from the obligations under the contract, the New Regulation requires the explicit approval of the consumer. If the consumer made an additional payment due to the fact that the options presented to him were already selected without his explicit approval, the supplier is required to return such payment immediately. This provision means that the options must be presented to the consumer, and the choice must be made only by the consumer.
The New Regulation did not change the obligation to retain all kinds of documents and information relating to the elements of the distance contract for a period of three (3) years, yet burdens intermediary firms to maintain the same record-keeping in relation to their transactions concluded with the suppliers.
Inertia Selling and Payment by Card
Unlike the Former Regulation, provisions on inertia selling and payment by card have not been included in the New Regulation. Inertia selling is regulated under Article 7 of the Law in a broad scope, and in such a way so as to include all consumer transactions. The said article exempts the consumer from the provision of any consideration in cases of unsolicited supply, the absence of a response, or the use of the goods or services not constituting consent for the conclusion of a contract; whereas, under the Former Regulation, use by the consumer was deemed to be consent.
The omission of the provision on payment by card is due to the fact that the Law foresees issuance of a specific regulation for payment by card.
While e-commerce is playing a larger part in consumers' daily lives day by day, the New Regulation aims to ensure that consumers are fully aware of their rights prior to the conclusion of distance contracts, especially in terms of the right of withdrawal. It strengthens consumers' positions by placing the suppliers under the burden of proof with respect to prior information, and setting forth specific sanctions for failure to inform consumers. It extends the time constraints relating to the exercise of the right of withdrawal, and shortens the period for the performance of the contract. It should be also stated that the New Regulation is considerably compatible with the current European Union legislation in terms of consumer protection.
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.