The Law No. 7392, published in the Official Gazette numbered 31796 on April 1, 2022, has introduced significant changes to many issues regulated under the Consumer Protection Law (the "Law").
The provisions of the new law that relate to timeshare and long-term vacation agreements entered into force on April 1, 2022, before the summer season. However, most of the changes, including those below, will come into effect on October 1, 2022. As the changes are substantial, we highly recommend stakeholders to take and complete the necessary steps for compliance with the new requirements until the date of entry into force.
The major amendments to the Law are as follows:
Consumer Default in Installment Sales Contracts
Sellers will be able to request for performance of all remaining debts with regard to installment sales contracts in case of default by consumers only if the relavant consumer fails to pay (i) at least two consecutive installments consisting of at least 10% of the total payable under the contract, rather than that of the current debt as was the case before the amendments, or (ii) one installment constituting at least 25 % of the total payable under the contract instead of the current debt. Said changes in favor of consumers have aggravated the conditions for sellers to claim the remaining debt in full.
Consumer Loan Agreements
- Right of Withdrawal
In consumer loan agreements, consumers have rights to withdraw from the agreement within 14 days without giving any reason or paying any penalty. By way of the changes, if consumers pay the entire loan debt within 14 days, they will be deemed to have exercised their right of withdrawal without further notification. The creditor will then make a refund accordingly for fees related to establishment of loan agreements.
- Insurance and Other Subsidiary Financial Products and Services
Creditors or financing institutions shall also offer a contract that does not include credit-linked insurance in consumer loan agreements or housing finance agreements. Accordingly, creditors or the financial institutions will not be able to offer a single consumer loan offer with credit-linked insurance only. Also, loan or financing agreements cannot be made conditional on the provision of subsidiary financial products and services unrelated to the loan itself, such as issuing a credit card and receiving automatic payment orders.
- Delivery of Prepaid Houses in Housing Finance
The maximum period for the delivery of prepaid houses in housing finance has been increased from 36 months to 48 months. It is also emphasized that the delivery of the prepaid houses within the time arranged under the contract is obligatory.
Intermediary Service Providers in Distant Sales Contracts
Intermediary service providers that mediate the establishment of a distant sales contract on behalf of sellers or suppliers will bear the following obligations:
- Service providers acting as intermediaries through the system they have created should establish a system that is convenient for consumers to transmit and follow up their requests and notifications regarding the distance contracts established in the service provider's systems and should keep this system accessible uninterruptedly;
- They should provide preliminary information to consumers in line with the legislation;
- They should keep records of the consumer transactions with sellers or suppliers, and provide public institutions and organizations and consumers with such records upon request.
- They should avoid practices contrary to the contract they concluded with sellers and suppliers regarding the intermediary services;
- In cases where they accept payment on behalf of sellers or suppliers, they should comply together with the relevant seller or supplier with all the obligations regarding the delivery, performance and the right of withdrawal;
- They must ensure that the campaigns, promotions, and discounted sales they organize without the approval of the seller or supplier are duly performed;
- They should ensure that the preliminary information and advertising practices are in line.
In case of failure to fulfill the above obligations, intermediary service providers may be jointly liable with the relevant sellers or suppliers against consumers and may face severe administrative fines depending on breach.
Another topic, which has recently been on the agenda and touched upon by the Law, relates to refurbished products. The Law will make it mandatory to give a warranty of 1 year from the delivery of the refurbished product to the relevant consumer in principle.
The Law also provides administrative fines for refurbishing activities without holding a certificate of authorization for goods that require a refurbishing authorization certificate, as well as for non-conformities and deficiencies detected in the sales of refurbished products.
Verification as to the use and registration of goods with electronic identity information will be made through the Information Technologies and Communications Authority records, if necessary.
Refurbishing processes and conditions, warranty arrangements, establishment, and responsibilities of refurbishing centers will be subject to amendments to the existing regulation and secondary legislation.
- Registration Obligation for Authorized Technical Services
Manufacturers and importers will be obliged to record information about all of their authorized service stations in the system created by the Ministry of Trade (the "Ministry"). Consumers will be able to verify whether or not any particular service provider is authorized and therefore, the consumers will be protected against any service from unauthorized service providers. For this purpose, the Service Information System (SERBIS) has been introduced. On the other hand, as a part of reliability, service stations operating independent from any manufacturer or importer shall also use the term "special service" in all kinds of medium and during their activities.
- Consumer Right to Compensation After Warranty Period Expires
If manufacturers or importers fail to provide after-sales service during the lifespan determined by the Ministry for goods in addition to their warranty periods, consumers will be entitled to claim compensation for their damages from the manufacturer or importer due to their failure to fulfill such obligation.
Application to Consumer Arbitration Committees, Notifications and Decisions
The amendment increases the upper limit for consumer disputes that should be brought before the consumer arbitration committee to TRY 30,000.
Consumer arbitration committees will be able to make notifications electronically in accordance with the Tax Procedure Law.
In addition to the above, the amendment also stipulates that if additional information and documents are submitted by the companies to the court hearing the objection against the consumer arbitration committee decision whereas they did not such information and documents during the dispute before the consumer arbitration committee and if the court revokes the consumer arbitration committee's decision due to such new information/documents, the consumer will not bear the litigation expenses and attorney fees, even if the decision comes in the consumer's detriment. This change aims that the non-consumer party of a consumer transaction makes all the information and documents it holds available in a dispute heard by the consumer arbitration committee, ensuring that the decision of the consumer arbitration committee as to the dispute complies with the Law and the circumstances of the concrete case.
The amendments will directly apply to consumer transactions executed after October 1, 2022. However, they will not apply to those which are concluded and completed prior to that date. Regarding the consumer contracts with an indefinite term, established before October 1, 2022, yet remains in effect afterward will fall within the scope of the amendment, and the new provisions shall apply to them. Articles in those contracts that contradict the amendments will be obsolete.
The said amendments aim to take measures to protect consumers within the framework of changing needs, facilitate the remedies of consumers and rearrange the sanctions by considering the principles of proportionality and deterrence.
Depending on the nature of non-compliance with the above obligations, administrative fines may be imposed. Additionally, as we have evaluated in detail before1, there have been some developments in the sanction catalog. In this respect, the Board of Advertisement is given authorization to decide on blocking access (in the form of URL, etc.) to the broadcast, section, or sub-section in case of breaches to commercial advertisement regulations via the internet.
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.