The new Law on the Protection of Consumer Rights No. 3153-IX (the “New Law”) was adopted based on draft law No. 6134. The New Law will significantly change Ukrainian legislation in the field of consumer rights protection, entirely replacing the current Law of Ukraine, “On the Protection of Consumer Rights” (the “Current Law”). In general, the New Law will finally fill the gaps in the current legislation and bring Ukrainian legislation significantly closer to the EU law in the relevant area. The New Law provides for many changes, but the following matters can be highlighted among the most important.
In-depth regulation of e-commerce and establishment of Portal “E-buyer”
Firstly, one of the main achievements of the New Law is an in-depth regulation of e-commerce matters in Ukrainian legislation. In turn, the New Law contains a whole section dedicated to consumer rights protection in the case of the conclusion of a contract outside a commercial or office premises or a distance contract (“distance contracts”). This section establishes the consumers’ rights while concluding such contracts: special attention is paid to the right to information, the delivery right, and the right to refuse the contract. Requirements for distance contracts are also established.
It is also worth mentioning that the New Law creates a Unified state web portal for consumers in the field of electronic commerce (“Portal “E-buyer”). The Portal “E-buyer” is an electronic information and communication system created to improve e-commerce regulation. The Portal “E-buyer” will be the place for interaction between e-commerce entities, consumers, and the competent body that implements state policy in the field of state supervision of compliance with legislation on the protection of consumer rights (“State Service of Ukraine on Food Safety and Consumer Protection, SSUFSCP”) or other state bodies that protect consumers’ rights in relevant areas within their competence.
An important aspect of the Portal “E-buyer”is the automated system of verified sellers. The system must contain information about verified sellers, namely e-commerce entities that have passed electronic identification and authentication and registered on the Portal “E-buyer, ” after which they are entered into the system. Authorised sellers must place the “verified seller” designation in the online store where they sell their products.
In addition, with the help of the Portal “E-buyer”:
- electronic user accounts will function; through these accounts, e-commerce entities, consumers, the SSUFSCP and other competent bodies will communicate;
- consumers will be able to file complaints about violations of their rights when purchasing products from e-commerce entities, receive commercial messages and information on the progress and results of consideration of their complaints;
- information on e-commerce entities will be collected, accumulated, processed, protected, accounted and provided to consumers;
- monitoring and evaluating the quality of services provided using the Portal “E-buyer” will be done.
Furthermore, the New Law directly regulates the issue of receiving electronic consumer messages from sellers. In turn, the New Law not only provides for the e-commerce entities’ obligation to post information about the possibility of opting out of e-mails and to provide the technical possibility to opt out, but it also establishes the requirements for the form of such information, namely, it must be primarily noticeable in comparison with the text of the electronic message itself. It is also possible to apply for a refusal to receive electronic messages through the Portal “E-buyer” if, even after the refusal via e-mail, the consumer continues to receive electronic messages. Moreover, through the Portal “E-buyer”, consumers will be able to file complaints against e-commerce entities that do not provide access to the terms of the contract in such a way that consumers can familiarise themselves with this contract before placing their order for the purchase of products.
Updating the list of sanctions
Secondly, the New Law updates the sanctions list to protect consumers’ rights. Among other things, the sanctions list that will apply in the field of e-commerce was expanded. In turn, the onset of liability was envisaged for:
- e-commerce entity’s failure to provide consumers with information about itself, which is envisaged by law;
- failure to register on the Portal “E-buyer” by an e-commerce entity that sells products using information and communication systems within 10 days from the date of commencement of such activity;
- e-commerce entity’s failure to notify about the change in information about itself, as required by law, through the Portal “E-buyer” within five days;
- failure to place the “verified seller” designation in the online store by an e-commerce entity that has undergone identification and authentication on the Portal “E-buyer” and acquired the status of a verified seller;
- placement of the “verified seller” designation without registration on the Portal “E-buyer”;
- e-commerce continues sending electronic messages to consumers after a consumer refuses to receive such messages, etc.
Moreover, the provisions of the New Law also introduce responsibility for the performance of works (providing services) that violate the legislation on the protection of consumers’ life, health, and property as well as the environment; violation of the consumers’ rights in trade and other services; and for the inclusion in contracts with consumers of conditions that limit the rights of consumers; implementation of unfair commercial practices.
Update of warranty provisions
Thirdly, the New Law contains updated provisions on warranty obligations. In addition to establishing a warranty period of two years from the date of transfer for new goods and one year for used goods, the New Law also stipulates that:
- for products whose service life is less than two years, the warranty period is set for the product’s service life;
- for immovable property and real estate, the warranty period is 10 years from the date of transfer to the consumer;
- defects identified within a year from the moment of handing over the goods to the consumer will be considered as existing at the time of handing over the goods unless proven otherwise by the business entity or if it does not correspond to the nature of the goods or the nature of the identified defect;
- in case of the defects’ identification a year later, the consumer must prove that the defect existed at the time of transfer;
- the consumer must report the identified defects within two months from the moment of identification, etc.
Detailed regulation of unfair commercial practices
Fourthly, while the Current Law contains a more general provision prohibiting unfair commercial activity in Art. 19, the New Law regulates the prohibition of unfair commercial activity in more detail, dedicating an entire chapter to this issue.
The Current Law limits the concept of “unfair business practice” to (i) actions qualified as a manifestation of unfair competition and (ii) activity that misleads the consumer or is aggressive. The New Law extends the concept of “unfair commercial practice” to any practice, the implementation of which causes or may cause damage to economic interests or distorts the consumer’s economic behaviour toward specific products and does not meet established standards of professional integrity. Misleading and aggressive practices are mentioned only as examples of such practices.
Furthermore, the New Law significantly expands the illustrative lists of misleading and aggressive practices compared to the Current Law. In addition, the New Law establishes the obligation of business entities to consider the vulnerability of specific consumer categories due to their age and mental or physical disabilities. When carrying out commercial practices concerning such consumers, their special characteristics and the increased probability of making a mistake or an unconscious choice should be considered. Failure to comply with these requirements equates to unfair commercial practices.
Update of the provisions regarding the purchase of defective goods
Fifthly, the provisions on the consumers’ rights in case of purchasing defective goods were also updated. Thus, the New Law expressly stipulates that warranty repairs or replacements must be carried out without any significant inconvenience for the consumer, taking into account the nature of the product and the purposes for which the consumer made a purchase and that the consumer is exempt from any payments related to with such repair or replacement.
Changing the scope of the application
Sixthly, the New Law will extend its scope to relations between sellers and buyers of food products, which are expressly excluded from the scope of application of the Current Law. At the same time, the New Law, in Article 2(4), clearly states the legal relations to which its effect will not apply:
- transfer of ownership of objects withdrawn from civil circulation or restricted in civil circulation following legislation;
- a deed that is subject to notarization and/or state registration by legislation;
- a transaction related to the gambling business, including bets, totalisers and other games of chance, or conducting lotteries;
- provision of medical and/or social services;
- provision of new buildings, significant conversion of existing buildings and rental of residential premises;
- sale of the foreclosed property.
Introduction of new definitions
Seventh, the New Law contains an updated list of definitions. In turn, the concepts “automated system of verified sellers”, “timeshare agreement”, “Unified state web portal for consumers in the field of e-commerce (Portal “E-buyer”)”, “verified seller”, “verified seller designation”, “digital service”, “digital content”, “consumer education”, “commercial guarantee “, “commercial practice”, etc.
Moreover, many definitions will be added to the concepts covered by the Law of Ukraine, “On Electronic Commerce,” through the transitional provisions of the New Law. Thus, the Law of Ukraine “On Electronic Commerce” will be supplemented with the concepts of “electronic advertisement posting service (classified service)”, “electronic product comparison service (price aggregator service)”, “electronic trading platform service (marketplace service)”, “provider of classifieds services (further – classifieds)”, “provider of marketplace services (further – marketplace)”, “provider of price aggregator services (further – price aggregator)”, etc.
Such an approach should bring Ukrainian legislation significantly closer to EU acts in relevant areas, in particular directives regulating electronic commerce: Directive No. 2011/83/EC of the European Parliament and the Council of 25 October 2011, and Directive No. 2019/771 of the European Parliament and the Council of 20 May 2019.
General evaluation and entry into force
Thus, the New Law will carry out a comprehensive update of legislation in the field of consumer rights protection and bring it significantly closer to the approaches of EU law. The New Law pays special attention to current challenges, particularly the rapid development of e-commerce. Moreover, the New Law will have a higher level of unification with other normative legal acts, particularly with the Law of Ukraine “On Electronic Commerce”.
The New Law should enter into force one year after its publication, namely on 7 July 2024, but not earlier than the date of martial law termination in Ukraine.