Obligations on service providers in Directive 2000/31/EC

1. Obligations on service providers in Directive 2000/31/EC Gábor Csiszér Ministry of National Development Department of Electronic Communications, Postal Services and Information Society Belgrade, 26.10.2010.

2. Content • Introduction • General information to be provided (Art 5-6.) • Importance of information in e-commerce • Detailed information requirements • Commercial Communications • Contracts (Art 9-11.) • Electronic contracts • Information to be provided concerning contracts • Placing orders on-line • The PPO Case

3. General information to be provided • Information Society services are provided „at a distance”: • the service is provided without the parties being simultaneously present • Compared to „conventional” services this involves certain risks for recipients: • They don’t know, who is on the other side • In case of distant selling they aren’t able to convinced about the quality of the product • They cannot make sure of what will they paying for • Etc • If consumers feels that shoping online is risky they’ll loose their confidence in that

4. General information to be provided • Why is this important?: • A Commission survey last May showed that 90% of the web shops are putting misleading information on their website • Misleading information on consumer rights, products, prices, etc • In many countries (for example in Hungary) the biggest obstacle of spreading e-commerce is the lack of confidence of consumers • In the beginning the greatest problem was the poor infrastructure, high price of internet access, etc, today it’s clearly the lack of confidence • Misleading information won’t help this situation • Providing information is important in order to protect consumers and facilitate the spreading of infosoc services

5. Information regarding the Service Provider: Name, geographic address Details, including an e-mail address Trade registry number (or any other similar registry number, if there is such) Grants, licenses if it’s activity is subjected to that VAT identification number In case of regulated professions: the body where it’s registered, the granted title, reference to the applicable rules in the MS of establishment General information to be provided • Information regarding the service itself: • Prices indicated clearly and unambiguously • Taxes, delivery costs • Information on contracts • Information regarding advertisement (commercial communication): • It shall be clearly identifiable • the natural or legal person on whose behalf the commercial communication is made shall be clearly identifiable • Promotional offers, promotional games shall be clearly identifiable, detailed and clear conditions shall be easy accessible These are minimum requirements, sectorial legislation requires more information to be provided These information shall be provided easily, directly and permanently accessible

6. Article 7 on Commercial Communications of ECD was overruled by Article 13. of Directive 2002/58/EC When the subscriber is a natural person, prior consent is required in all cases where an automated calling or communication system is applied for direct marketing (opt-in scheme) The only exception is where the service provider is in contract with the natural person in question – the service provider can market it’s own product or service for it’s client if the client did not refuse this at contracting The service provider must ensure the possibility of objection free of charge and in an easy manner (opt-out) Commercial Communications

7. Article 7 on Commercial Communications of ECD was overruled by Article 13. of Directive 2002/58/EC The Directive leaves the option open for Member States to expand the scope of this article to different kind of communications In Hungary the opt-in regime is applied to almost all commercial communications, it covers political and non-profit advertisements as well Article 13. prohibits unidentifiable commercial communications Not having a valid address for receiving objections is also illegal All this shall apply for natural persons, however, Member States shall ensure that non-natural persons shall also enjoy similar protection Commercial Communications

8. Main rule: Member States shall ensure that their legal system allows contracts to be concluded by electronic means. Member States shall in particular ensure that the legal requirements applicable to the contractual process neither create obstacles for the use of electronic contracts nor result in such contracts being deprived of legal effectiveness and validity on account of their having been made by electronic means This is a general rule, butit doesn’t mean that contracts concluded by electronic means are fully equivalent with non-electronic contracts It means basically that wherethere’s no special obligation regarding the form of a contract, an electronic contract will also do I.e. retail trading you won’t conclude a formal written contract in a „normal case” When ordering online, the electronic placement of the order however establishes the contract, therefore parties, MS authorities shall accept this as a normal contract Electronic contracts are not always considered as written contracts I.e. in Hungary signing with electronic signature is a requirement for that Electronic contracts have not always the same evidentiary force as paper contracts Depends on Member States civil law legislation, but usually an electronic document with qualified electronic signature and time-stamp has the same force before jurisdictional or same proceedings Contracts

9. E-commerce directive allows some exceptions for Member States; MS can decide they won’t accept the following contracts in electronic form: contracts that create or transfer rights in real estate, except for rental rights; contracts requiring by law the involvement of courts, public authorities or professions exercising public authority contracts of suretyship granted and on collateral securities furnished by persons acting for purposes outside their trade, business or profession; contracts governed by family law or by the law of succession; Member States shall report the Commission the exceptions they apply, they shall do this in every five years regarding point b). Contracts

10. Information to be provided regarding electronic contracts: the different technical steps to follow to conclude the contract; whether or not the concluded contract will be filed by the service provider and whether it will be accessible; the technical means for identifying and correcting input errors prior to the placing of the order; the languages offered for the conclusion of the contract. Information on relevant code of conducts These requirements shall apply only to services where the recipient is consumer. The requirements above shall not apply to contracts concluded exclusively by exchange of electronic mail or by equivalent individual communications Contract terms and general conditions provided to the recipient must be made available in a way that allows him to store and reproduce them. Contracts

11. Placing the order via electronic means In case when the recipient is customer, the service provider has to acknowledge the receipt of the recipient's order without undue delay and by electronic means Hungarian legislation requires this within 48 hrs the order and the acknowledgement of receipt are deemed to be received when the parties to whom they are addressed are able to access them The requirements above shall not apply to contracts concluded exclusively by exchange of electronic mail or by equivalent individual communications Contracts

12. The PPO Case • Hungarian service provider PPO provided a single access and paying point service to various other services (e.g. online purchasing motorway sticker, parking tickets, cinema tickets, etc.) • PPO had more than 200 000 clients • Clients provided their credit card number to PPO ⇒ PPO was entitled to withdraw money from the cards • The majority of clients used the free service of PPO, but 1 year after starting of the service PPO decided to introduce a yearly registration fee (10 Euros) • PPO amended its General Terms of Contract • PPO informed its clients about the change, and provided a couple of weeks to consider whether they need the service with this condition • If a consumer did not cancel the registration during this period, PPO deemed this as a consent, and automatically charged the yearly fee from his/her credit card • It seems OK, but: • PPO used an internal message-service (they haven’t sent a normal e-mail), clients needed to log in in order to have access to PPOs messages • Most client logged in only 2-3 times a year, they just simply missed this message • PPO charged this 10 Euro from more than 150 000 clients, most of them were not aware of the amendment of the General Terms of Contract • It became to a huge scandal, PPO went to bankrupt. • Authorities and courts are still analyzing this case now – in principle the behavior of PPO might be legal, but it’s clear that it is not fair at all.

13. Thank you for your attention! gabor.csiszer@nfm.gov.hu