23/04/2021

Webstore Operators, Is Consumer Protection on Your Radar?

The past year of the COVID-19 pandemic was a year of dizzying growth for online retail. Some estimates place the growth of online retail sales at about 22%, with growth having been the fastest in over a decade. With customers avoiding brick-and-mortar stores and spending their time shopping from home, a well-functioning webstore has been a vital source of income and engine of growth for many companies.

In Finland, online selling is considered distance selling as defined in the Consumer Protection Act (38/1978). Distance selling involves numerous obligations relating to information and consumer rights that cannot be deviated from to the detriment of consumers. As this subject is particularly important to many consumer webstores in the current situation, I have listed a few things in this post that every online vendor should be aware of.

Consumer Authority Has Its Eye on Webstores

Webstores are subject to continual supervision by the consumer authority. At that start of the year, the consumer authority reviewed the consumer protection knowledge of webstores and found room for improvement. This is a timely topic, given that the Market Court issued a decision at the beginning of the year in which it found that a webstore had violated the Consumer Protection Act by denying a consumer the right to cancel an online purchase. At the Consumer Ombudsman's demand, the judgment was issued with a conditional fine to reinforce the prohibition. Read more about the Consumer Ombudsman's expanded powers of supervision in our previous post.

As a general rule, it is best to behave transparently and in a customer-oriented manner. The key issue from the perspective of the Consumer Protection Act is that consumers cannot be misled and they must be given the opportunity to make considered purchase decisions online.

Extensive Disclosure Obligation for Webstores

Distance selling involves significant disclosure obligations. The Consumer Protection Act provides that the consumer must be provided with a confirmation of the contract on paper or otherwise in a ‘permanent manner’. The confirmation must include certain mandatory prior information, such as information on the seller, the price of the product including taxes, as well as the other terms of delivery or performance of the contract. If necessary, the consumer must also be provided information on customer complaint procedures as well as a form and instructions for the right of withdrawal, if any.

It is also worth making sure you communicate prices and any additional fees to consumers clearly and transparently. Before approving an order, the customer must be clearly notified of the total price of the product including taxes, delivery costs as well as any additional fees that may be charged. Also keep in mind that consumers are under no obligation to pay costs that they have not been informed of prior to making the order.

Right of Withdrawal Key Right in Distance Selling

Many brick-and-mortar stores offer 14-day exchange and return policies—some even longer. These policies are voluntary for the store, and should not be confused with the mandatory 14-day right of withdrawal that webstores must provide.

Webstore customers are entitled to use this statutory right of withdrawal, i.e. withdraw from a purchase at any time within 14 days without providing a reason. The consumer’s right of withdrawal is a key consumer right in distance selling and it applies in nearly all online selling with only a few exceptions defined in law. Such exceptions include custom products made to the customer's specifications, contact lenses, hygiene products and audio or visual recordings once their seal has been broken. The right of withdrawal also, in principle, applies to service contracts made through distance selling.

Consumers should be informed of their right of withdrawal clearly and transparently, not least because the withdrawal period only expires 12 months after the end of the normal withdrawal period if the seller has not informed the consumer of the right of withdrawal. If the vendor remedies their omission during this 12-month period, the withdrawal period will end 14 days from when the consumer was informed of the right of withdrawal.

Exercising the right of withdrawal has to be made easy for consumers, and the Consumer Protection Act includes provisions on how consumers can notify the seller that they are exercising their right and what then happens: for example, the seller must as a rule return all payments by the consumer without delay.

Keep in mind that the right of withdrawal cannot be limited by agreement, because the Market Court has stated that such clauses are unlawful and void and cannot be relied on by sellers.

What Language for Your Webstore? Do You Need Customer Service in Finnish?

There is no obligation to have a webstore in Finland’s official languages (Finnish and Swedish), and many Finnish online vendors have set their eye on international growth from the very beginning. However, if your webstore and company website are in Finnish and Swedish, it would also be worth considering whether you provide customer service in those languages as well.

If you don't, but your webstore is directed at consumers in Finland, you need to clearly inform customers before their purchase that customer support is not available, for example, in Finnish. This is particularly the case if your webstore is in Finnish, because it is likely that consumers will assume that customer service is also available in Finnish. However, if your company and its webstore only operate in English, consumers can be assumed to understand that, for example, terms and conditions and customer service may not be available in Finland’s official languages.

The Consumer Protection Act forbids behaviour that is misleading or inappropriate from the point of view of consumers in sales and marketing. Finland has a ‘black list’ decree (601/2008) that defines what behaviour is considered misleading in customer relationships. The decree states that committing to provide customer support in a language other than the official language of the vendor’s country of residence is misleading, unless the consumer is clearly informed prior to entering into the contract that support will not be provided during the contractual relationship in that language.

The general rule is that consumers should be able to easily find information relating to the product and exercise their rights, i.e. issue notices of defect or use their right of withdrawal.

Polish Up Your Terms and Conditions and Head to New Markets

I cannot recommend enough that you draft comprehensive terms and conditions for orders for your webstore. The terms should cover mandatory consumer protection provisions, such as the right of withdrawal, the withdrawal form and alternative consumer dispute resolution—just to name a few. Your website should also have terms of use that set forth the conditions under which you provide your webstore service to your customers. Data protection is also important: make sure that you have a proper privacy policy that informs you customers about what personal data you process and on what grounds as well as how your customer (the data subject, to use data protection parlance) can exercise their data protection rights.

Is your next step to jump into new markets? You should begin researching the product liability and consumer protections legislation of the target when a particular market becomes important to you and you have continuous sales into the region. At the latest, you should do more detailed homework on the target country’s national legislation when planning your expansion there. For example, what are the requirements for deliveries, returns and notices of defect? If your target market is outside the EU, you will also have to look into export, customs and taxations issues. As far as taxation is concerned, you will need to look into at least distance selling and value added tax matters.

I hope this helps you get started. It’s always good to aim high, so maybe next it will be time to think about expanding your webstore into new markets.