Consumer Rights’ Protection: New Rules in Line with EU Directives

20/ 06/ 2023

In this issue Pragma Consulting Group Alignment of Ukrainian legislation on the protection of consumer rights with EU standards Provision of information and digitalization New approaches to the warranty for sold goods Alternative dispute resolution mechanism Photo: Markus Spiske, unsplash.com On June 10, the Parliament of Ukraine adopted the Law of Ukraine “On Consumer Rights’ Protection”, which, after being signed by the President of Ukraine, will replace the current law on this matter, adopted back in 1991. The new law is aimed at both bringing the regulation in line with the existing market situation and alignment with EU legislation on the matter. Some of the key elements of the new system of consumer rights protection – in our review. Alignment of Ukrainian legislation on the protection of consumer rights with EU standards Taking into account both obligations of Ukraine under Association Agreement with the EU and further deepening of the relations after officially becoming the candidate state, one of the main aims of draft law no. 6134, adopted on June 10, was to align national legislation with EU one. In particular, the law aims at the implementation of about eight legislative acts of the EU, some of the most important of which are: Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts; Directive 98/6/EC of the European Parliament and of the Council of 16 February 1998 on consumer protection in the indication of the prices of products offered to consumers; Directive 2005/29/EC, so-called “Unfair Commercial Practices Directive”; Directive 2013/11/EU, also known as “Directive on Consumer ADR”; Directive (EU) 2019/771 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the sale of goods, amending Regulation (EU) 2017/2394 and Directive 2009/22/EC, and repealing Directive 1999/44/EC (Text with EEA relevance.). In order to comply with the mentioned documents, the law in question introduces, among others, new requirements in terms of the information that should be available to consumers, requirements specific to digital marketplaces, a new approach to the provision of warranty services, as well as requires to establish alternative dispute resolution procedures for consumer disputes. Provision of information and digitalization Proper provision regarding goods or services sold is one of the keystones of the new consumer rights protection system. Article 13 of the law provides the list of information regarding the product or service, which should be provided to consumers prior to purchase. In addition to that, in the case when a purchase is made on distance, consumer should have access to the information regarding the merchant. Unlike the current law on consumer protection rights, the newly adopted one establishes the system for the protection of consumers in the era of e-commerce and digital content. In particular, it clarifies that merchants, selling the goods using a marketplace, should provide all the information regarding the goods and themselves that are required in other cases. When it comes to digital content, especially the types of content that require regular updates, the law introduces requirements for such content. In addition, the law introduces electronic services for consumers and online merchants– Single state portal for consumers in the sphere of e-commerce (e-pokupets) – a system that will comprise a registry of merchants and ensure communications between the state, merchants and consumers; for example, it is prescribed that such portal may be used for filing complaints. New approaches to the warranty for sold goods In line with Directive (EU) 2019/771 the law sets up new requirements regarding guarantee services for sold goods. In particular, new law suggests that the minimum term during which guarantee services are available should be equal to 2 years (except for the cases when goods were in use before being sold). In addition, it stipulates that if any lack of conformity of the good was noticed by the consumer within one year after the purchase shall be considered as one that existed at the time of purchase of the product, unless the merchant proves it appeared later. At the same time, in order to make the transition more smooth, during the first six months after publishing the draft law such a time frame will be decreased to six months. In case the lack of conformity of goods become apparent during the warranty period, the consumer should be entitled to remedy – repair or replacement, reduction in price or termination of contract. Alternative dispute resolution mechanism In order to implement provisions of the Directive 2013/11/EU, the law prescribes that alternative dispute resolution mechanisms should be available for consumers. During the preparation of the draft law for the second reading it was suggested to regulate relevant procedures in the same law, but due to the numerous discrepancies with approaches of the Directive 2013/11/EU such proposals caused broad discussion and were declined. In the final version of the law it is prescribed that special law on alternative dispute resolution should be developed by the Cabinet of Ministers of Ukraine and submitted to the Parliament within six months after official publication of the law. It is expected that the introduction of such a mechanism will simplify the access of consumers to dispute resolution and make the protection of their rights easier.

In this issue Pragma Consulting Group

Alignment of Ukrainian legislation on the protection of consumer rights with EU standards
Provision of information and digitalization
New approaches to the warranty for sold goods
Alternative dispute resolution mechanism

Photo: Markus Spiske, unsplash.com

On June 10, the Parliament of Ukraine adopted the Law of Ukraine “On Consumer Rights’ Protection”, which, after being signed by the President of Ukraine, will replace the current law on this matter, adopted back in 1991. The new law is aimed at both bringing the regulation in line with the existing market situation and alignment with EU legislation on the matter. Some of the key elements of the new system of consumer rights protection – in our review.

Alignment of Ukrainian legislation on the protection of consumer rights with EU standards

Taking into account both obligations of Ukraine under Association Agreement with the EU and further deepening of the relations after officially becoming the candidate state, one of the main aims of draft law no. 6134, adopted on June 10, was to align national legislation with EU one. In particular, the law aims at the implementation of about eight legislative acts of the EU, some of the most important of which are:

Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts;
Directive 98/6/EC of the European Parliament and of the Council of 16 February 1998 on consumer protection in the indication of the prices of products offered to consumers;
Directive 2005/29/EC, so-called “Unfair Commercial Practices Directive”;
Directive 2013/11/EU, also known as “Directive on Consumer ADR”;
Directive (EU) 2019/771 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the sale of goods, amending Regulation (EU) 2017/2394 and Directive 2009/22/EC, and repealing Directive 1999/44/EC (Text with EEA relevance.).

In order to comply with the mentioned documents, the law in question introduces, among others, new requirements in terms of the information that should be available to consumers, requirements specific to digital marketplaces, a new approach to the provision of warranty services, as well as requires to establish alternative dispute resolution procedures for consumer disputes.

Provision of information and digitalization

Proper provision regarding goods or services sold is one of the keystones of the new consumer rights protection system. Article 13 of the law provides the list of information regarding the product or service, which should be provided to consumers prior to purchase. In addition to that, in the case when a purchase is made on distance, consumer should have access to the information regarding the merchant.

Unlike the current law on consumer protection rights, the newly adopted one establishes the system for the protection of consumers in the era of e-commerce and digital content. In particular, it clarifies that merchants, selling the goods using a marketplace, should provide all the information regarding the goods and themselves that are required in other cases. When it comes to digital content, especially the types of content that require regular updates, the law introduces requirements for such content.

In addition, the law introduces electronic services for consumers and online merchants– Single state portal for consumers in the sphere of e-commerce (e-pokupets) – a system that will comprise a registry of merchants and ensure communications between the state, merchants and consumers; for example, it is prescribed that such portal may be used for filing complaints.

New approaches to the warranty for sold goods

In line with Directive (EU) 2019/771 the law sets up new requirements regarding guarantee services for sold goods. In particular, new law suggests that the minimum term during which guarantee services are available should be equal to 2 years (except for the cases when goods were in use before being sold). In addition, it stipulates that if any lack of conformity of the good was noticed by the consumer within one year after the purchase shall be considered as one that existed at the time of purchase of the product, unless the merchant proves it appeared later. At the same time, in order to make the transition more smooth, during the first six months after publishing the draft law such a time frame will be decreased to six months.

In case the lack of conformity of goods become apparent during the warranty period, the consumer should be entitled to remedy – repair or replacement, reduction in price or termination of contract.

Alternative dispute resolution mechanism

In order to implement provisions of the Directive 2013/11/EU, the law prescribes that alternative dispute resolution mechanisms should be available for consumers. During the preparation of the draft law for the second reading it was suggested to regulate relevant procedures in the same law, but due to the numerous discrepancies with approaches of the Directive 2013/11/EU such proposals caused broad discussion and were declined. In the final version of the law it is prescribed that special law on alternative dispute resolution should be developed by the Cabinet of Ministers of Ukraine and submitted to the Parliament within six months after official publication of the law.

It is expected that the introduction of such a mechanism will simplify the access of consumers to dispute resolution and make the protection of their rights easier.