E-commerce is experiencing dynamic growth, but with it come new legislative challenges. What legal pitfalls await online entrepreneurs and how can they avoid problems associated with e-shop regulation? We discussed these and many other topics with Barbora Vrabcová, an experienced lawyer from the law firm Hronček & Partners, which specializes in e-commerce, technology law, and crypto asset regulation.
Could you briefly introduce yourself? What is your area of expertise in law?
My name is Barbora Vrabcová and I am currently nearing the end of my legal internship. However, I have been working at Hronček & Partners since 2018, with a short break during maternity leave. During my professional training, I focused on several areas of law, but for some time now I have been specializing mainly in e-commerce, technology law, fintech, and crypto asset regulation. I help clients comply with all legislative and regulatory requirements and set up their business model in a commercially sustainable way, which I believe has a significant impact on the success of their business.
Your practice also includes e-commerce law. What issues do entrepreneurs in this area most often turn to you for help with?
Most often, we deal with issues related to consumer law and the setting of general terms and conditions (GTC). Another big issue is complaints and withdrawal from contracts, as consumers have a strong position in the online market, which is associated with a whole range of extensive rights, for which e-shop and marketplace operators, or retailers, are often unprepared or inadequately prepared. Of course, this naturally leads to the requirement to process complete documentation for the proper functioning of a trustworthy e-shop. In this case, many traders follow the motto "better late than never," which I personally consider illogical, as it is certainly more advantageous from an economic point of view to be prepared in advance, to have clearly defined rules and high-quality legal documentation in place than to subsequently change the GTC or various technical settings of the online platform after sanctions have been imposed by the relevant supervisory authorities. It is important to realize that if you want to gain a relevant position in the online market, it is necessary to invest not only in the design of the platform, but also in its functionality in the form of providing relevant information to consumers, as most of them now do a quick check of the mandatory information that every trader should provide before making an online purchase (this includes information such as the trader's contact details, GTC, complaints procedure, GDPR, return or exchange form, etc.). This can also ultimately play a role in the final decision of whether a customer places an order in a given e-shop.
E-commerce is a rapidly changing industry where legislation is constantly adapting to new trends. What do you think are the biggest challenges facing online entrepreneurs today?
One of the main challenges is aligning business processes with increasing regulation. Not so long ago, retailers had to adapt to new consumer protection legislation that was implemented last year, However, despite increased media coverage in this area, a large number of traders have not adapted to the dynamics of consumer reform and have not reflected the changes in their online business, including legal documents. However, it is important to note that the changes to the consumer law framework were necessary not only to bring the legislation into line with European Union directives, but also to prevent further fragmentation of the legislation by consolidating it into a single comprehensive piece of legislation. The amendment to the Consumer Protection Act proved to be a necessary step aimed at strengthening consumer confidence in the online environment while increasing the transparency and accountability of traders. In this way, the legislator ensured the modernization of legislation to reflect current needs and trends, while elegantly ensuring the same level of consumer protection in Slovakia as in other Member States of the European Union.
At the same time, this amendment to the Consumer Protection Act has removed duplications, application problems, internal contradictions between individual provisions, and terminological differences. As consumer law is evolving dynamically, it is essential that it responds to new market developments, business models, and technological advances, including digitalization. Last but not least, changes in consumer legislation are desirable given the dynamics of the sector, even though they bring new obligations and possibly burdens for businesses. On the other hand, the changes can also be seen as new opportunities to strengthen their market position.
However, it is important not only to accept these changes, but also to ensure that they are actually applied within the online market, which is often problematic, especially for small and medium-sized e-shop operators.
Why are GTCs necessary for e-shops and what is their main legal significance?
Terms and conditions are a contractual document that governs the relationship between a merchant and a customer. They define the rights and obligations of both parties, address the ordering process, payment, delivery, complaints, withdrawal from the contract, and other details. At first glance, it may seem that they only serve to protect the consumer, but the truth is that they are equally important, if not more important, for the protection of the entrepreneur, as they are the first thing that the authorities or courts consider in the event of a dispute. Well-written and professionally drafted GTC prevent most disputes and thus save considerable financial resources which the trader would otherwise have to spend to prove the truth of their claims. Last but not least, they save time and stress in the event of deficiencies in the GTC that will sooner or later come to light.
Are there any legal obligations that every e-shop must comply with?
Yes, traders must comply with and provide their customers with at least the general information requirements arising from the Consumer Protection Act, which include, for example, the trader's identification details, information about the sales price, the main characteristics of the product, the terms of performance, including delivery terms, options for withdrawal from the contract, liability for defects in the goods, and much more. At the same time, the legislative framework also regulates negative obligations, i.e. what traders are not allowed to do, such as the prohibition of unfair commercial practices, unacceptable contractual terms, denial of consumer rights, acting contrary to good morals, and so on. There are many obligations, and it is not reasonable to choose only those that seem easiest to fulfill or less demanding to implement.
What are the most common mistakes entrepreneurs make when drafting their GTC?
If I had to name the most common and, in my opinion, the most fundamental mistake, I would say that there is a general undesirable trend on the market of copying GTC from other platforms. which may seem innocent and promise traders financial savings, but the opposite is true. GTC prepared and tailored to one business model may not suit another. It does not matter whether the GTC regulate goods or services, as there may also be differences in the type of goods or services, methods of delivery, terms of performance, and many other aspects which, for understandable reasons, cannot be universally adjusted and must be individualized. Therefore, as a law firm, we strive to educate our clients and the general public in this area so that they do not adopt templates in the form of GTCs from competitors and leave the drafting of legal documents to professionals.
How should withdrawal from the contract by the customer be handled in the GTC?
First and foremost, the provisions relating to the possibility of withdrawal from the contract must be drafted in such a way that they are easy to understand, minimizing the possibility of different interpretations. The legislator has quite clearly laid down the conditions under which a customer may withdraw from a contract. However, traders are also creative in this regard and in many cases try to adapt these conditions or not to inform their customers of this option, which is definitely not the right approach, as the trader has an explicit obligation to inform the customer in the position of a consumer of the possibility of withdrawing from the contract within the statutory 14-day period. If the trader fails to do so, they run the risk of the consumer being granted an additional period for withdrawal from the contract by law, up to 12 months from the expiry of the period in which the trader would have fulfilled their obligation to inform the consumer properly and in good time. Among other things, the trader is also required to provide customers with a model form for withdrawing from a distance contract and a contract concluded outside business premises. Traders are also obliged to provide their customers with information on the consumer's right to withdraw from a distance contract and a contract concluded outside the trader's business premises, thereby fulfilling their legal information obligation.
What must an e-shop include in its complaint terms and conditions to comply with the law?
First and foremost, it is important that the e-shop has a properly drafted complaint procedure that is understandable and transparently published in an easily accessible and visible place. This may sound simple, but practice shows that retailers do not always fulfill this obligation. It is not enough to just have a complaint procedure tucked away in a drawer somewhere. It is essential to ensure that customers have access to and can familiarize themselves with the terms and conditions and the complaint handling procedure before they decide to place their order. This is the first prerequisite for successfully meeting the legal requirements relating to the complaint process. Ideally, the e-shop website should also have a complaint form available, which will significantly simplify the entire complaint process for both parties. In this simple way, merchants ensure that customers provide them with all the information necessary to process their complaints, and customers easily know what information they need to provide to the merchant and how to proceed if they want their complaint to be handled without complications. A very important part of the complaint procedure, which is of primary interest to customers, is of course the deadline for handling their complaint, which is set by law at 30 days. This is the maximum period, but complaints should be resolved as quickly as possible, depending on the nature of the complaint. This period may only be exceeded in individual cases if there are reasons beyond the trader's control that prevent the complaint from being handled within 30 days. However, even for an extended period, the shortest possible time shall apply, and the trader shall always inform the consumer in writing of this period and the reasons for exceeding 30 days. The interpretation and application practice in the Slovak Republic in this matter follows the long-standing legal situation with a fixed 30-day period for all types of goods, and therefore the 30-day period should be considered as a reference period for interpreting the reasonable period in application practice, which should be shortened if the circumstances of the specific case allow it, and extended if the objective circumstances of the specific case require it. This provision is naturally accompanied by the trader's obligation to inform the consumer of the reasonable time limit.
An interesting fact that few traders are aware of because it is a new feature introduced last year, the legislator has finally considered situations where customers do not collect their goods that are the subject of a complaint, and has therefore introduced an obligation for the buyer to collect the goods from the seller within six months of the date when they should have been collected after repair or replacement. This is a significant help for retailers, who were previously limited by consumers and their arbitrary decisions on when to collect repaired or replaced goods.
What are the main requirements of the GDPR for terms and conditions and how should they be incorporated?
The GDPR, or in other words the issue of personal data protection, is a broad and very sensitive topic, which is why it requires a special and consistent approach. I would argue that most e-shops unfortunately have insufficient or completely incorrect information about personal data protection. A classic mistake is to include all information on personal data protection as part of the terms and conditions. However, we know from experience that this form of providing information on personal data protection is insufficient and does not meet the requirements for informing customers about how their personal data is processed. Partial and basic provision of information on personal data protection within the GTC is desirable, and the GTC may contain basic information on the processing of personal data, but this should also refer primarily to a separately prepared document which contains a range of information relating to the processing of personal data, the purpose of processing, the retention period, as well as the options for withdrawing consent to the processing of personal data and much other information arising from the relevant legislation. It is not sufficient for a trader to simply include this information in the order summary, especially if it is pre-selected and the customer has no opportunity to read the terms and conditions of data processing. Unfortunately, this still occurs on the websites of many merchants, despite the fact that it is one of the most common errors found during inspections by the Office for Personal Data Protection. In this case, too, the law belongs to the vigilant, and therefore the processing of GDPR documentation must be clearly categorized as a priority.
How often should e-shops update their GTC and what can compel them to do so?
There are several situations in which it is really necessary to update the GTC or the overall documentation used by traders, whether it is a change in legislation, the goods or services offered by traders, or even minor changes of an informative nature on the part of the trader. These are basically all situations where it is necessary to update the documentation almost immediately. However, in addition to these standard situations, I recommend that clients carry out a preventive check at least once a year to see if their documentation needs to be updated. However, if I were to give a comprehensive answer to the whole question, as far as enforcement measures are concerned, the most effective measure seems to be checks by the relevant authorities, where businesses are willing, especially in order to avoid penalties, to carry out a whole range of updates, from amending legal documents to technical adjustments.
What penalties do entrepreneurs face if their GTCs are not in accordance with the law?
It depends on the situation, the extent, and the seriousness of the violations committed by the trader. The latest reform of consumer law last year brought a new penalty regime that is, let's say, more favorable to traders. In general, it can be said that the supervisory authority (Slovak Trade Inspection) has the option of applying a "second chance" mechanism, which is intended to strengthen the preventive and educational effect of supervision on the supervised entities and thus reduce or waive penalties for breaches of legal obligations, if the supervised person accepts responsibility for their unlawful conduct, ceases to violate the law, remedies the consequences of their conduct, and compensates consumers whose rights have been violated by their conduct. The whole point of this review of the penalty provisions was to make penalties fairer and more proportionate. Sanctions are currently imposed depending on the trader's turnover for the previous accounting period, which may represent a maximum limit of 5% of the trader's turnover for the previous accounting period, but not exceeding EUR 600,000.
If you had to give e-shop entrepreneurs one piece of advice when drafting their terms and conditions, what would it be?
Pay sufficient attention to them and seek advice from experts with experience in this area.
