Common legal mistakes by ecommerces and possible sanctions
In the following article, we will develop the essential aspects that every eCommerce must carry out before starting its online business.
In accordance with the above, Letslaw will analyze the requirements and applicable regulations that every online business must consider.
Protection of the domain name and trademark
The first step in starting a business is to choose an identifying name and register it with the Spanish Patent and Trademark Office. Simultaneously, the registration of a domain name in accordance with the registered trademark where the products and services will be offered to the user through the website must be carried out.
In the event of not proceeding with the registration of the trademark or domain name at the appropriate time, it may be the case that it is already registered by another user.
If we find ourselves in this situation, we should try to negotiate the transfer of the domain name or trademark by amicable means. If this is not possible, the possibility and feasibility of taking legal action should be assessed.
Therefore, taking these steps in the first instance avoids many problems in the future.
Law 34/2002 of 11 July 2002 on Information Society Services and Electronic Commerce (LSSICE) and Organic Law 3/2018 of 5 December 2018 on the Protection of Personal Data and the Guarantee of Digital Rights establishes the obligation for all eCommerces to have clear legal texts that are accessible to all consumers and/or users.
Firstly, companies are required to permanently display information about themselves on their website. For this purpose, the company’s identification data, company name, registered office, e-mail address or Tax Identification Number (NIF) must be included.
On the other hand, it is common to find errors in the terms and conditions of contract. This document is the contract that establishes the conditions and obligations between users and the eCommerce owner.
This contract should reflect aspects such as the price of the articles, the method of shipping and payment of the products, the return policy, guarantees, and in general, all aspects of the operation of online shops, requirements that are not always fully or correctly included.
It is important to note that informing consumers about the return policy is essential, as failure to do so will considerably extend the period within which the consumer will be able to exchange or return the product without justification or charge. Instead of 14 calendar days, the period is extended to a further 12 months.
Similarly, the website owner must ensure that all users expressly accept the content of these Terms and Conditions before they contract the services. One method of ensuring acceptance of the Terms and Conditions would be to include an opt-in system (box not checked by default) of acceptance that must be checked before contracting the services.
Accordingly, operating in accordance with the law is of great importance for ecommerce, not only because of the high penalties that these companies face for non-compliance with the law, but also because failure to do so means that they are completely helpless and unprotected when it comes to dealing with user complaints regarding the conditions and limits of the services they offer.
The service provider is obliged to confirm receipt of the acceptance of the contract by one of two options:
- Sending an acknowledgement of receipt by e-mail within 24 hours of receipt of the acceptance.
- Confirmation of acceptance by a means equivalent to that used in the contract as soon as the other party has accepted and provided that such confirmation can be stored by the addressee.
Regarding the place of conclusion of this type of contract, the contract shall be deemed to have been concluded:
- At the consumer’s habitual residence if one of the parties is a consumer.
- At the place where the service provider is established if both parties to the contract are entrepreneurs or professionals.
European Platform for Online Dispute Resolution
For years, the European Commission has had an ODR (Online Dispute Resolution) platform for the out-of-court resolution of online disputes between consumers and traders in relation to online purchases and contracts.
Thus, in a simple, free, and totally electronic way, European consumers and businesses can try to resolve their consumer disputes, within a general period of 90 days in which they can negotiate, attach documents and try to reach an agreement through an approved dispute resolution body (in Spain, for example, the consumer arbitration boards of the Autonomous Communities or Autocontrol).
Regulation (EU) 524/2013 obliges traders to offer users the possibility to go to this European platform, including the corresponding link.
Failure to do so is another very common non-compliance, which can also lead to a sanction for the website owner.
The penalties to which website owners are exposed vary depending on the seriousness of the infringement. According to the section on Infringements and Penalties in Title VII of the Law on Information Society Services and Electronic Commerce, infringements are classified as minor, serious and very serious, and can lead to a fine of between 600 and 600,000 euros.
A minor infringement can be, for example, not informing about the NIF or the codes of conduct to which a website adheres. On the other hand, failure to make clear the terms of competitions and promotions can lead to a fine of up to €30,000.
Infringements of the Data Protection Act, set out in Article 83 of the GDPR and specified in the LOPDGDD in Articles 71 to 74, establish the conditions that determine the imposition of administrative sanctions and their maximum amount, established according to the article infringed:
- 10.000.000 Euro maximum or 2% maximum of the total annual aggregate turnover in the preceding business year if it is an undertaking for the infringements referred to in Art. 83.4;
- 20,000,000 or 4% of the total annual aggregate turnover in the preceding business year if it is an undertaking for infringements of the provisions referred to in Article 83(5).
All these penalties are quantified financially on a case-by-case basis and considering the provisions of art. 83.2 of the GDPR.
Therefore, and in relation to the above, we consider it essential to have legal advice before starting your online business.
Letslaw es una firma de abogados internacionales especializada en el derecho de los negocios.