New Law on Consumer Rights Protection: Key Improvements in Regulations for E-commerce and Not Only

In July 2023, the President of Ukraine signed into law the Law of Ukraine “On Protection of Consumers’ Rights,” dated 10 June 2023 (“New Law”), repealing the current Consumers Protection Law adopted back in 1991 and amending the existing E-Commerce Law. 

This legislative change is driven by both the rise of e-commerce and the strategic goal of Ukraine to align the consumer protection legislation with the EU standards.  

This overview delves into the key improvements in regulations and offers quick guidance for businesses. 

Correlation between compliance with the EU consumer protection laws and the New Law

The New Law is aimed at ensuring compliance with five EU Directives: (i) Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts; (ii) Directive 98/6/EC of 16 February 1998 on consumer protection in the indication of the prices of products offered to consumers; (iii) Directive 2005/29/EC of 11 May 2005 concerning unfair B2C commercial practices; (iv) Directive 2013/11/EU of 21 May 2013 on alternative dispute resolution for consumer disputes; and (v) Directive (EU) 2019/771 of 20 May 2019 on certain aspects concerning contracts for the sale of goods. 

Therefore, businesses that comply substantially with the EU consumer protection laws can assume that they are substantially in compliance with the New Law. Still, seeking tailored local legal advice for specific matters is recommended, as deviations from the EU practices and regulations are not excluded. 

Scope of the New Law

The scope of the New Law extends to businesses trading in products, goods, and services, including goods with digital elements and food products. It excludes specific areas such as gambling and lotteries, real estate, medical and/or social services, administrative services, construction and rental of residential premises (with likely minor exceptions for relations between developers of construction projects and consumers). 

The New Law applies to brick-and-mortar and online stores, including websites, marketplaces, classifieds, and price aggregators. 

Enhanced protection for consumers within the realm of e-commerce

Article 16 of the New Law regulates the Unified State Portal for Consumers in E-Commerce (“e-Consumer Portal”). The e-Consumer Portal is aimed at enhancing and facilitating interaction among businesses offering their goods and services online, consumers, and consumer protection authority.  

For consumers, the e-Consumer Portal simplifies the process of reporting product purchase violations (i.e., filing complaints), accessing information related to the status and outcomes of their reports (complaints), and submitting opt-out requests for commercial electronic messages (advertisements), among other functions. 

For certain e-traders, the e-Consumer Portal requires mandatory electronic identification, authentication, and registration, ultimately resulting in the trader offering goods and services via the Internet to receive the designation of a verified e-seller. Such e-traders must ensure that the information on the e-Consumer Portal is up to date. 

The e-Consumer Portal must be rolled out within three years of the New Law’s effect. 

The procedure for excluding e-commerce entities from the e-Consumer Portal shall be approved by the Ukrainian Government. 

What is more, the New Law amends the E-Commerce Law (i) introducing definitions of digital trading platforms (i.e., marketplaces, classifieds) and product comparison services (i.e., price aggregators); (ii) imposing specific pre-contractual obligations on the said e-commerce actors. This should enhance the protection of consumer’s rights when buying products of poor quality online and provide an efficient refund procedure. 

Additional power for the consumer protection authority concerning online blocking

If a business entity fails to provide accurate information on the website (i.e., their name and location), the Ukrainian consumer protection authority (the State Service of Ukraine on Food Safety and Consumer Protection) can request an internet service provider to restrict access to the respective website. When the failing business entity requests the restoration of access to the website due to the publication of required information regarding name and location, the consumer protection authority can contact the internet service provider within two working days to restore access. 

Local e-commerce actors (marketplaces, classifieds, price aggregators) are concerned about the above regulation, arguing that the mere violation of just one e-trader can block the entire website (portal), leading to significant damages for them due to the blockage.  

The procedure for restricting and restoring access to the website is to be established by the Ukrainian Government. 

Consumers’ rights

The New Law can be treated as consumer-friendly. It reinforces the requirements set by the current laws of Ukraine, including E-Commerce Law, Advertising Law, Personal Data Protection Law, and Language Law. 

The commercial practices should be conducted fairly and in a non-aggressive way, ensuring informed and conscious decisions of the customers (Article 24), as well as comply with novel requirements regarding vulnerable consumer groups (Article 25). Article 8 of the New Law also includes specific regulations for cases in which consumers purchase unfit or dangerous food products. 

The New Law also allows consumers to take photos and/or record videos of violations of their rights, provided it is not contrary to the law (Article 4). 

Furthermore, in contrast to the current Consumer Protection Law, the New Law extends the requirements for providing information about products to consumers (Article 13). Additionally, the New Law prioritises information about products to be in Ukrainian. This information should be presented in a clear, easily accessible, and understandable format, using colour schemes, fonts, sizes, symbols, and graphic images that do not hinder comprehension (i.e., avoiding discrimination against the Ukrainian language in any form when presenting multilingual product information). Product information can also be duplicated in other languages, except for the state language of an aggressor state (i.e., Russian). 

The New Law also (i) regulates the use of terms such as ‘discount,’ ‘reduced price,’ ‘benefit,’ ‘sale,’ ‘promotion,’ and any similar claims (the New Law improves regulation of the current Consumer Protection Law in this regard); (ii) introduces the concept of a ‘common price‘ to regulate product pricing. Additionally, consumers have the right to receive timely, complete, accurate, and reliable information about the pricing method of the product in cases where it is impossible to determine the final product price at the time of delivery.  

Consumer advocacy groups

Consumer advocacy groups are provided with a legal framework that enables their active involvement in protecting consumer rights. This framework includes the right to conduct training sessions on consumer rights protection and participate in pre-litigation and trial proceedings related to consumer rights protection cases. 

Consumers (in cases related to violation of their rights), consumer protection authorities and consumer advocacy groups (in cases concerning consumer rights protection) are exempted from paying court fees in all judicial instances (Article 42). 

Warranty durations and repair

The New Law mandates different warranty durations depending on the type of product. For example, for brand-new items, including goods with digital elements, the mandatory warranty lasts two years from the purchase date, while for used goods, it is one year.  

Regarding real estate and immovable property, the warranty period extends to ten years from the acquisition date. The Ukrainian Government shall prepare a draft law on the provision of guarantees by developers of construction projects for not less than 10 years from the date of transfer to the consumer. It remains to be seen how the construction projects will fall within the scope of the New Law, considering that real estate and construction area is mainly excluded from the scope of the New Law. 

Business entities can also provide additional commercial warranties. If the advertised commercial warranty terms provide more favourable terms for consumers than the offered commercial warranty, the seller must adhere to the advertised terms (Article 6).  

Product warranty documents can be provided to consumers in paper or electronic form. 

Warranty repair processes are undergoing amendments too. In particular, consumers can choose between repairing a defective or malfunctioning product or receiving a replacement with a similar, functional item (Article 7). 

Transitional period

The New Law provides a long and smooth transitional period for all involved to prepare for the new requirements. It should enter into force on 08 July 2024, but not before the martial law is terminated. 

Information contained in this overview is for general information purposes only, does not constitute legal or other professional advice, and should not be relied upon as a substitute for specific professional advice tailored to particular circumstances. The overview was prepared with the assistance of associate Anastasiia Finko.