Legal Risk Management in E-Commerce

Introduction

In the fast-paced world of e-commerce, entrepreneurs, digital entrepreneurs and startups face a number of legal challenges that can jeopardise the viability of their businesses. That is why at ILP Abogados we have set out to provide you with the tools and strategies necessary to effectively manage the legal risks in this dynamic field.

Key figures for e-commerce in 2022

To understand what e-commerce represents in Spain, perhaps we should simply read these figures for the year 2022:

• Turnover: 57,862 million euros.
• Growth: 12% compared to 2021
• Penetration: 77% of Spanish internet users bought online
• Average ticket: 127 euros
• Best-selling products: Fashion, electronics, home and food
• Preferred payment methods: Bank card, PayPal and Bizum

Legislation applicable to e-commerce

In Spain, e-commerce is regulated by various regulations that guarantee legal certainty for both consumers and digital entrepreneurs.

Law 34/2002, on Information Society Services and Electronic Commerce (LSSI-CE), establishes the legal requirements for the provision of online services. It includes the regulation of information to be provided by websites, the consent to send commercial communications and the responsibilities of service providers.

At the European level, Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce) is the main legislation regulating electronic commerce in the European Union.

The Directive’s guiding principles are as follows:

• Free movement of services: The Directive establishes the principle of free movement of information society services in the EU internal market. This means that service providers from one Member State can offer their services in any other Member State without prior authorisation.
• Non-discrimination: The Directive prohibits discrimination on grounds of nationality or residence against information society service providers.
• Mutual recognition: The Directive establishes the principle of mutual recognition of national rules applicable to Information Society services. This means that Member States must accept other Member States’ rules on electronic commerce.
• Liability of intermediaries: The Directive establishes a limited liability regime for intermediaries, such as Internet access service providers and web hosting providers.
• Consumer protection: The Directive lays down a number of rules to protect consumers in the area of e-commerce, such as the right to information, the right of withdrawal and the right to a guarantee.

The e-commerce Directive has had a significant impact on the development of the Digital Single Market in the EU. It has contributed to the creation of a more favourable legal environment for e-commerce and has facilitated the development of new online business models.

Other relevant legislation in this area includes the following:

• General Law on Advertising: Regulates advertising in the field of e-commerce.
• Personal Data Protection Act: Regulates the protection of consumers’ personal data in the field of e-commerce.
• International e-commerce regulations: There are various regulations governing international e-commerce, such as the Vienna Convention on the International Sale of Goods.

Obligations of e-traders

E-merchants have a number of responsibilities that they must fulfil to ensure a satisfactory experience for consumers:

• Pre-contractual information: It is essential that e-merchants provide clear and detailed information about the products or services they offer. This includes details such as price, delivery conditions, product features, right of withdrawal and any other relevant information that may influence the consumer’s purchasing decision.
• Contract formalisation: Traders must ensure that the purchasing process is transparent and easy for the consumer to understand. This implies providing a clear and simple purchasing process, where the consumer has the opportunity to review and correct any errors before finalising the transaction.
• Transaction security: It is crucial that e-merchants ensure the security of consumers’ personal and financial data during electronic transactions. This involves implementing robust security measures to protect sensitive customer information and prevent fraud or unauthorised access.
• Customer service: E-merchants must provide effective customer service to deal with consumer queries, concerns or complaints. This includes providing multiple channels of communication, such as email, live chat or telephone support, and ensuring fast response times and effective solutions to problems raised by consumers.

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Consumer rights

Consumers have a number of fundamental rights when shopping online:

• Right to information: Consumers have the right to receive clear and complete information about the product or service they are purchasing. This includes details such as price, delivery conditions, right of withdrawal and any other relevant information that may influence their purchasing decision.
• Right of withdrawal: Consumers have the right to withdraw from the contract within 14 calendar days, without giving any reason. This allows them to cancel the purchase and return the product if they are not satisfied with it.
• Right to return the product: Consumers have the right to return the product within 14 calendar days of receipt and receive a full refund of the purchase price. This right gives them the peace of mind of being able to try the product and, if it does not meet their expectations, to return it without any impediment.
• Right to a guarantee: Consumers are entitled to a two-year legal guarantee for defective products. This means that if the product is defective in workmanship or function within two years of purchase, the consumer has the right to request repair, replacement or refund, as appropriate. This right protects consumers from purchasing defective or substandard products.

Electronic dispute resolution and litigation

Electronic dispute resolution and litigation is a critical aspect of e-commerce, where transactions can cross borders and laws can vary significantly from country to country. To address these challenges, it is important to have effective dispute resolution strategies in place, including:

• Mediation and negotiation: Mediation is an effective tool for resolving disputes amicably and out-of-court, allowing parties to reach mutually satisfactory agreements with the help of a neutral mediator. Direct negotiation between the parties can also be beneficial in reaching quick and cost-effective solutions.
• Specialised legal representation: Having lawyers specialised in digital law and e-commerce is essential to protect your company’s interests in electronic disputes and litigation. An experienced legal team can provide strategic advice and expert representation in court proceedings and arbitration, ensuring that your rights are effectively defended.

The main dispute resolution mechanisms are (i) consumer arbitration and (ii) court claims. Consumers can go to the Consumer Arbitration Board to resolve disputes arising with e-merchants, or to the ordinary courts.

Control Bodies

The Spanish Agency for Consumer Affairs, Food Safety and Nutrition (AECOSAN) is one of the most important control bodies responsible for ensuring safety and protection in the field of e-commerce in Spain. This body plays a crucial role in defending consumer rights, ensuring that online transactions comply with established safety and quality standards. In addition to safeguarding the interests of shoppers, AECOSAN also focuses on ensuring adequate nutritional information and food safety in the digital environment.

On the other hand, the Ministry of Industry, Trade and Tourism plays a key role in the promotion and development of e-commerce in Spain. This body is dedicated to promoting initiatives that foster growth and innovation in the digital sphere, seeking to strengthen the presence of Spanish companies in the electronic market both nationally and internationally. In addition, the Ministry works to create policies and regulations that promote consumer confidence in online transactions, generating a favourable environment for e-commerce in the country.

Both bodies, AECOSAN and the Ministry of Industry, Trade and Tourism, collaborate in a coordinated manner to ensure a safe and transparent e-commerce environment in Spain, promoting sustainable growth and confidence of both consumers and businesses in the digital market.

Conclusion

At ILP Abogados, we understand that every business is unique and requires a tailored approach to manage its legal risks effectively. Our team of digital law experts is committed to providing you with the legal advice and representation you need to protect your business in the digital world. Remember that law is not a commodity, and choosing the right lawyer can make the difference between success and failure.

Trust the experience and expertise of ILP Abogados to secure the future of your e-commerce business.

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