Updates of consumers protection legislation

On 6 October 2022, Draft Law No. 6134 of 5 October 2021[1] (the “Draft Law”) was adopted as a basis. The Draft Law can significantly change the legislation on consumer rights protection in Ukraine. The Draft Law does not simply amend the Current Law of Ukraine “On Protection of Consumer Rights” (the “Current Law”), but actually proposes to adopt a completely new version of it. The explanatory note to the Draft Law states that this legislative initiative aims to harmonise the national legislation with the European Union law and to bring the principles of consumer rights protection in Ukraine closer to the principles, practices and approaches of the European Union.

The explanatory note highlights several areas that currently have regulatory gaps and need to be regulated, including protection of consumer rights in the field of e-commerce, effective mechanisms for product warranty service and protection against unfair trade activities, etc.

Introduction of new definitions

To begin with, art. 1 of the Draft Law introduces new definitions if compared with the Current Law. It is caused by the extension of consumer protection legislation’s effect on new spheres of relations. In turn, it is proposed to introduce such concepts as “electronic product comparison service (price aggregator)”, “electronic trading platform (marketplace)”, “subject of e-commerce”, “digital service”, “digital content”, “consumer education “, “commercial guarantee”, “commercial practice”, etc. The proposed approaches to the definition of concepts comply with the legislation of the European Union, in particular the directives regulating e-commerce: Directive No. 2011/83/EC of the European Parliament and the Council of 25 October 2011, and Directive No. 2019/771 of the European Parliament and the Council of 20 May 2019.

Changes in scope of application

According to Art. 2 of the Draft Law, it is planned that the new version should extend the scope to relations between sellers and buyers of food products, which is directly excluded from the scope of application of the Current Law unless stated otherwise. In addition, the Draft Law directly indicates the legal relationships to which its effect will not apply:

  • transfer of ownership of objects withdrawn from civil circulation or restricted in civil circulation in accordance with legislation;
  • a deed that is subject to notarization and/or state registration in accordance with legislation;
  • a transaction related to the gambling business, including bets, totalizers and other games of chance, or conducting lotteries;
  • provision of medical and/or social services;
  • provision of new buildings, significant conversion of existing buildings and rental of residential premises;
  • sale of the foreclosed property.

Introduction of consumers protection principles

Another general change proposed by the Draft Law is the introduction of the list of principles for the implementation of consumer rights protection in Art. 3. Although such a provision may seem to lack practical significance at first glance, the principles may play an important role in the interpretation of ambiguous provisions of the legislation in the future, as well as in filling the gaps in the legislation that may arise because of the development of social relations. The following principles that are of utmost importance include the principle of priority of the rights and interests of consumers over any other interests and goals of business entities, the principle of deciding in favour of the consumer in cases of ambiguous provisions, the principle of taking into account the needs of vulnerable categories of consumers.

E-commerce regulation

Turning to the particular changes proposed by the Draft Law, the first thing to mention is the regulation of legal relations in the field of e-commerce. The lack of regulation of commerce through electronic platforms has long been considered one of the main proofs of the obsolescence of the Current Law.

Art. 17 of the Draft Law regulates the rights of consumers when purchasing products by means of e-commerce. In particular, the seller is obliged to post the terms of the contract on the website in an easily accessible place so that the consumer can read them; to submit envisaged reports to the central executive bodies; to post general information which is sufficient to identify the business entity on the website. The last provision also applies to those entities that place other entities’ products on their own platforms.

The Draft Law provides for the specific procedure for using such personal data as the buyer’s e-mail address. In particular, it is prohibited to send any letters to the disclosed addresses without the prior consent of the consumer.

Consumer rights protection in case of defective goods purchase

The Current Law provides for the procedure for consumers’ rights protection in case of purchasing products of inadequate quality, which generally coincides with the provisions of the Draft Law. Nevertheless, an important new provision is the limitation of the period during which the seller must repair or replace the defective product at the request of the consumer. The Current Law refers to a relative category of “reasonable period” when it comes to the elimination of product defects. Meanwhile, the Draft Law establishes a period of 14 days during which the product with a defect must be repaired and establishes the seller’s obligation to replace the product if the repair cannot be carried out within 14 days.

Nevertheless, it should be noted that the Draft Law, in contrast to the Current Law, does not provide for the obligation of the seller to immediately replace the goods at the request of the buyer in case of availability of the goods.

Unfair commercial practice

The Current Law contains the concept of “unfair business practice” and regulates its prohibition in Art. 19, however, the Draft Law regulates the prohibition of unfair commercial activity in more detail, devoting an entire chapter to this issue.

First, the Current Law limits the concept of “unfair business practice” to (i) actions qualified as a manifestation of unfair competition; (ii) activity that misleads the consumer or is aggressive. The Draft Law extends the concept of “unfair commercial practice” to any practice, the implementation of which causes or may cause damage to economic interests or distorts the economic behaviour of consumers in relation to certain products. Misleading and aggressive practices are mentioned only as examples of such practices.

Second, the Draft Law significantly expands the illustrative lists of misleading and aggressive practices compared to the Current Law.

Thirdly, the Draft Law establishes the obligation of business entities to consider the vulnerability of certain categories of consumers due to their age, and mental or physical disabilities. When carrying out commercial practices regarding such consumers, it is necessary to take into account their special characteristics and the increased probability of making a mistake or making an unconscious choice. Failure to comply with these requirements is tantamount to unfair commercial practice.

Liability for consumer protection legislation violations

The Draft Law contains approaches to establishing responsibility for violation of legislation on consumer rights protection, which is similar to the approaches of the Current Law. However, it should be emphasized that new grounds for the emergence of liability were separately provided for. Such grounds include, in particular, the performance of works (providing services) that violate the legislation on the protection of life, health and property of consumers and the environment; violation of consumer rights during trade and other services, failure to post general information about the business entity sufficient for its identification on the website of the online store, the inclusion of conditions limiting consumer rights in contracts with consumers; implementation of unfair commercial practices.

Current status of the Draft Law

As of now, the Draft Law is at the stage of preparation for the second reading. In the case of its adoption this year, in accordance with part 1 of the Final Provisions, most of the articles of the Draft Law should enter into force on January 1, 2023. As a result, based on Part 2 of the Final Provisions of the Draft Law, the Current Law will be recognised as having lost its validity.

[1] http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=72932

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