The Russian government will regulate online aggregators’ activity

Pepeliaev Group advises that amendments have come into effect to the Law “On protecting consumers' rights”[1], which confer on the Russian Government powers to publish legislative instruments regulating the activities of online aggregators

The Federal Law “On amending article 1 of the Russian law ‘On protecting consumers' rights’”[2] (the “Law”) came into effect on 5 May 2020. According to the new amendments, powers have been conferred upon the Russian Government to publish rules that are binding on the owners of online aggregators when they enter into and perform public contracts with consumers. The amendments will primarily affect the activities of online aggregators in the area of the distance sale and purchase of goods.

Please be reminded that by an aggregator[3] the legislature means a program for electronic computing machines and/or a website and/or webpages in the Internet via which a consumer is able with respect to certain goods (a certain service) to simultaneously: (1) become familiarised with the offer of a seller (a service provider) to conclude a sale and purchase agreement for goods (a fee-based contract for services), (2) conclude with a seller (a service provider) a sale and purchase agreement (a fee-based contract for services), and (3) make a pre-payment for the goods (service) by wire transfer to the owner of the aggregator. Owners of an online aggregator are companies or individual entrepreneurs to whom the above software and/or webpage(s) in the Internet belong.

What will change for the owners of aggregators?

Before the Law was adopted, the Russian Government did not have any powers to regulate the activities of owners of online aggregators. Among other things, the state did not have any instruments to promptly respond to certain issues arising out of the relationships between consumers, sellers and aggregators.[4] The reason behind this was that owners of aggregators were not included in the list of subjects in article 1(2) of the Law “On protecting consumers' rights”[5] with respect to which the Russian Government may issue mandatory rules.

Specifically, before the amendments were adopted, the Russian Government could not regulate the activities of the owners of online aggregators when consumers conclude transactions to sell and purchase goods via the Internet. The rules regulating the distance sale and purchase of goods are approved by the Russian Government; it was impossible, though, to include in them provisions that would regulate the activities of the owners of aggregators owing to the lack of relevant powers of the Russian Government with respect to such persons.

In this regard, when transactions are consummated involving distance sale and purchase of goods via online aggregators, there are no clear-cut rules applicable to consumers allowing for their interests to be better protected. On the other hand, the absence of a distinct mechanism regulating the activities of the owners of aggregators harnesses the development of this important instrument of online trade. The general regulation established by the Law “On protecting consumers' rights”, being a framework regulation, cannot ensure a comprehensive scope of regulation for specific aspects of relationships between sellers, consumers and owners of aggregators.

Once the amendments have been introduced, this hurdle can be overcome and the Russian Government will be able to specify general statutory provisions related to the owners of online aggregators when consumers make transactions involving the distance sale and purchase of goods. The Government will be able to promptly respond to any potential difficulties.

Please note that the Law's main objective was to supplement the Russian Government’s powers to regulate the activities of the owners of online aggregators when a seller and a consumer enter into a contract for the distance retail sale and purchase of goods. We cannot rule out that the amendments adopted will not affect in future other sectors of online business (e.g. the service sector). At present, the Russian Government has adopted specific rules for distance selling with respect to goods only. There are no similar rules for the supply of services and/or dissemination of digital content via the Internet. Nevertheless, the new amendments have made it possible to apply to the owners of online aggregators any rules that the Russian Government may subsequently adopt with respect to any consumer contracts concluded remotely (e.g. with respect to online services). Specifically, the Russian Government may issue separate rules regulating activities of online taxi aggregators after a draft law has been adopted that is now being considered by the Russian State Duma (the lower house of the Russian Federal Assembly) and that provides, among other things, for the regulation of aspects of online taxi aggregators’ activity.

Who will not be affected by the amendments?

The new amendments primarily affect owners of marketplaces and e-platforms which are covered by the definition of an aggregator of information about goods (services) from the perspective of legislation protecting consumers' rights. In particular, as stated above, such services must enable a consumer to familiarise him/herself with a public offer of the seller for the purchase of goods or a service, to accept the offer (i.e. enter into a contract) and make a prepayment for the goods.

If the online service does not have any of the above options and a consumer has been explicitly informed of this (e.g. there is no ‘shopping cart’ on the website, and nor does the functionality of the website allow for payment to be made, but only gives to the customer the contact details of the seller of the relevant goods), in other words if the owner of the online resource provides to consumers information services only, such services are not aggregators and the new rules will not be applied to their owners.

Which rules of the Russian Government will not be changed?

The principal rules that regulate the activities of the owners of online aggregators that have been established by the Law “On protecting consumers' rights” will not change within the scope of the Russian Government’s rule-making relating to the new amendments. Specifically, this applies to the rules establishing information obligations of the owners of aggregators and their liability for providing inaccurate information about goods (a service) or the seller (the service provider). In other words, the Russian Government’s regulations cannot introduce additional liability for the owners of aggregators or establish other rules that will contravene current regulation or worsen the consumers’ position.

Nevertheless, the Government will be able to additionally regulate other aspects of the activities of the owners of aggregators where there are loopholes in the legislation at present. Consequently, the Government will be able to both adopt new rules targeted at the owners of aggregators and extend already existing mandatory requirements adopted by it to the owners of aggregators where such requirements regulate relationships in the retail trade of goods and supply of services.

What to think about and what to do

IT companies that are owners of online aggregators are advised to monitor the Russian Government's rule-making in the sphere of online trade. If the Russian Government adopts mandatory rules with respect to the owners of online aggregators, companies are advised to bring their activity in line with such rules by the deadline that will be set.

Help from your adviser

Pepeliaev Group’s specialists have extensive experience in advising on various issues in the area of e-commerce, including where online aggregators and online marketplaces are used. We are ready to provide legal support on any matters surrounding the activities of the owners of online aggregators, including in connection with the anticipated adoption by the Russian Government of new rules regulating such activities of the owners of online aggregators.