E-commerce law: All current topics for retailers
As with all topics in the e-commerce space, the same applies to e-commerce law: there is no standing still. New laws and guidelines are constantly coming into force that affect online sellers. Keeping track is not always easy. In today’s podcast episode, expert Dr. Carsten Föhlisch from Trusted Shops and eBay legal expert Dr. Tilmann Kuhla take a look at some current topics: What are the specific effects of the Anti-Warning Letter Act? Is the GDPR now a warning-letter issue? What are some particularly big “traps”? And what’s the deal with the new Packaging Act?
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Isabell: Hello dear listeners, and welcome to our new podcast episode for our sellers and, of course, for everyone who wants to become one. I’m glad you’re with us again. And I’m just as happy that my dear podcast colleagues David and Tino are with us again today too.
David: Yes, hello dear Isabel and hello dear listeners, in today’s episode we want to dive back into the world of eCommerce law with you. Because keeping track of all the new developments that keep coming up for our sellers is simply not that easy. And it always helps to listen to two experts talking about the current topics.
Tino: And for that we invited two great guests. First I’d like to welcome Dr. Carsten Föhlisch from Trusted Shops. Hi Carsten!
Carsten: Hi Tino!
Tino: And I’m happy that we have Dr. Tilmann Kuhla at the microphone again today, who recorded an episode with us some time ago on the topic of warning letters. Hi Tilmann, nice to have you back.
Tilmann: Yes, thanks a lot, Tino. I’m happy to be back too.
Isabell: Carsten, would you like to tell our listeners a little more about yourself and what exactly you do at Trusted Shops?
Carsten: Yes, I’ve been at Trusted Shops for quite a long time, 22 years, and I’m responsible for the legal department there. The internal stuff, but above all legal products. We call them warning letter protection packages. That means we’ve been making sure for a very long time that sellers don’t get warning letters, because as we’ve already heard, there are lots of weird or hard-to-see regulations and we mainly make sure that sellers are protected.
David: Very nice. Tilman, could you please? For everyone who doesn’t know us yet, and from our last episode, tell us a little bit about you and your role at Ebay.
Tilmann: Sure, gladly, David. So I’ve been at Ebay for ten years and in Ebay’s legal department I deal with contractual matters. That means when Ebay enters into contracts with large partners or small partners, but together with other people we also take care of compliance. That means we make sure that Ebay complies with the legal regulations in Germany and Europe. And we also make sure that sellers can comply with the legal regulations. So I’m not checking whether everyone has legal notice information, but there has to be a field where you can enter your legal notice information. And if something changes there, we also initiate the changes that are then necessary.
Isabell: We already said that we’ve spoken with Tilmann before about the topic of warning letters. Carsten, I’d like to pick up on that pretty big topic again now. In preparing for today’s episode, the term Anti-Warning Letter Act came up. Would you tell us what exactly that is and how you assess its impact?
Carsten: Yes, warning letters have just been an annoying topic for sellers for many years. Because if I failed to comply with some little thing, very large penalties or sanctions threatened me. And that’s why, among other things, I lobbied through various associations, the chambers of industry and commerce, and other business associations to get such a law passed. More specifically, it’s called the “Act to Strengthen Fair Competition,” but it’s also called the Anti-Warning Letter Act. And after eight years of lobbying, it came into force in December 2020 and essentially has two main points. First, warning-letter associations have to be entered on a list at the Federal Office of Justice, and the biggest unserious actor has so far not been entered on this list. And that’s why warning letters have actually decreased since then. And second, formal violations by competitors can still be warned against, but no longer for a fee. That means lawyers can no longer profit from them. Formal violations are violations of the so-called information obligations in eCommerce. So I have to provide information in the legal notice about my identity, but also about things like, let’s say, nitty-gritty topics such as whether the contract text is stored, the European platform, the US platform, such things, which contract languages are available. This was often forgotten or is often forgotten. And although these are such little things, where you do wonder “What does that have to do with consumer protection?”, in the past they could lead to a warning letter and lawyers would send an invoice for it. And that’s just not possible anymore.
Tino: Tilmann, if we now hear that there are fewer warning letters per se, but the warning letters that do actually happen become much more expensive. What exactly is the reason for that?
Tilmann: So just as Carsten said, some of these nitty-gritty, I think that’s a nice term. So these little things can no longer be the subject of warning letters and make real money. And that means you now have to look for bigger legal violations that may have been committed. You always look for the door that opens the easiest or where you can get through most easily. In the past it was these topics, and now it’s topics like, for example, from the area, I now know this from Carsten, from his practice too, trademark and copyright law. So for example, if I as an online seller use an image that someone else made, I download it from Google. Or I take some official product image from the manufacturer without having authorization to use that image. That can constitute a copyright infringement, or I use a term in my offer on ebay that is protected by trademark law, and then the rights holder can come and say, hold on, you’re using my trademark here and I haven’t licensed that to you at all, you’re not allowed to do that. And that’s more expensive because the so-called dispute value in these copyright and trademark proceedings is higher. And with lawyers it’s always the case that they calculate the fee or the cost of their involvement based on the dispute value, and because the dispute value is higher, the lawyer’s costs are also higher right from the start. And that leads to these much more serious, more expensive warning letters.
Isabell: So the effects of the Anti-Warning Letter Act aren’t only positive.
Tilmann: I’d say they are very positive indeed. That’s an interesting view, Isabell. It’s just that other things are now coming into focus, which means sellers simply have to keep an eye on everything and make sure they do these other things properly and instruct their staff not to use any terms that may be protected by trademark law, like “Harry Potter” or something like that. Or to download images from the internet that they didn’t create themselves. But sure, those dangers already existed before. We’re just seeing them pop up more often now.
Isabell: And Carsten, what does it mean when a warning letter goes straight into a main proceedings case? Maybe you could also explain for our listeners what such a main proceedings case actually is and who is involved in it.
Carsten: A warning letter is an out-of-court attempt to settle a dispute, so in competition law or trademark/copyright law, as Tilmann just said. Originally it was also intended to save expensive court proceedings, and the next step after the out-of-court warning letter, so if I say I’m not reacting to it or I don’t sign this cease-and-desist declaration, in the past it was always the so-called injunction. That is a court fast-track procedure, where the same actor who warned me then goes to court and in this expedited procedure basically wants to prohibit me from doing it. And after a decision by the Federal Constitutional Court, that has decreased because the Federal Constitutional Court said that this is not possible without hearing the people concerned. And that makes things complicated. And that’s why we observed this year that above all associations that issue warning letters are going straight to the so-called main proceedings, meaning the normal court proceedings and not these fast-track procedures. And that then leads to relatively high court costs being incurred immediately if I can’t settle the whole thing out of court. That is the main proceedings case. But sometimes it can also be a strategy not to just sign something, especially if I can’t rule out the same violation happening again. Because then it becomes a kind of money-printing machine for the person issuing the warning letter, since they can then collect so-called contractual penalties. And that’s why it may also make sense to prefer being sued, because then there are no contractual penalties if it happens again, but rather fines. And those don’t go to the person issuing the warning letter, but to the state treasury. And that’s why it’s less attractive for the warning-letter issuer to pursue something like that.
David: Very interesting, Carsten. To stay with the warning-letter topic for a moment: what about the GDPR, the General Data Protection Regulation? Is that now also a warning-letter issue or not really yet? And what else can actually happen to me as a seller?
Carsten: Yes, many people feared that in 2018 when the GDPR came into force. That the next big wave of warning letters was coming, but so far it has still not materialized. That is also because it still hasn’t been definitively clarified by the highest court whether competitors can even issue warning letters about it. Because data protection law is first and foremost public law. That means the authorities can impose fines or preliminary stages of that, such as information procedures and so on. That already happens more often, but that competitors issue warning letters on a large scale for data protection violations, we still can’t see that. What is happening right now, and this has also been in the press, is that private individuals, so-called data subjects, who are on a website and are then tracked, for example without opt-in, are taking action against me as a seller and saying, you have violated my personal rights, I now want compensation. And there is a relatively recent court ruling from Munich that, for example in the case of Google Fonts without opt-in, awarded the data subject €100 in damages. And there are such, yes, real waves, also from private individuals, who are now trying to jump on the bandwagon and cash in.
David: So there isn’t big money to be made there; it’s still manageable.
Carsten: Correct, it’s manageable. These are attempts by private individuals at the moment on a smaller scale, but it’s not comparable to what we actually had in the past with a wave of warning letters on other topics.
Isabell: Tilmann, what options do our sellers have to protect themselves from this at all?
Tilmann: I was really waiting for that question, Isabell. That actually brings us a bit back to what we discussed last time as well. And it’s actually not that difficult. You need to get legal help, and preferably before anything happens. Most of those expensive costs that can arise in trademark or copyright proceedings can be wonderfully avoided if you simply follow important basic rules. And that’s not rocket science, as we say, so it’s not rocket science to behave properly. We’ve had a cooperation between Ebay and Trusted Shops for some years now, which means that anyone who has an Ebay Shop subscription can use the warning-letter package free of charge. Ebay has basically already paid for that for you. You just have to claim it. And there’s a lot of information about legal notice information, the right of withdrawal, terms and conditions, how to set them up properly. An automatic tool asks you a few questions and then the explanations come out correctly. In addition, Trusted Shops also has an extensive database that they always keep up to date. On the question “What do I need to do if I sell toys, for example?”, “What rules do I need to follow?” Or if I sell batteries or if I sell electrical appliances? So depending on what the respective seller sells, you can inform yourself there to rule out the risks. So yes, it’s not a nice topic, it’s not fun, nobody gets out of bed for it. But it’s better to deal with it once now than to create costs. Then you have to deal with it anyway. And that way you can live with the nice feeling that you’ve protected yourself and can then focus on selling.
Isabell: And by now you mean ideally before I start selling, right?
Tilmann: Of course, but at the latest now.
Tino: Very nice, Tilman. Speaking of security and protecting myself, I’ve seen this over the last two years. I’m also one of those big Ebay buyers, and delivery service is allowed to deliver the package contact-free, so also without a signature. How do our sellers deal with that? Especially in cases where, for example, the package gets lost?
Tilmann: That’s an interesting question, when I saw that you wanted to ask me that, Tino, even if it naturally comes across super spontaneous now, I did think about it a bit. I’ve observed it myself as a customer, because we were all at home so much, that the DHL courier or also the Hermes or UPS courier says, you don’t need to do that here, I don’t want you to touch my scanner. As a seller, at the moment DHL says, I delivered the package to Mr. Propp, whether Mr. Propp signs or the parcel courier, then first of all that’s DHL’s problem. That means if Mr. Propp then comes later, I say no, look here. DHL has confirmed to me that it was delivered to you. I’m not aware of any court proceedings so far on this issue, but as a seller I have to be able to rely on my shipping service provider doing it properly. And if they have problems there, then they have to sort it out in the end. So I don’t see any major significant additional risk for a seller.
Isabell: Since we’re already on the topic of packages and shipping: the new Packaging Act has also been in force since July 1. Carsten, could you briefly summarize for our listeners what that is and what to watch out for?
Carsten: Yes, it’s been around for some time and there were already extensive changes in January of this year. Basically, you can say that you have to participate in a dual system. There are various ones, for example the Green Dot, meaning you have to register there and also pay fees for packaging disposal. What’s new since July 1 is that marketplaces, including Ebay or others, are no longer allowed to let anyone onto the platform who is not registered and not participating in the system. That means I could already in the past, and this also happens frequently, actually be warned against. That’s a classic warning-letter issue, even if I’m not licensed and don’t pay packaging fees. In addition, in the future the platform may also exclude me from selling. And if the Ebay platform doesn’t properly check that, meaning it also allows sellers on the platform who don’t pay packaging fees, then that can lead to very high fines. I think up to €100,000, and I’d guess Tilmann and co. are already making sure that everyone has the appropriate registration.
Tilmann: Exactly, we started some time ago to inform our sellers that they need to enter the necessary information for us. And now we’re already past July 1. We can see that our sellers have really provided us with the necessary information. And where that is not the case, we also exclude people from selling. So we are not going to take the risk of getting fined ourselves. It must also be said that as annoying as all this administration is, the basic principle behind it is absolutely right. We all need to make sure that we don’t litter our environment too much. And that’s why it makes sense that whoever creates the waste must also take the waste back or contribute to the costs. And as annoying as it is, like I said, I think the basic principle is absolutely right and understandable, that we work according to the polluter-pays principle here.
Isabell: What, for example, has to be specified there?
Tilmann: You register. I’m not, we have other specialists for that internally, but I know the basics. You register with the central office and then with a dual system. And then they want to know, dear Isabell, in 2021 how many boxes, of what size, did you place on the market? And then, depending on the amount, you have to pay contributions to dispose of all that cardboard. So this really applies to almost everyone in online retail, because everyone ships their stuff somehow in a package. I once heard there are exceptional cases of people who ship complete car tires, for example, because then they may not have any cardboard around them. So you really have to ask yourself: does this apply to me? And for most people, we can already give the answer here: yes. And then you have to register. But I think our sellers have also been made very aware of this through various channels. And many of them, as Carsten said, the law has been around for quite a while, many of them have already been on the right track for years.
David: I also think this still shows that many decisions are not up to us, but are imposed on us and we only have to enable them accordingly so that our sellers can trade safely too. Carsten, in that context there are a few other, I’d call them current pitfalls, that we should discuss. I’d like to talk about the topic of price advertising. What can you tell us about that?
Carsten: Well, this year we had the implementation of the so-called European Omnibus Directive, which was basically adopted in Europe back in 2018. Four directives were amended, including the Directive on Unfair Commercial Practices and, as part of that, the topic of price indications as well. And yes, it’s about various topics, including the so-called crossed-out prices. That means if I advertise with a lower price and compare it with an older crossed-out price, there are stricter rules. I have to say exactly what price it is. And also use the price that is the lowest from the last 30 days. I don’t want to go into detail now, that would probably blow the time frame, I think. And yes, another thing that has changed, for example, is the reference size for base price information. So if I sell wine, for example, or olive oil, in the past I could state it per 100 milliliters. It now has to be a liter or a kilo. And these are again seemingly small things, but they are also classic warning-letter issues. And it’s also something I always advise against, for example, giving an out-of-court cease-and-desist declaration, because that’s the so-called contractual penalty trap. Because if I have 10,000 products, it will keep happening from time to time that I make a mistake, forget the base price. Or I’m suddenly listed on Google Shopping and it’s not correct there. And then I have to pay a penalty if I’ve signed something like that once. So I’d really be careful there. That was already a huge issue in the past and has now become relevant as a warning-letter topic again through the change.
Isabell: Carsten, you already spoke at the beginning about the legal notice and its importance. There have also recently been changes there, and something has also changed with the right of withdrawal, which has already come up now too. Could you summarize that once more for our listeners?
Carsten: Yes, that’s also a topic that comes from this European Omnibus Directive and was also implemented this year. It’s relatively small. The withdrawal instructions must now always include the telephone number. That was already the case in case law in the past. But now it’s also written into the law, and the fax number was removed in 2022. So I no longer have to provide it, I may still provide it, but then the so-called privilege no longer applies. There’s this model withdrawal notice. If I use it unchanged, the law says, then I’m doing everything right and can’t be challenged for it. That fax number is no longer in there. So, long story short: update the withdrawal notice once, ideally with the tool we provide at Trusted Shops for Ebay sellers. Run it through once, then I get the current text and I’m protected again. In the legal notice, in addition to the telephone number, I now also have to provide other channels through which I can be reached, for example WhatsApp or, depending on what I do, other electronic means of communication. Those are the main changes and I should simply run these legal text generators again and then we also assume liability for that.
Tino: Yes, Carsten, Tilmann, thank you very, very much for your update on the topic of eCommerce law. We’ve now heard a bit about warning letters, then the Packaging Act, price advertising, and now, at the end, the legal notice and the right of withdrawal. We could probably make a podcast about it that lasts an hour and a half, but the podcast is drawing to a close. But we still have one question, and that’s for Carsten first now. What was the last thing you bought on Ebay?
Carsten: Tino, I actually have to look it up because I buy a lot on Ebay. And the last thing was actually a big box of Yumm Yumms, because my sons really like to eat them, dry or otherwise. And I bought 90 pieces in bulk from an Asian store. Yes, I like buying things like that on Ebay.
Isabell: Yes, the supply will probably last for a while. Tilmann, what was the last thing you bought on Ebay?
Tilmann: Yes. You all know that we’re expanding authenticity verification into more and more categories. We started with sneakers and then moved on to expensive watches. And now handbags are included too, and I was able to take part in the internal beta pilot for it, so I bought a Gucci handbag. By the way, Isabell is getting really big eyes for everyone who can’t see it, and I’ve now received it. In a really great Ebay-branded box with a dust bag, I was told. So a nice Ebay dust bag around the Gucci handbag, and in unobserved moments I’m now out and about with it.
David: I think it definitely suits you very well. Thank you both very much for being here and for giving us so much information on the whole topic of eCommerce law. That also means it’s time for my closing words. We would of course be very happy about your feedback on our podcast. Feel free to write to us in the Ebay Community about your experiences, also if I’ve already had to deal with the whole legal topic. Or your experiences, of course, also with the Shop subscription and the Trusted Shop offer that we provide you. Otherwise, we’re always very happy if you leave us a subscription or a like where you’re listening to us, if possible. As I said, many thanks again to both of you for having the time and for being here. And of course thanks also to Tino and Isabell for your great co-moderation.
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1 comment
passionepassato
·4 years agoVery interesting, although when it comes to the packaging ordinance, one also has to say that it is in part a money-making scheme by lobbyists. Paper and cardboard do not cause any costs for consumers; disposal in the waste paper bin is free of charge, because the waste paper bin brings around €80-90 to the disposal companies. In other words, the disposal companies actually make money rather than incur costs. I can understand it with plastics, but waste paper is a rip-off!! Or who among you pays for the waste paper bin?!
Best regards and thanks for the interesting upload.