Turkish parliament to vote on draft law to amend Consumer Protection Law and E-Commerce Law

On 18 July 2024, a Draft Law aimed at amending the Consumer Protection Law and Certain Legislation was presented to the Turkish Grand National Assembly. This Draft Law proposes notable changes to Consumer Protection Law No.6502 and Law No. 6563 on Regulation of Electronic Commerce.

I. Amendments to the Consumer Law

(i) Consumer loan agreements

The Draft Law stipulates that consumer loan agreements will be valid if concluded at a distance as an alternative to the traditional requirement that such agreements must be in writing to be valid. This provision aligns with Banking Law No. 5411, which regulates that agreements within its scope may be concluded either in writing or through distance communication tools. These tools include information or electronic communication devices that enable the verification of the consumer's identity and are recognised as valid alternatives to the written form within the framework of the relevant legislation. Consequently, the Draft Law envisions that consumer loan agreements between creditors and consumers, as governed by the Consumer Law, can be established both in writing and via distance communication methods.

Pursuant to the Consumer Law, if an account is opened for a fixed-term loan agreement and only loan-related transactions are carried out from this account, no fees or charges can be requested from the consumer for this account under any name. Under the Consumer Law, this account is closed upon repayment of the loan unless the consumer has a written request to the contrary. With the proposed Draft Law, however, it is envisaged that the account will be closed upon repayment of the loan unless the consumer has a request to the contrary in written form or, alternatively, through a permanent data storage device.

(ii)  Housing finance agreements

According to the Consumer Law, a housing finance agreement is not valid unless it is concluded in writing. The proposed Draft Law, however, provides that such an agreement may also be concluded through distance communication methods as an alternative. Note that a housing finance institution that has not concluded a valid contract cannot invoke the invalidity of the contract to the detriment of the consumer.

As per the Consumer Law, if an account is opened for a housing finance agreement and only loan-related transactions are carried out from this account, no fees or charges can be requested from the consumer for this account under any name. Under the Consumer Law, this account is closed upon repayment of the loan unless the consumer has a written request to the contrary. With the proposed Draft Law, it is envisaged that the account will be closed upon repayment of the loan unless the consumer has received a request to the contrary in written form or, alternatively, through a permanent data-storage device.

(iii) Direct selling system

Before the Draft Law, the direct sales system was to be regulated by a regulation under Article 47 of the Consumer Protection Law. The Draft Law introduces Article 47/A to the Law, providing a detailed regulation of this system.

The direct sales system is defined as a sales method where independent representatives, distributors, consultants, and similar individuals, who are not employed through an employment contract but operate in return for commissions, bonuses, incentives, and rewards, sell goods or services to consumers. In essence, the direct sales system involves individuals or groups selling products or services directly to consumers, typically outside of traditional retail environments. For example, this could include door-to-door salespeople, or representatives selling products through home parties or online networks. The system is characterized by the compensation structure for the salespeople, which is based on their sales performance and often includes commissions and other financial incentives.

The direct selling companies must be established as stock corporations and meet additional conditions outlined in future regulations. The direct selling model must focus on the sale of goods or services to consumers rather than recruiting new sellers and distributing the resultant benefits. Violations of these obligations will lead to an administrative fine of TRY 5 million (approximately USD 151,136).

It is prohibited for direct selling companies to request any payments from direct sellers (e.g. renewal fees or contributions) that do not include goods or services intended for sale to consumers. The level of a direct seller within the system will not be determined by the volume or value of goods or services purchased from the direct selling company. Consumers have the right to withdraw from purchases within 30 days without the need for any justification or penalty clause, by notifying either the direct seller or the direct selling company. Any violation of these withdrawal provisions will incur a fine of TRY 2,200 (approximately USD 67) per transaction.

Direct selling companies are required to establish a system to inform consumers about specified matters by the Ministry of Trade and facilitate their requests and notifications. Companies failing to comply will be given three months to rectify the violation, and failing this they will be fined TRY 1 million (approximately USD 30,227).

(iv) Sanctions

The Draft Law revises administrative fines for various violations under the Consumer Law. In accordance with Article 62 of the Consumer Law, sanctions will be imposed on those who violate the specified obligations related to unfair commercial practices. These sanctions may include:

• Suspension or cessation of activities for a period of up to three months.
• Imposition of administrative fines ranging from TRY 60,000 (approximately USD 1,814) to TRY 600,000 (USD 18,136).

The Advertisement Board is authorised to apply these fines either jointly or separately, contingent upon the specific nature of the violation. In cases where the violation has a nationwide impact, the administrative fines can escalate significantly, ranging from TRY 600,000 (approximately USD 18,136) to TRY 6 million (USD 181,363).

Specific fines for violations through different media include:

• Television channel broadcasting at local level: TRY 110,000 (USD 3,325) to TRY 1.1 million (USD 33,260);
• Television channel broadcasting nationwide: TRY 2,210,000 (USD 66,802) to TRY 22,100,000 (USD 668,021);
• Periodical publications: Half of the above-mentioned fines will be imposed in case of violation through periodical publications;
• Radio channel broadcasting at local level or through satellite: TRY 60,000 (USD 1,814) to TRY 600,000 (USD 18,136);
• Radio channel broadcasting nationwide: TRY 600,000 (USD 18,136) to TRY 6 million (USD 181,363);
• Television channel broadcasting via satellite or via the internet: TRY 600,000 (USD 18,136) to TRY 6 million (USD 181,363);
• Text messages: TRY 280,000 (USD 8,464) to TRY 2.8 million (USD 84,636);
• Other means: TRY 60,000 (USD 1,814) to TRY 600,000 (USD 18,136).

An administrative fine of 1% of the annual gross income at the end of the fiscal year preceding the date of the violation, but not less than TRY 80,000 (approximately USD 2,418), will be imposed on those who act contrary to the obligation to provide all kinds of information and documents to authorised individuals or institutions. These penalties will also be imposed on those who fail to provide the original or certified copies of the documents upon request regarding the issues falling within the scope of the Consumer Law if the violation continues despite the warning to provide the information and documents correctly within seven days or to provide the opportunity for on-site inspection.

Non-declarations or inaccurate declarations will result in a fine of TRY 6 million (USD 181,363) for prepaid housing sales and TRY 1 million (USD 30,227) for other sales.  Additionally, an administrative fine of TRY 50,000 (USD 1,511) will be imposed on those not required to declare their gross income.

The applicable provisions of Turkish Criminal Code No. 5237 will be enforced against those who, in contravention of Article 80 of the Consumer Law, initiate, organise, or disseminate a pyramid sales scheme through meetings, electronic communications or other methods that enable the participation of numerous persons or who support the dissemination of such a scheme for commercial purposes.

Moreover, the Draft Law abolishes Article 77/A-(2) of the Consumer Law, which allows for the submission of reconciliation requests concerning administrative fines issued by the Ministry of Trade and governorships – excluding those fines imposed by the Advertisement Board.

II. Amendments to the E-Commerce Law

The E-Commerce Law had significant revisions with notable updates published in the Official Gazette on 7 July 2022 that established a licensing requirement for e-commerce intermediary service providers. These amendments specified exemptions for transactions abroad. For example, sales made abroad executed through the e-commerce marketplaces of these e-commerce intermediary service providers are excluded from the licence-fee calculation. The proposed Draft Law introduces the following further exemptions.

If the net transaction volume of the e-commerce intermediary service provider does not exceed 20% of the combined net transaction volumes of the intermediary and the e-commerce service providers (based on ETBIS data), the following amounts will be doubled and deducted from the net transaction volume for the purpose of calculating the licence fee:

• The value of sales conducted abroad through the e-commerce marketplaces of the e-commerce intermediary service provider and the e-commerce intermediary service providers;
• The amount of investment expenditure made under an investment incentive certificate issued by the Ministry of Industry and Technology in compliance with legislation on project-based investment support.

The following additional exemptions are proposed in the calculation of the licence fee for the years 2024 and 2025:

• For 2024, the aforementioned 20% threshold will not apply, and four times the specified amounts will be deducted from the net transaction volume of the e-commerce intermediary service provider.
• For 2025, three times the specified amounts will be deducted from the net transaction volume of the e-commerce intermediary service provider.

These extensive revisions aim to create a more flexible and equitable regulatory environment for e-commerce activities. They seek to incentivise international sales and investments by offering significant exemptions and adjustments to the licence fee calculations for e-commerce intermediary service providers.

Conclusion

The Draft Law proposes notable changes to the Consumer Law and E-Commerce Law. The sections of the Draft Law pertaining to the direct selling system and associated administrative penalties for non-compliance will come into effect nine months following its publication in the Official Gazette. All other provisions will be effective immediately upon publication.

For more information on the amendments to the Consumer Law and E-Commerce Law and their impact on your company or business, contact your CMS client partner or these CMS experts: [email protected],  [email protected] and [email protected].