Important Amendments in the Consumer Legislation are within Sight

The Legislative Proposal on the Amendment to the Consumer Protection Law (“ Legislative Proposal “) was brought to the attention of the presidency of the Grand National Assembly of Turkey on 8 March 2022 and accepted by the relevant commission on 9 March 2022. The Legislative Proposal, which consists of 19 articles in total, envisages significant changes to Consumer Protection Law No. 6502 (“ Law “).

Recent Development

The Legislative Proposal includes amendments regarding consumer and residential loans, default in installment sales contracts, responsibilities of intermediary service providers, prepaid housing sales, time-share vacation contracts, resale of products whose economic life has expired, service stations and after-sales services, dispute resolution and administrative fines. The Legislative Proposal is available online here (in Turkish).

What’s New?

The main amendments envisaged in the Legislative Proposal are as follows:

• Installment sales : For a consumer’s entire debt to become due upon their default in installment sales contracts rather than the remaining amount, total debt in the contact will be considered when evaluating whether the conditions for the consumer’s default are fulfilled.
• Consumer loan : In consumer loan agreements, paying the entire loan within the withdrawal period will be considered as exercising the right of withdrawal and the related fees will be refunded to the consumer. In indefinite term loan agreements, the obligation to notify the consumer of interest rate changes 30 days in advance will only be required if the interest rate is increased. To offer credit-linked insurance as a package with the loan, the companies will have to offer the option of an uninsured loan to the consumer. Also, the insurance will only be a guarantee for the repayment of the loan and the conclusion of the consumer loan agreement cannot be subject to the purchase of ancillary financial products and services.
• Housing finance and prepaid housing sales : The conditions for insurance and other subsidiary financial products in consumer loans are also stipulated for housing finance. The maximum delivery period for prepaid housing sales was increased to 48 months from the contract date.
• E-commerce : In distance sales contracts, intermediary service providers will be responsible for the following:

1. Establishing an uninterrupted system for consumers to submit and follow their requests and notifications
2. Providing and confirming preliminary information to the consumer, and proving this jointly and individually to the seller or the supplier
3. Except for cases where the data entry is made by the seller or the supplier, the deficiencies in the preliminary information
4. Keeping records of the consumers’ transactions with the sellers or suppliers and providing this information to the relevant authorities, organizations and consumers upon request
5. Transactions in which the intermediary service provider violates the agreement on the provision of intermediary services, causing the seller or supplier to violate their obligations regarding distance contracts
6. If the intermediary service provider collects the payment on behalf of the seller or supplier, except for cases where: (i) payment is made to the seller or supplier upon delivery of the goods or services to the consumer; and (ii) the consumers exercise their optional rights with regard to defective products and services. Intermediary service providers are responsible individually and jointly with the seller or the supplier for the delivery or performance and the obligations regarding the right of withdrawal.
7. Failures in the performance of distance contracts where campaigns, promotions or discounts are organized without the approval of the seller or supplier
8. Compatibility between the preliminary information and the information in the advertisements and proof regarding this

In addition, the maximum delivery period of 30 days for e-commerce will not be applied to contracts regarding goods prepared specifically for the request or needs of the consumer.

• Refurbished products : Used goods offered for resale upon enhancement in the hardware, software or physical features will be considered as refurbished products and at least one-year warranty will be provided, starting from the date of delivery to the consumer. The products determined by the regulation can be offered for sale again, provided that they are renewed in the centers authorized by the Ministry of Trade (“ Ministry “). Verification regarding the use and registration of the goods with electronic identity information can be made by the Ministry, renewal centers and authorized buyers via the Information Technologies and Communications Authority’s records.
• After-sales services: Information regarding the after-sales service stations will be registered in the system to be established by the Ministry, and the service stations will use the term “special service” in all their activities and channels. If, upon expiry of the warranty period, after-sales services will not be provided during the lifespan determined by the Ministry, consumers will be able to claim compensation for their damages from the manufacturer or importer.
• Consumer arbitral tribunals: For the year 2022, the upper limit of the disputes in which the consumer arbitral tribunals are in charge will be increased from TRY 15,430 to TRY 30,000. Consumers will be able to apply to the local district governor’s office if there is no consumer arbitral tribunal in the domicile or place where the transaction was executed. An objection to the consumer arbitral tribunal’s decision can also be made before the consumer courts in the consumer’s residence. In addition, no litigation expenses and attorney fees will be awarded against the consumer if the decision is annulled due to the submission of information or a document to the consumer court that was not presented to the consumer arbitral tribunal.
• Fines : The Legislative Proposal increases administrative fines set forth in the Law. Imprisonment can be imposed upon violation of certain obligations regarding time-share vacation. Significantly, if the violation occurs on the internet, the Advertisement Board may decide to block access to the broadcast, section or part where the violation occurred. The Advertisement Board can also block access to the entire website if it is technically impossible to block access to the infringing content or to prevent the violation by blocking access to the relevant content only.

Conclusion

If the Legislative Proposal is enacted, intermediary service providers’ responsibilities will expand, refurbished products’ launch into market will be regulated, manufacturers and importers will be subject to additional obligations regarding after-sales services and the Advertisement Board will be authorized to block access in cases of violations via the internet. We expect that the regulations to be issued by the Ministry will clarify the details, procedures and principles regarding these amendments.