NEWS AND INSIGHT

Proposal for Amendment to the Law on Consumer Protection Submitted


06 August 2024

Proposal for Amendment to the Law on Consumer Protection Submitted

The Law Proposal on the Amendment of the Law on the Protection of Consumers and Certain Laws[1] ("Proposal") has been discussed and accepted by the Turkish Grand National Assembly Industry, Trade, Energy, Natural Resources, Information and Technology Commission ("Commission") and it is expected that the relevant amendments will be announced in the Official Gazette and enter into force on a date yet to be determined but to be determined in the near future.

The general justification for these legislative amendments is stated as "Protecting the health and safety and economic interests of the consumer in accordance with the public interest, compensating the damages, ensuring protection from environmental hazards, taking measures to enlighten and raise awareness of the consumer, encouraging consumers' self-protection initiatives and encouraging voluntary organizations in the formulation of policies on these issues". As the technologies related to the development and use of financial services are developing and changing without slowing down, which creates the necessity to regularly update the relevant legislation, it seems possible to say that this Proposal is an appropriate and needed amendment in terms of (i) the written form requirement for the establishment of consumer loan agreements, which is in need of renewal, especially in terms of today's technologies, and (ii) some sanction provisions that have lost their deterrent feature due to the inflation process that our country has experienced in recent years.

In this review, the amendments envisaged by the Proposal in terms of the Consumer Protection Law ("CPL") will be discussed and analyzed.

 

  1. Amendments to the Written Form Requirement for Certain Contracts and Related Transactions

One of the most striking amendments envisaged for the TPL is related to the written form requirement for the conclusion of consumer loan agreements. In this context, pursuant to Article 22/3 of the current TPL, it is regulated that consumer loan agreements shall not be valid unless they are concluded in writing. With the amendment envisaged in the Proposal, it is regulated that these agreements may also be concluded by distance. In this context, it is stated that consumer credit agreements may also be concluded through methods that include verification of the consumer's identity through an information or electronic communication device.

This amendment to the form requirement is not only related to the conclusion of the contract, but also enables other transactions related to the contract to get rid of the outdated written form requirement. A similar amendment has been made with respect to certain other agreements and related transactions for which a written form requirement is stipulated in the current law, and new regulations have been introduced in order to enable them to be concluded at a distance and certain related transactions to be carried out at a distance. In this context;

  • With the amendment made to Article 31/1 of the TPL, the accounts opened for fixed-term loan agreements will be closed upon the payment of the loan, unless the consumer requests otherwise in writing or with a permanent data storage device.
  • With the amendment made to Article 32/2 of the TPL, it is regulated that housing finance agreements may be concluded in writing or by distance.
  • With the amendment made to Article 39/1 of the TPL, in parallel with the amendments made on the closure of accounts related to loan agreements and the establishment of housing finance agreements, it is regulated that the accounts related to housing finance agreements will be closed upon the payment of the loan, unless the consumer requests otherwise in writing or through a permanent data storage device.

The phrase "permanent data storage device" included in these amendments is essentially one of the concepts familiar to the legislation of the TPL and refers to "text message, electronic mail, internet, disk, CD, DVD, memory card and any similar means or media that allows the information sent or sent to the consumer to be recorded and copied unchanged in a way that allows the consumer to examine this information for a reasonable period of time in accordance with its purpose and to access this information exactly as it is[2] ".

 

  1. Reorganization of Direct Selling Systems

The only regulation on direct sales in the current TPL legislation is Article 47, paragraph 7, titled "Contracts concluded outside the place of business", which is the first article of Chapter Five titled "Other Consumer Contracts". Pursuant to this provision, it is regulated that the procedures and principles regarding direct sales shall be determined by regulation, and the "Regulation on Contracts Established Outside the Place of Business" published in the Official Gazette dated 14.01.2015 was put into force.

In the new bill, it is envisaged that direct sales will be regulated within the scope of consumer legislation by adding Article 47/A after Article 47 of the TPL. With this provision, direct selling systems are defined, certain characteristics of direct selling companies are listed and certain rights of consumers in direct selling transactions and certain obligations of direct selling companies are specified. It can be said that the aim of this regulation is to prevent the formation of Ponzi schemes and to make the direct sales sector and systems more open to supervision.

Under this proposed provision of law;

  • The definition of direct selling systems is as follows: "A direct selling system is a sales system in which direct sellers, who are created by the direct selling company and who are not employed with an employment contract and who operate under the names of independent representatives, distributors, consultants and similar names in return for benefits such as commissions, premiums, incentives and rewards, market goods or services to consumers."
  • Direct selling companies can only be established as capital companies and must comply with other conditions to be determined by regulation.
  • It is regulated that direct selling systems should not be established for "bringing new direct sellers into the system and distributing the benefits arising thereby" and should be based on the sale of goods or services to consumers.
  • Regarding the right to withdraw from the contract of consumers who purchase goods or services through direct sales systems, it is regulated that consumers will have the right to withdraw from the contract within thirty days without any justification and without paying any penal clause. In terms of exercising the right of withdrawal, it is stated that it is sufficient to notify the seller or the direct sales company that the right of withdrawal has been exercised within the thirty-day period.
  • Direct selling companies are obliged to establish a system that enables consumers to be informed on the issues determined by the Ministry and to submit their requests and notifications.
  • Finally, the rights and obligations of the direct selling company, the direct seller and the consumer, out-of-scope contracts, sale of goods or services, right of withdrawal, information obligation, delivery and other implementation procedures and principles will be determined by regulation.

 

  1. Re-evaluation of the Administrative Fine Sanctions for Commercial Advertising and Unfair Commercial Practices

Due to the high inflation rates experienced in Turkey in recent years and the depreciation of the Turkish Lira, there has been a need to reorganize the administrative fines set as fixed fines in many laws. Due to the fact that these administrative fines have lost their deterrent features, the legal interests and values that are tried to be protected by these fines become unprotectable. With the proposed amendments to the law, the idea of re-evaluating the sanctions of administrative fines has been put forward in order to protect consumers who are in a weaker position compared to the other party in the commercial life.

  1. Sanctions foreseen for Commercial Advertisements

 

The provisions regulating administrative fines for commercial advertisements, which are proposed to be amended, are included in Article 77 of the CPLPL. This article titled "Sanction Provisions" regulates the administrative fines to be imposed in case of breach of certain obligations stipulated in the CPLPL. The transactions or acts for which these sanctions are intended, the current regulations of these sanctions and the new sanctions envisaged to be amended by the Proposal will be analyzed below.

Article 77/12 of the TPL regulates the sanctions to be applied in cases of violation of Article 61 regulating the procedures and principles regarding commercial advertisements. In each subparagraph of this paragraph, different sanctions to be imposed in case the breach in question is committed in different ways, and separate amendments have been proposed for each subparagraph. In this context;

  • Article 77/12-a of the TPL stipulates an administrative fine of TRY 10,000 if the breach in question is committed through a television channel broadcasting at the local level. The amount of the fine envisaged by the proposal is from 100.000 TL to 1.000.000 TL.
  • While Article 77/12-b of the TPL stipulates an administrative fine of TRY 200,000 if the breach in question is committed through a television channel broadcasting nationwide, it is proposed to change this amount from TRY 2,210,000 to TRY 22,210,000.
  • Article 77/12-c of the TPL stipulates a fine in the amount of half of the fines stipulated in subparagraphs (a) and (b) in the event that the breach in question occurs through periodicals, and no change has been proposed in the wording of this subparagraph. However, since subparagraphs (a) and (b) have been amended, it would be appropriate to say that the amount of the administrative fine stipulated in this subparagraph has also changed.
  • Article 77/12-ç of the TPL stipulates a penalty of 5.000 TL if the breach in question is realized through a radio channel broadcasting at local level or via satellite, and it is proposed to change this amount from 60.000 TL to 600.000 TL.
  • While Article 77/12-d of the TPL stipulates a fine of 50.000 TL in case the breach in question is realized through a radio channel broadcasting throughout the country, it is proposed to change this amount from 600.000 TL to 6.000.000 TL.
  • While Article 77/12-e of the TPL stipulates a fine of TRY 50,000 in the event that the breach in question is realized through a television channel broadcasting via satellite or the internet, it is proposed to change this amount from TRY 600,000 to TRY 6,000,000.
  • While Article 77/12-f of the TPL stipulates a penalty of 25.000 TL in case the breach in question is realized through text messages, it is proposed to change this amount from 280.000 TL to 2.800.000 TL.
  • While Article 77/12-g of the TPL stipulates a penalty of 5.000 TL in case the breach in question is realized through other channels, it is proposed to change this amount from 60.000 TL to 600.000 TL.

In the continuation of Article 77/12 of the TKHK, it is regulated that the Advertisement Board may impose a fine up to ten times the relevant administrative fine if the sanctioned violation is committed again within 1 year. With the proposal, it has been suggested to abolish this regulation and instead, a regulation has been proposed as follows: "When imposing the administrative fines specified in this paragraph, the Advertising Board shall take into account the unfair content of the violation, the magnitude of the benefit obtained or the damage caused due to the violation, and the fault and economic situation of the violator." In the said paragraph, it is also regulated that the Advertisement Board may decide to block access to the content if the contravention is committed on the internet and the content subject to the contravention is not removed within 24 hours despite the fact that the removal of the content subject to the contravention is notified to the relevant persons through means that can be communicated electronically. With the proposal, it is proposed to remove the authority of the Advertising Board in this regard by removing this regulation from the legislation.

 

  1. Sanctions foreseen for Unfair Commercial Practices

Article 77/13 of the TPL regulates the sanctions foreseen to be imposed in cases of violation of the matters regulated in Article 62 of the TPL titled "Unfair commercial practices". Article 77/13 of the TPL stipulates that the sanctions of suspension of the unfair commercial practice, suspension of the unfair commercial practice for up to three months or an administrative fine of TL 5,000 may be imposed and that the Board may impose these three sanctions together or separately. In addition, it is regulated that if the violation subject to the sanction is committed throughout the country, the administrative fine will be applied as 50,000 TL. The proposal only envisages an increase in the amount of administrative fines, and it is proposed to add to this paragraph the provision authorizing the Advertisement Board to determine the amount of fines within the lower and upper limits specified in the law, which is proposed to be added to Article 77/12 of the TKHK. In this context, the Advertising Board will determine the amount of the administrative fine by taking into account the unfair content of the violation, the size of the benefit obtained or the damage caused by the violation, and the fault and economic situation of the violator. It is proposed to change the fine of 5.000 TL in the current legislation from 60.000 TL to 600.000 TL and the fine of 50.000 TL from 600.000 TL to 6.000.000 TL.

 

  1. Sanctions for Violation of Audit Obligations

Article 75/2 of the TPL regulates the obligation to provide all kinds of information and documents to the authorized and authorized persons or institutions in matters falling within the scope of the TPL, or to provide the original or certified copies of the documents upon request, and the sanctions to be applied in case of violation of the obligations stipulated in the article are regulated in Article 77/15 of the TPL. In this context, with regard to the calculation of the administrative fine to be imposed in case of violation of the obligations stipulated in Article 75/2 of the TPL, while the current legislation stipulates an administrative fine at the rate of one percent of the annual gross revenues at the end of the fiscal year preceding the date of the violation and not less than 80,000 TL, the Proposal proposes to be based on the annual gross revenues at the end of the fiscal year preceding the date of the violation.

Another proposed amendment to Article 77/15 of the TPL relates to cases where the gross income is not reported or misreported. In this context, the current legislation imposes an administrative fine of 3.000.000 TL for the breach in question and regulates that the fine will be doubled if the act subject to the breach is committed again within one year. With the proposal, it is envisaged that the amounts of administrative fines to be imposed in case of violation of the aforementioned notification obligation will be amended as follows:

  • 6.000.000 TL for prepaid housing sales,
  • 1.000.000 TL for other sales,
  • Changed to TL 50,000 for those who are not obliged to declare their gross income; and
  • Elimination of the provision that the administrative fine will be doubled if the offending act is repeated within one year.

 

  1. Sanctions to be Imposed in Case of Violation of Obligations Regarding Direct Selling Systems

Article 47/A, which is envisaged to be added to the provisions of the TPL with the proposal, regulates the obligations regarding direct sales systems. It is envisaged that the sanctions to be imposed on the acts and transactions that constitute a violation of the obligations in this proposed provision will be regulated by subparagraphs (a) and (b) proposed to be added to Article 77/17 of the TPL. In this context;

  • If the obligation for direct sales companies to be capital companies is not complied with (47/A paragraph 2) or if the sales system is not in compliance with the principles specified in the third paragraph of Article 47/A, 5.000.000 TL for each violation,
  • In case of violation of the obligations stipulated in the fourth, fifth and seventh paragraphs of Article 47/A, an administrative fine of 2,200 for each transaction found to be in violation,
  • In the event that the direct sales company violates the obligation stipulated in the sixth paragraph of Article 47/A to establish a system that enables the consumer to be informed on the issues determined by the Ministry and to communicate their requests and notifications, it is proposed to give a three-month period to remedy this violation, and if the violation is not remedied within this period, an administrative fine of TRY 1,000,000 will be imposed.

 

  1. Amendments to the Law on the Regulation of Electronic Commerce ("ETDHK")

The proposal envisages the addition of some paragraphs to the Provisional Article 2 and Additional Article 4/7 of the ETRCL. The amendment proposals in question are related to electronic commerce license fees and the paragraphs proposed to be added are as follows:

  • Additional Article 4/7 has been amended by adding subparagraphs (b) and (c) as follows:

 

"In calculating the license fee,

a) Sales made abroad through the electronic commerce marketplaces of the electronic commerce intermediary service provider and the electronic commerce intermediary service providers with which it is in economic integrity are not included in the account.

b) Realized in the following calendar year, provided that the net transaction volume of the electronic commerce intermediary service provider is not more than twenty percent of the sum of the net transaction volumes of the electronic commerce intermediary service provider and electronic commerce service providers calculated using ETBIS data;

1) The sales amount specified in subparagraph (a),

2)The amount of investment expenditure realized by obtaining an investment incentive certificate from the Ministry of Industry and Technology in accordance with the legislation on supporting investments on a project basis,

two times the net transaction volume for that calendar year.

c) Exceedances below fifteen percent shall not be taken into account in determining whether the limit specified in subparagraph (b) has been exceeded."

 

  • To be added to Provisional Article 2;

 

"(5) In the calculation of the license fee for the year 2024, the twenty percent requirement specified in subparagraph (b) of the seventh paragraph of the seventh paragraph of Annex Article 4 shall not be sought and four times the amounts specified in the subparagraphs of the same paragraph shall be deducted from the net transaction volume of the electronic commerce intermediary service provider.

(6) In the calculation of the license fee for the year 2025, three times the amounts specified in the subparagraphs of subparagraph (b) of the seventh paragraph of the seventh paragraph of Annex Article 4 shall be deducted from the net transaction volume of the electronic commerce intermediary service provider."

It is stated that these regulations aim to support export activities and contribute to fair competition.

 

  1. Conclusion

We would like to remind once again that the proposed amendments to the law that are the subject of this article have not yet been adopted and published in the Official Gazette, in other words, they have only been submitted to the Commission and are still under evaluation. However, since it is becoming more and more necessary to update the articles of law that are subject to amendment, it would be appropriate to expect that they will be amended in the near future, even if not exactly as envisaged in the Proposal, and that these changes will be generally in line with the Proposal that is the subject of this article.

 

[1] https://cdn.tbmm.gov.tr/KKBSPublicFile/D28/Y2/T2/WebOnergeMetni/bdd541b5-c5f1-4e39-aba5-b7208a6fbdc2.pdf

[2] TKHK, Article 3/1/f