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Breaking barriers toward greater
cross-border e-commerce and a new
retail economy
Nick Holland, Partner, Field Fisher Waterhouse LLP
Arndt Soret, Director, Legal Services Europe, Home
Away Inc
Paul Drake, Legal Director, European Expansion and
Cross-Border Trade, Ebay Marketplaces
1
Update on the Data Privacy Regulation,
Consumer Rights Directive, Payment
Services Directive, VAT Changes in the
B2C Arena and Intermediary Liability
Nick Holland – Partner, Field Fisher Waterhouse
2
The EU Directive on Consumer Rights (2011/83/EC)
Replaces, as of 13 June 2014:
• 97/7/EC on the protection of consumers in respect of distance
contracts;
• 85/577/EEC to protect the consumer in respect of contracts
negotiated away from business premises.
Directives remaining in force:
• 1999/44/EC on certain aspects of the sale of consumer goods
and associated guarantees; and
• 93/13/EEC on unfair terms in consumer contracts.
3
Commission’s aims:
• Achieve a real business-to-consumer (B2C) internal
market.
• Strike a balance between a high level of consumer
protection and the competitiveness of businesses.
• Achieve a simplified, accessible and transparent
rights regime for consumers
• Ensure common rules for businesses enabling ease
of trade across the European Union.
4
Why implement the new Directive?
Consolidation and simplification - existing consumer
protection laws are fragmented across several EU
Directives:
• the Distance Selling Directive;
• the Doorstep Selling Directive;
• the Unfair Contract Terms Directive; and
• the Sale of Consumer Goods and Guarantees
Directive.
5
Key changes affecting distance selling:
• Consumers will have a 14-day cooling off period in which
to cancel the distance contract.
• Traders will have to refund the consumer within 14 days of
receiving notice of cancellation (currently 30 days).
• Traders will have to provide consumers with detailed
information on prices, delivery charges, payment
methods, whether the consumer is to bear the cost of
returning the goods, and for bulky items, an estimate of
the return costs.
• Limited right to surcharge for credit and debit card
purchases
6
Key changes cont…
• Online “order buttons” will have to be clearly labelled
so that the consumer understands that, by clicking,
he or she is entering into a payment obligation –
without such labelling the consumer will not be bound
by the obligation.
• Default settings (e.g. pre-ticked options) for anything
that results in the consumer incurring additional
charges over and above the price for the main
contractual obligation, such as a premium delivery
service are not permissible.
7
Key changes affecting digital content:
• Traders to provide information about the content’s compatibility
with hardware and software, as well as inform the consumer if
the content is subject to any digital rights management
technology.
• No consumer right to cancel a digital download purchase once
the download has begun provided that (i) this has been made
clear to the customer and (ii) the customer has given their
explicit acknowledgement.
• Mandatory pre-contract information to be provided in a “durable
medium” within a reasonable time following conclusion of the
contract (rather than before the download begins).
8
Commission’s objectives:
• An integrated and efficient European payments
market.
• A level playing field for payment services providers
• high standards of consumer protection.
• To encourage lower prices for payments.
• To facilitate the emergence of common technical
standards and interoperability.
9
Why change from PSD?
• Commission acknowledges PSD was generally fit for
purpose, however:
• implementation inconsistent between Member States
resulting in fragmented payment services market
along national borders;
• payment services market very dynamic;
• PSD2 intends to expand the types of organisations
that are regulated to better protect consumers and
homogenise implementation.
10
PSD2: changes to scope – extending the
regulatory sphere • E-comms platforms can no longer rely on the “commercial
agent” exemption to avoid regulation where they act for both
buyer and seller.
• “Digital services” exemption tightened – new rules set limits on
the levels of m-payments (€50 per transaction and €200 per
month) for the exemption to apply but the type of device used
will be irrelevant.
• “Limited network” exemption redrawn to bring large scale or high
volume payments or wide ranges of products or services into
the regulated arena.
• 3rd party providers offering payment initiation services and
account information platforms will be regulated to encourage
new low-cost internet payment solutions.
11
Changes to scope cont…
• “One-leg transactions” (where the payment service
provider of either the payer or payee is outside EEA) will
be required to comply with transparency and supply of
information to user regulations – transactions in any
currency will be covered.
• Removal of ATM exemption for operators of independent
ATMs - this incentivised higher consumer fees.
• The definition of “payment services” aims to be
technologically neutral and allow for the development of
new systems in an attempt to future proof PSD2.
12
IF Regulations - Controls on interchange fees
and surcharging for card-based transactions
Dual approach – PSD2 and IF Regulations
Interchange fees:
• Capped at 0.2% for most debit cards and 0.3% for most credit cards
(except for 3-party schemes such as AMEX and commercial cards)
• No impact in UK on debit cards as fees already below limit but up to 1/5
reduction on credit card interchange fees.
• Capping to be phased in – to cross border payments as soon as PSD2
and IF Regulations implemented, then applying to domestic card
payments after 2 years.
13
Interchange Fees and Surcharging
• Merchants will be able to surcharge, or refuse to
accept, cards not subject to the cap on interchange
fees – not to exceed real cost of using card.
• Limits to surcharging already imposed by CRD.
• Non-transparent pricing methods by payment service
providers will be prohibited, full information on costs
must be given to users in advance.
• Commission to adopt rules to ensure controls on
interchange fees and surcharges are not
circumvented. 14
VAT changes in the BTE B2C arena
• Currently – where a supplier of broadcasting,
telecommunications and e-services (BTE) is based in
the EU and the customer is a non-taxable person
(B2C), the supply is taxed at the place where the
supplier is established.
• 1 January 2015 – supply of BTE services to non-
taxable persons will be taxable in the Member State
where the customer is established, has his
permanent address or usually resides.
15
Impact
• EU and non-EU BTE suppliers will need to determine where
customers are established or usually reside to charge the
applicable VAT rate for that jurisdiction and account for it
accordingly – irrespective of whether the supplier is established
or registered there for VAT purposes, OR use Mini One-Stop
Shop scheme (MOSS).
• Removal of incentive for non-EU based suppliers to set up a
permanent establishment within the EU, in a low-rate
jurisdiction, so as to be able to charge lower VAT rates on intra-
EU B2C supplies.
• End of the “99p download”?
16
Businesses will need to consider:
• Whether supplies are made on B2C basis
• How to determine the location of customers
• How VAT will be charged and correctly accounted for
• The impact of additional VAT on profit margins and
whether to pass such increases on to customers or
absorb them;
• The impact of increasing prices on attractive pricing
models – such as the 99p download
• Whether to relocate from low-tax jurisdictions
17
EU Data Protection Law Reform
Main aims: – improve harmonisation
– improve interoperability
– reduce bureaucracy
– improve individuals rights
– enhance organisational accountability
– strengthen regulators’ powers
Key changes: – Power to issue fines up to greater of
100million EUROS or 5% of annual worldwide turnover;
– Territorial scope extended to organisations outside of EU processing data related to individuals within the EU;
– Additional definitions added including ‘encrypted data’ and ‘pseudonymous data’;
– Consent must be freely given;
– Measures introduced as a result of the PRISM revelations including a right for data subjects to know whether their personal data has been disclosed to a public authority at the authority’s request;
– Requirement for appointment of Data Protection Officers;
– Much, much more!
18
EU Data Protection Reform: Proposed Timeline
• January 2012 – EU Commission publishes proposal for Draft Data Protection Regulation
– http://ec.europa.eu/justice/data-protection/document/review2012/com_2012_11_en.pdf
• December 2012 – Amendments proposed by LIBE Committee rapporteur, Jan Albrecht
• January 2013 – Publication of the Albrecht Report: presentation of amendments
• May 2013 – Draft ‘compromise’ text published by the EU Council (Member States)
• October 2013 – Publication of Council’s Common Position
• 21 October 2013 - LIBE Committee votes in favour of adopting latest Compromise Text
• December 2013 – Justice Council discusses the proposals
19
EU Data Protection Reform: Proposed Timeline • 23-24 January 2014 – Informal JHA Council in Athens discusses proposals and announces an
agreement on reform is possible before end of 2014
• 12 March 2014 – the European Parliament adopted in plenary the proposal for the Data Protection Regulation – which includes the amendments originally put forward by the LIBE Committee (led by Jan Philip Albrecht) in its report from October 2013
• April 2014 – European Parliament is expected to adopt the proposals in its first reading in the Plenary session
• Separately the Council of Ministers (comprising a Justice Minister for each of the 28 Member States)
are currently discussing the Regulation in order to put forward their own adopted text
• Only once the Council has completed this process this can tripartite discussions between the EU
Commission (which introduced the original draft Regulation text), the Parliament and the Council take
place in order to agree a final text of the Regulation
• It is hopeful that the Council can finish their review by June 2014 (before the EU Summer recess
commences), however this is uncertain due to disagreement between Member States on certain
provisions of the draft Regulation
• Spring/Summer 2014 - official negotiations of the text between Parliament / Council
• June 2014 – EU Parliament elections
• 31 December 2014 – Parliament / Council aiming to adopt Regulation by this date
• If they tripartite discussions do not begin until November 2014, the final text may not be formally adopted under the tripartite discussions until 2015, in which case the Regulation may not come into force until after 2017
• 2015/2016 – Aiming to fully implement Regulation into Member State law (current draft includes a 2 year grace period) by this date 20
The E-Commerce Directive and Intermediary Liability
• Website hosts and platform services (e.g., Amazon, eBay, Twitter, Tumblr) offer
features allowing their users to place their own content at their own discretion,
i.e. posting advertisements on classifieds websites, posting products to sell in an
online marketplace, or posting blogs and other written content which are typically
not fully vetted by the service
• A gray area emerges when the intellectual property of a product is used by third
parties to sell that product without the manufacturer’s permission via a website
host, but it is possible the position becomes clearer if the website host is actively
making use of the intellectual property or omitting action against detectable
infringing activity, e.g., L’Oréal v eBay
21
L’Oréal -v- eBay
• L’Oréal (and others) sued eBay and its users for selling counterfeit
goods and unpacked L’Oréal goods and tests on the eBay site.
• The High Court gave judgment against eBay for part of the claim and
then referred a number of questions to the ECJ for guidance including a
question concerning the scope of the exemption for website hosts from
liability for illegal content under the E-Commerce Directive.
• The Article 14(1) exemption is available when a host is a ‘mere conduit’
of illegal content, provided that if the host has actual knowledge or has
knowledge of facts or circumstances that it should make it aware of such
content, it ‘expeditiously’ acts to take it down.
22
L’Oréal -v- eBay: the E-Commerce Hosting Defence
• The ECJ ruled that the Article 14(1) defence remains intact
provided that:
– The host does not play an active role in the presentation
and promotion of offers for sale posted by its users so as
to give it knowledge of, or control over, related data.
– Where a host has knowledge of facts that would alert a
‘diligent economic operator’ to illegal activity, it must
remove the offending data to benefit from the defence.
23
Consumer directive, cyber security and
and data privacy for online marketplaces
Arndt Soret, Director Legal Services,
HomeAway Sàrl
24
Who is HomeAway ?
• HomeAway is an online marketplace - bringing
together (2nd) home owners and travelers. About
900,000 vacation rentals are available via the
HomeAway network of websites across the globe.
• In Europe alone HomeAway runs 34 websites in 13
countries and in 12 languages.
25
Geographies
26
2 contractual relationships
1. Relationship HomeAway – homeowner = b2b?
Careful: New consumer definition in the directive
2011/83 EU => Even when a contract is being
concluded only in part for business purposes then
the person entering into the contract shall be
regarded as consumer; countries may choose to
apply the directive to small and medium enterprises
2. Relationship homeowner – traveller = b2c
27
How does HomeAway comply with the new consumer
directive ? continues
• As a marketplace HomeAway itself has to provide the
technical means for that owners and property
managers can comply
• Example: pay per booking – service = free listing but
HomeAway receives a commission from the booking
28
How does HomeAway comply with the new consumer
directive ? continues
• Imprint requirements
• Pricing regulations, display all mandatory fees &
taxes (German Preisangabenverordnung example)
• Credit card fees clearly spelled out and opt-out boxes
• «Book now button» suffices when entering into a
payment obligation
• Automatical renewal information provided «opt-out»
• => Be clear and be transparent and summarize !
29
Example: auto-renewal
• Drafting tables / websites = biggest common
denominator approach – e.g.:
ES FR DE IT UK NL
Email notification -28 and -14 days before
renewal
T-31 and T-14 before
renewal
T-28 before renewal -28 and -14 days before
renewal
-28 and -14 days before
renewal
-28 and -14 days before
renewal
Declining method Link in prominent position of
the email. Clear wording
3 links redirecting to the
owner’s dashboard + 2
mentions of the renewal
date
Via dashboard page payment
preferences (credit card only) or
customer service there is clear
a hint in A/R notification but no
link to dash
Link in prominent
position of the email.
Clear wording
Guidance on deactivating
set out in the email. Can
deactivate on the
dashboard or by contacting
CS.
Link in prominent position of
the email. Clear wording
Auto-renewal mention on site Only in T&Cs. Nothing in the
LYP and following pages
In T&C and in the first
page of the LYP
Only in T&Cs, nothing on LYP
and following pages
In T&C and in the last
page of the payment
page (see below)
In the T&C accepted by
owners when purchasing
Only in T&Cs, nothing on
LYP and following pages
Price change mention No mention Slightly mentioned in the
email notification through a
link.
Slightly mentioned in the footer
of the email notification through
a link to price list.
No mention Set out clearly in the auto-
renewal email (see below)
Slightly mentioned
Number of complaints/refunds 2013 xx xx
xx
xx xx xx
Refund policy 30 days post payment, no
question asked
30 days post payment, no
question asked
No refunds, only in exception
cases like “Owner sold his
object”
30 days post payment,
no question asked
30 days post payment, no
question asked
30 days post payment
Planned improvements Adding price change in email
+ auto-renewal mention in
the subscription purchase
process (to be defined)
Adding clearly the price
change in email
+ specifying after the
“Supscription 12 Months”
through an “*”
Would like to include services
and price for which will be auto-
renewed but this is currently not
possible. This needs to be
worked on by HUB.
to add the following
words in the last page of
the payment process in
order to complete the
sentence about the
automatic renewal
Guidance on deactivating
set out in the email. Can
deactivate on the
dashboard or by contacting
CS.
Would like to include services
and price for which will be
auto-renewed but this is
currently not possible. This
needs to be worked on by
HUB.
30
How do we keep up to speed with business & with
Legal challenges ? • It only starts with the directives.
• Each lawyer responsible for 2-3 countries ;
participating in Product Marketing team meetings
• Each lawyer / country member of local consumer
associations.
• Changes to be implemented in contracts online / law
of region as well as terms and conditions.
• CLEAR structures
31
How does HomeAway deal with the data protection law
reform ?
The EU motive was to «strengthen individual rights and
tackle the challenges of globalization and new
technologies»
• 1 supervisory authority «one stop shop»
• Rules apply also to non-EU based businesses (where
controller, processor or data subject is based in EU)
= extra – territorial reach
• Privacy by Design (data protection safeguards to be
built into the products or services from their earliest
stage)
32
How does HomeAway deal with the data protection law
reform ? continues
• Explicit consent (partly in violation shall be void)
• Right to be forgotten (erasure of any links or copies)
• Right not to be subject of profiling (e.g. workplace
must be highly visible if done)
• Internal data protection officer appointment
• Data breaches «breach of security leading to the accidental
or unlawful destruction, loss, alteration, unauthorised disclosure
of, or access to personal data transmitted, stored or otherwise
processed»
• Sanctions 2% or 5% (EU Parliament 5%) or 100
million EUR whichever is higher 33
How does HomeAway deal with the data protection law
reform ? continues
• The need for 100% compliance is higher.
• Tick – boxes «opt-in»
• Privacy policies are different from site to site
• DTA`s must be updated / cross border transfer
• Data indices re-written, more clear more transparent
• Data officers / entity
• Much more contact with the Product; IT & IT Security
understand if anonymous data can be made
«personal data»?
• Transparency 34
Example: HASC «HomeAway secured communications»
• Communications now via HomeAway servers
• Huge data protection challenge:
– Make sure access controls are in place
– Trainings are being provided
– Policies are up-to-date
– Each employee has signed an acknowledgement
Thank you !!
35
BREAKING BARRIERS TOWARD GREATER CROSS-
BORDER E-COMMERCE AND A NEW RETAIL
ECONOMY – THE EBAY EXPERIENCE
Paul Drake
Legal Director – European Expansion &
Cross Border Trade, eBay Marketplaces
36
OVERVIEW
• International commerce trends
• About eBay
• Barriers to cross border e-commerce
• What eBay is doing to overcome these barriers
• Potential legal issues
• Q&A
37
INTERNATIONAL COMMERCE
TRENDS
38
CAGR = Compound Annual Growth Rate Source: OC&C Strategy: Britain’s Retail E-mpire, 2013
SALES FROM UK RETAILERS, UK & INTERNATIONAL (£BN, % TOTAL, % CAGR)
+12% International
26%
UK
6%
20 (36%)
2018
56
36 (64%)
CAGR
2013-20
34
13 (29%)
2016
45
32 (71%)
2020
28 (40%)
69
41 (60%)
Forecast
2012
4 (14%)
28
24 (86%)
2014
8 (22%)
36
28 (78%)
2013
5 (15%)
32
27 (85%)
INTERNATIONAL COMMERCE SET TO GROW 7x TO £28BN
39
E-COMMERCE IS GROWING FAST IN KEY MARKETS
AU 14%
UK 11%
DE 13%
IT 18%
ES 19%
FR 12%
RU 18%
BR 21%
US 10%
CN 20%
5X VALUE OF ONLINE
EXPORTS IN 6 TOP
ECOMMERCE MARKETS
SET TO GROW FIVEFOLD
BY 2020 1
33% OF ALL ONLINE
TRADE WILL BE
CROSS BORDER
BY 2020 2
64% OF EU BUYERS WILL
BE OUTSIDE UK &
GERMANY
BY 2016 3
Source: 1 OC&C and Google study January 2014 2 IMRG 2013; 3 Euromonitor, April 2013
FORECAST ONLINE RETAIL GROWTH RATE, 2013-17
(Euromonitor April 2013)
40
Source: OC&C The Global Retail e-mpire 2014
$1180M
STRONG ONLINE TRADE CORRIDORS ALREADY EXIST
Source: OC&C The Global Retail e-mpire 2014 41
• eBay Inc.'s Marketplaces and PayPal businesses are
true global platforms; the majority of users and volume
comes from outside the U.S.
• In 2013, eBay Inc. enabled $212 billion of commerce
worldwide
• eBay is one of the world’s largest online marketplaces,
with 128m active users and 500m+ listings worldwide
• Our cross-border business is strong and growing fast
• eBay’s global buying hub focuses on localising sites for
larger markets outside the U.S 42
BARRIERS:
• Language
• Payments
• Logistics: Shipping &
Customs
• Returns
In 2013, according to
an EU Commission
study, 15% of EU
residents made a
cross border purchase
DRIVERS: VALUE
PRICE
PRODUCT CHOICE
EBAY CONSUMERS ARE HAPPY TO BUY INTERNATIONALLY…
…BUT BARRIERS STILL EXIST
Books, DVDs and electronic
products such as computers
and cameras are among items
most likely to be purchased
cross border*. *EU Commission and Civic
Consulting Survey, 2011
43
SERVICES TO INCREASE
INTERNATIONAL TRADE ON
EBAY
44
1 ENABLE SHIPPING
AND PAYMENTS
Accept global payments
Offer global shipping
solutions
2 3
LOCALISE TO YOUR
SPECIFIC MARKET
ENTER MARKET AND
BECOME A LOCAL
Translate & localise
Drive traffic to existing site
Local language customer
service
Create a local web
experience
Local distribution
Take on the incumbents
Increasing cost, commitment and compliance
eBay supports sellers, bridging the gaps between the 3 options
EBAY: GLOBAL SCALE WITHOUT THE GLOBAL INVESTMENT COSTS
45
ENCOURAGING SELLERS TO SELL DIRECTLY ON EBAY’S
INTERNATIONAL SITES
Acting like a local
helps maximise
international sales, via:
Translated listings
Various delivery options
Competitive postage costs
46
DON’T SPEAK THE LANGUAGE?
NO PROBLEM!
eBay and ChannelAdvisor have partnered
to launch a funded and guided Cross
Border Trade Programme for shared
sellers.
IT COULD SAVE YOU HOURS,
IF NOT DAYS, OF WORK!
eBay will fund the translation and set-up of
up to 500 listings in up to 4 locales.
ChannelAdvisor will utilise translation partner,
Gengo, whilst in-house teams at ChannelAdvisor
will launch the listings to the non-UK eBay sites
on behalf of the sellers.
TRANSLATION & LISTING ACTIVATION SERVICES
47
:TAX CONSULTANCY SERVICES
FREE VAT REGISTRATION IN
FRANCE AND GERMANY
eBay international tax consultancy partner
Meridian will complete the necessary VAT
registration application to the
local VAT authorities
on your behalf.
*This special offer is conditional upon using
Meridian to file your VAT returns for France and
Germany for a minimum of 12 months.
After registering interest, you will be contacted
by Meridian.
LIMITED AVAILABILITY OFFER
48
POSTAGE SERVICES
SPECIAL RATES Shipping: 1 kg parcel to Germany
Cost: £5.33
Transit time: 2-3 days
INTERNATIONAL SHIPPING
…little more effort than domestic shipping. Buyers
appreciate reasonable, clearly stated delivery times.
FASTER DELIVERY
Reduced delivery times improve the experience.
SPECIALLY NEGOTIATED RATES
eBay works with the UK’s leading carriers to help give
sellers the best deal.
TRACKED SHIPPING
Minimise risk with visibility of parcels and when they will
arrive.
49
Where:
On ebay.de, ebay.fr, ebay.it and ebay.es
When:
From 7 April to 7 October 2014
How:
Using eBay’s advanced international
selling programme.
Invited sellers only. Terms and conditions apply.
PRICE PROMOTIONS FOR SELLERS
ZERO INSERTION FEES
IN GERMANY, FRANCE
ITALY AND SPAIN
7 APRIL – 7 OCTOBER
50
TOTAL SALES GREW 19% TO £75M
IN 2012 with online sales doubling in value.
USING EBAY STORES TO TEST NEW MARKETS.
POSITIVE REACTION IN GERMANY, FRANCE AND ITALY
HAS LED TO OPENING LOCAL STORES.
GROWTH VIA GLOBAL EXPANSION
WITH MINIMAL CAPITAL
INVESTMENT
PARTNERING EBAY TO:
• Increase sales across the board via global audience of 128M+
• Sell seasonal products all-year round
EXAMPLE - FINDING A YEAR ROUND GLOBAL MARKET
51
LEGAL BARRIERS TO
INTERTNATIONAL TRADE
52
LEGAL BARRIERS - CONSUMER LAW
• If sellers actively targeting sales in a
country (e.g. if in local language) local
consumer laws apply, e.g. rights of return
• Consumer Rights Directive makes intra-
EU trade easier, differences exist outside
EU
• eBay’s business seller framework and
other guidance helps sellers comply with
many requirements under EU law
• eBay’s International Selling Agreement
obliges sellers to comply with local eBay
site policies, e.g. money back guarantee
on UK site
53
LEGAL BARRIERS - LIABILITY FOR INTERMEDIARIES
• eBay relies on hosting defence under E-
Commerce Regulations
• L'Oreal v eBay clarified that a website
operator may lose this defence if it
performs an ‘active role’ in an illegal
activity
• Providing services such as translations
may increase the risk of losing the
defence, if this is seen as an active role
• Risk mitigated by ensuring the seller
retains control over their content,
outsourcing certain services or using
automated translation methods that do not
give actual knowledge
54
OTHER LEGAL BARRIERS
• Tax / customs, particularly
outside EU
• Selective distribution
• Parallel imports
• Product safety / banned items
55
• International trade is key
for the future growth of
commerce
• Our job as lawyers is to
enable this trade while
minimising risk to our
customers and the
company
CONCLUSION
56
