Traders have legal obligation to treat EU customers equally
For years, online shoppers – Europeans in particular – had run into problems preventing them from making purchases. Right before they could make a purchase, customers were redirected to a new page telling them that the order was unavailable in their country. This wasn’t limited to online shopping -- it happened with online services and subscriptions, too.
In the European Union, only 37% of purchases in another Member State are fulfilled, according to data from the European Commission. To create a more fair ecommerce environment, The European Union passed a new regulation to end discrimination against such customers.
Starting December 3, 2018 no trader in Europe is allowed to impose specific conditions or restrictions on the sale of its goods and services according to customer or market size.
What exactly does that mean? Merchants are no longer permitted to prohibit a buyer from discrimination based on nationality, country of residence, or place of establishment.
Erply asked
Andrus Ansip,
Vice President of the European Commission and European Commissioner for Digital Single Market, what this means and how it will affect European merchants and shoppers.
How does this regulation concern merchants?
Similar to GDPR, the Regulation applies to all traders offering their goods or services to consumers in the EU, regardless of whether they are established in the EU or in a non-EU country. All merchants established in non-EU countries that operate in the EU are subject to this Regulation.
Traders operating in the EU, i.e. in one or more Member State, may need to adapt their online stores if their interface:
- Prevents access to customers from other Member States.
- Blocks orders and payments based on a customer’s nationality, residence or establishment.
End of geo-blocking
The end of geo-blocking will bring changes to a wide range of industries and ecommerce shops. Consumers can expect to see changes in:
- Industrial and retail goods, including electronics and furniture
- Online services, including web hosting and cloud services
- Entertaining services, including entertainment and concert tickets
2020 will bring additional regulations that will benefit EU consumers. Cultural products, such as music, e-books, online games, and software will be prohibited from geo-blocking customers.
How should businesses prepare for geo-blocking?
Merchants that implement geo-blocking techniques will need to lift all demographic-based restrictions by the deadline, December 3, 2018. If a merchant reroutes a specific IP address based on a shopper’s nationality, they will need to request consent from the consumer before the reroute can legally take place. Merchants are also responsible for making online purchases simple for all consumers. This means that webshop interfaces may not be designed in a way that would prevent customers from other Member States to easily complete their orders.
On the other hand, the Regulation does not impose an obligation on traders to adapt their online interfaces to all different formats and coordinates applicable across the EU, nor to specifically set-up websites or sections of it in certain languages.
In other words...
The Regulation does not affect the right of traders to freely design their prices and websites across the EU, nor does it affect their marketing strategies.
In summary, the geo-blocking regulation obliges traders to treat all EU customers the same, regardless of their nationality, place of residence or place of establishment. This includes webshop access, ease of use, and delivery options offered on a website or point of sale.
No justification for restricting access
The Regulation defines certain situations where there can be no justified reason for geo- blocking or other forms of discrimination based on nationality, residence or establishment. In these situations, customers from another Member State have the same access and possibility to acquire goods and services as local customers.
Geo-blocking cannot be justified in the following scenarios:
- Delivery or pick up services to an outside Member State, if the merchant already offers delivery services in that area. Note that merchants are not obligated to deliver to all Member States..
- Sale of electronically supplied services excluding access to or use of copyrighted protected works.
- Sale of services provided in a specific physical location.
Merchants must be granted customer consent before they block access to their website or reroute the customer based on their IP address.
The Regulation prevents merchants from providing a different shopping experience based on a customer's:
- Nationality
- Place of residence
- Place of establishment
- Location of the payment account
- Place of establishment of the payment services provider
- Place of issue of the payment instrument, within the range of electronic payments
- Currency accepted by the trader.
These situations do not justify a merchant to restrict access to a customer.
Delivery options
Merchants are free to define the geographical area where he or she provides delivery services.
Similarly, the Regulation does not impose an obligation on traders to set-up pick-up points for their goods in other countries. However, in areas where a merchant offers delivery or pick up options, customers from other Member States must be permitted to access those pick up options regardless of their nationality, residence or establishment.
Price formation
The Regulation does not regulate nor or impose obligations on merchant prices.
Merchants that offer cross-border delivery in some or all Member States remains the trader’s free marketing choice. However, all related information must be clearly spelled out in the applicable general terms and conditions.
The total price must be communicated in a clear and comprehensible manner to consumers before the conclusion of the contract.
Sale of services
The Regulation defines situations where client changes do not justify reason for geo-blocking or other forms of discrimination based on nationality, residence or establishment.
- A customer that buys goods where delivery options are not offered in their Member State is entitled to delivery options in Member States where delivery services are offered.s.
- Customers are entitled to purchase services, such as cloud services, data warehousing or website hosting, from traders established in outside Member States.
- Customers that purchase services supplied on a merchant’s premise (or a physical location where the merchant operates) are entitled to the same treatment residents from that Member State. These serves include but are not limited to ticket sales, accommodations, and car rentals.