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Brazilian e-commerce: who is afraid of going virtual?

E-commerce can be a great way to boost one’s business. However, in order to fully benefit from the opportunities brought by the huge Brazilian e-market and meet all legal requirements, it is crucial to undergo an in-depth legal compliance ...

It has been over two and a half years since federal decree no. 7962 /2013 (“e-commerce decree”) came into force. the e-commerce decree was enacted with the purpose of providing e-consumers with legal safety when acquiring products and services on-line by improving access to the information on the services and products offered, thereby assuring transparency and protection to e-consumers.

For such purpose, the E-commerce Decree provides, inter alia, the following obligations on companies acting in the Brazilian e-commerce (“Provider”):

  • making available to consumers a summary of the contract, before its execution, with sufficient information regarding the choices available, as well as clear identification of any clauses which limit consumer rights;
  • providing consumers with efficient tools for identifying and correcting any errors which may have occurred at any stage prior to the execution of the contract;
  • immediately confirming the acceptance of the purchase order made by the consumer;
  • providing the consumer with a full version of the contract/terms and conditions for download immediately following its acceptance;
  • making available to consumers an efficient on-line customer service so that any questions, doubts, complaints, requests, suspensions or cancellations can be addressed.
  • making use of technological secure means to enable the transmission of data and execution of payment;
  • clearly informing consumers about their cooling-off rights (“Right of Regret”) and providing suitable means for exercising such right. The Right of Regret under Brazilian law grants consumers the right to cancel any contract within 7 days of its conclusion or receipt of the product, when the transaction is concluded outside the physical establishment of the Provider. The courts consider any sale executed using a website as a “transaction outside the establishment of the Provider”;
  • promptly indicating: a) clear and complete information regarding the products and services offered to consumers; b) all information concerning the Provider, including its CNPJ (Tax Enrolment Number with the Brazilian Federal Revenue Office); c) physical and e-mail addresses and all other information necessary for locating and contacting the Provider; d) any additional expenses to be added to the price, including expenses related to delivery and insurance; etc

Despite the recent economic downturn, e-commerce in Brazil reached the amount of approximately BRL 36 billion in 2014 and is estimated to grow by 20% in 2015. However, a quick look at the websites of many international and national e-commerce players reveals that such players have been slow in complying with many of the rules laid down by the E-Commerce Decree.

What then could be the impact of this lack of compliance and how the courts have been addressing this matter?

In a lawsuit seeking material and pain and suffering damages on the grounds of failure to replace/return a pair of shoes purchased on-line, the Court of Appeals of Rio de Janeiro basing its ruling on the failure by the Provider to comply with many of the provisions of the E-Commerce Decree, upheld the decision of the lower court awarding material damages in twice the value of the shoes, whilst awarding compensation for pain and suffering in the amount of BRL 1,800 to the plaintiff. (Appeal No. 00065860620148190019 – TJRJ, Reporting Judge Flavio Citro Vieira de Mello, Date of Publication in the Official Gazette on 10/06/2015).

In a lawsuit having one of its causes of action the application of a penalty by PROCON - the Consumer Protection Municipal Body – ordering the cessation of sales of concert tickets of the International Festival of Londrina, for being, inter alia,  in violation of several provisions of the E-Commerce Decree, the Court of Appeals of Paraná upheld the legality of such penalty. (Appeal No. 12189245 – Reporting Judge Maria Aparecida, TJPR, Reporting Judge Maria Aparecida, Published in the Official Gazette on 24/10/2014).

In a lawsuit seeking material and pain and suffering damages based on the failure to delivery a product acquired on-line, the Court of Appeals of Rio Grande do Sul used as one of its lines of reasoning for upholding the lower court decision, the fact that the website violated Articles 4 v and 6 of the E-Commerce Decree (failure to provide suitable customer services and to meet the offer conditions relating to quantity, quality, suitability and deadline for delivering the product). In addition, the court also notified the local PROCON, so that such body could assess whether administrative penalties should be applied on the Provider. (Appeal No. 71004246799, TJRS, Reporting Judge Carlos Eduardo Richinitti – Day of Judgment 27/06/2013).

In a lawsuit seeking material and pain and suffering damages based on the failure to deliver sun-glasses acquired on-line, the Court of Appeals of Rio de Janeiro found the co-defendant, a company hired by the Provider to manage the collection of payment of its on-line operations, strictly liable for choosing to form a commercial partnership with the Provider despite: (i) the existence of several complaints against such Provider on the website “Reclame Aqui”, a well-known platform used by consumers for sharing their negative experiences with Providers; (ii) being included in the list of not-recommended companies of the PROCON of the State of São Paulo and; (iii) having more than 80 lawsuits filed against the same. The Court awarded material damages against such co-defendant in the amount paid by the consumer for the produtct as well as pain and suffering compensation in the amount of BRL 1,000. (Appeal No. 0004315-45.2014.8.19.0206, Reporting Judge Flavio Citro Vieira De Mello, Date of Publication in the Official Gazette 02/07/2015).

In a different lawsuit, the Court of Appeals of the Federal District of Brazil awarded pain and suffering damages in the amount of BRL 5,000 against the global e-commerce market place Groupon for failing to provide complete information on the Provider, a wedding catering company which failed to provide the services offered and hired by the plaintiff on Groupon´s platform. (Appeal No. 20130110070519ACJ, Reporting Judge Diva Lucy de Faria Pereira, TJDF, Date of Publication in the Official Gazette 05/12/2013).

In a Class Action brought by Association of the Consumers of São Paulo against a Real Estate Agent, the lower court of the Judicial District of Santos ordered the defendant to provide in its website all information regarding the properties offered, including the CNPJ, address and summary of contract of each unit offered within 15 days from the publication of the decision, under penalty of daily fine of BRL 2,000 up to BRL 1,000,000 (Lawsuit No. 1008691-27.2015.8.26.0562, Judge Leonardo Grecco, 1st Civil Court of Santos, Date of Publication in the Official Gazette 25/08/2015).

From the above, we note that although there are few judgments based on the failure to comply with the E-Commerce Decree, when such claims are brought up, the courts have been very receptive in awarding damages against not only the Providers, but also any company taking part in any of the stages of the e-commerce operation (whether as a payment collector or even for providing “deal of the day” services, such as Groupon).

It is worth mentioning that in addition to the material and pain and suffering damages awarded by the courts, the E-commerce Decree also provides that the failure to comply with its provisions may cause the competent authorities to impose penalties such as fines or even total or partial prohibition to continue to do business.

E-commerce can be a great way to boost one’s business. However, in order to fully benefit from the opportunities brought by the huge Brazilian e-market and meet all legal requirements, it is crucial to undergo an in-depth legal compliance otherwise the virtual dream can turn into a real legal nightmare.

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Sobre o autor
Eduardo Ludmer

Dual qualified lawyer in Brazil and Israel with extensive experience and expertise in handling local and cross-border legal matters primarily practicing in the areas of intellectual property, corporate and business law and international arbitration.

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