Online shopping has been on the rise in Hungary over the past decade and, following the Covid pandemic, the number of goods and services that we cannot access online is getting fewer and fewer. Consumer protection legislation and enforcement are trying to keep pace and the ‘Database of Infringing Webshops’, launched in 2017, is an important cornerstone of this effort.
Act CLV of 1997 on Consumer Protection and the related Government Decree 453/2016 (19.12.2016) provide the legal basis for the database. Created and operated by the Ministry of Justice (IM), the database lists publicly accessible online stores whose infringing conduct has been legally established by either the Hungarian Competition Authority, the country’s consumer protection authority, or a court of law.
The database, which has been in operation for 5 years now, currently comprises 583 infringing webshops. Here we can search for the name, address or web address of the company running the webshop. Clicking on the name of the website listed allows us to view detailed information relating to any infringement the webshop has committed. Current consumer protection legislation means so-called serious infringements can gain a webshop an unwanted reputation in the Ministry’s database. Now all this may lead us to believe that if we upload our General Terms and Conditions and a Privacy Notice to our website, then we do not need to bother ourselves with this database, as we surely cannot be committing any serious breach. This, however, may not necessarily be the case, as it is especially important that we adapt these legal documents to suit our online store. It is therefore not enough to simply copy samples downloaded from existing websites, especially if these are from foreign sources.
So, let’s take a look at what the most important details are for a webshop to consider and what kind of breaches could lead to them finding their way into the IM database. First of all, it is important to point out that we can search the database by the types of infringement committed, but this categorisation can be misleading, as it is not, in our opinion, consistent with the three types of serious infringement specified in the Decree which sets out the detailed regulations for the database.
The first category of serious infringements identified in the Decree relates to the webshop’s information obligation and is particularly important for the transparency of the webshop’s operation. This includes, amongst other things, the need to provide the webshop’s contact details (i.e. company name, registered office address, telephone number), to inform customers about their consumer rights (i.e. details of warranty, product guarantee etc.), and to set out how to withdraw from or terminate their agreement.
This category, the provision of insufficient information relating to contact details (one of the keywords we can use to search the database for the types of infringement), reveals currently 395 webshops in the database. Typically, these sites were unavailable or did not respond at the contact details provided, did not indicate the name or address of the business on the website, or did not provide information about the conciliation body.
One of the most common breaches of the information obligation, and at the same time one of the reasons why more and more webshops are falling foul of this obligation, relates to problems with delivery, withdrawal from the agreement and warranty (another searchable keyword on the Ministry’s platform). Currently 573, more than 90% of the webshops in the database, are listed for this reason. To illustrate, one infringing webshop is named in the database, where it states that the webshop “did not inform customers in advance about the service provider’s registration body, complaints handling procedure and provided misleading information about warranty rights.” If we click on the name of the webshop, we can also read the final resolution in the procedure, which details the errors the webshop made.
We can also search offending webshops in the database on the basis that they have misled consumers with respect to “products that work wonders”. We can currently find 37 such webshops and, according to the categorisation specified in the Decree, engaging in such behaviour falls into the first category of serious infringements as presented here.
The second category of serious infringements that warrants a webshop being listed in the database is the clause in the Consumer Protection Decree which states that should the consumer not be able to exercise their right of withdrawal, as provided for by law, due to the imputable conduct of the webshop, then this also qualifies as serious infringement. However, at the time of writing no online store could be found listed on this legal basis in the database.
The third category of serious infringements which results in inclusion in the database is where a webshop has applied unfair standard contractual terms and conditions, insofar as the unfairness of the condition has been established by a court of law in the course of a public interest claim or lawsuit. Again, at the time of writing no webshops were listed for this reason.
It is clear that only those online stores that have committed a serious infringement of the information obligation are currently included in the database. Probably none of these breaches would have occurred had the webshop in question availed itself of comprehensive and continuously updated General Terms and Conditions. For example, a webshop is listed as committing an infringement because it did not provide consumers with complete and prior information regarding the identity of the service provider (i.e. telephone number, e-mail address). In principle, this information should appear on the first page of the General Terms and Conditions, but still many webshops find themselves listed in the database for failing to do this. Another typical shortcoming, which leads to many webshops receiving unwanted attention, is the lack of complaints and dispute resolution procedures, again something which they have failed to include in their General Terms and Conditions.
It is important to highlight that the database which the IM operates also indicates whether the webshop has co-operated with the consumer protection procedure and complied with the obligations imposed by the authority or court of law. This, however, does not mean that the webshop will automatically be removed from the Database of Infringing Webshops. In the event that, following a final legal decision on the infringement, the webshop ceases the infringement specified in the resolution, the fact of the infringement, referencing its reparation, will be visible in the database for two years. It is therefore crucial that especially the General Terms and Conditions, but also other legal documents, pertaining to the operation and circumstances of our webshop are properly regulated, otherwise we could easily face consumer protection issues.
We believe that the operation of the IM database is undoubtedly valuable, but it would be especially important to make as many consumers as possible aware of its existence, as this would help avoid many unfortunate online shopping experiences.
We therefore recommend that whenever you are considering making a purchase from a webshop about which you have doubts, check whether the website is listed in the Database of Infringing Webshops, and if you do happen to come across an offending online store, report it immediately to the consumer protection authority, so that they can identify problematic webshops on as wide a scale as possible.
Of course, the database alone is not enough to drive offending online stores out of the market. In conjunction with the creation of the database, consumer protection authorities have started to pay particular attention to the activities of online businesses, increasing the number of consumer protection procedures and, as a result of a legislative amendment, increasing the size of the fines that may be imposed – as the IM representative outlined in the third episode of the “Voice of Consumer Protection” podcast. Naturally we hope that all these measures will lead to a safer online shopping environment.