Adoption of the Law for a Digital Republic

The Law for a Digital Republic of October 7, 2016, establishes new obligations for online platforms to strengthen the fairness of information provided to consumers online. New provisions have been inserted into the Consumer Code.

Consumer protection on the internet is a major current issue.

The OECD recently amended its Recommendation on Consumer Protection in the Digital Economy at the OECD Council meeting of March 24, 2016, to encourage member countries to strengthen the fairness and transparency of consumer information online.

In France, the Hamon Law and the Macron Law had already introduced new measures aimed at increasing consumer protection online. This includes, in particular, the enhanced consumer information obligations imposed on online comparison sites since July 1st (codified in Articles L.111-5 and D.111-5 to D.111-9 of the French Consumer Code). It seems that consumer protection was not fully guaranteed by the existing mechanisms, and therefore that the obligations of professionals needed to be further strengthened.

This is the purpose of the Law for a Digital Republic of October 7, 2016 (Law No. 2016-1321), which creates new obligations for online professionals in two areas: the fairness of consumer information on online platforms, and the regulation of online consumer reviews.

1. Fairness of Information and Online Platforms

The law aims to ensure transparent information for consumers, particularly regarding the exact nature of the intermediation activities of online platforms.

1.1 Definition of Digital Platforms – Imposing obligations on online platforms first requires defining what is meant by “online platforms.” The Law for a Digital Republic amends Article L.111-7 I of the Consumer Code to specify that “An online platform operator is defined as any natural or legal person offering, on a professional basis, whether for remuneration or not, an online public communication service based on:

1° The ranking or referencing, by means of computer algorithms, of content, goods, or services offered or made available online by third parties;

2° Or the connection of several parties for the purpose of selling a good, providing a service, or exchanging or sharing content, a good, or a service.”

Thus, all types of digital platforms are concerned: marketplaces, comparison sites, and also so-called “collaborative” intermediation platforms, whether they connect a professional and a consumer (B2C) or two consumers (C2C).

1.2 Information Content – ​​Article L.111-7 II lists the information that online platforms must provide to consumers.

Regardless of the nature of the connection (consumers with professionals or non-professionals), the following information must be provided:

– the general terms and conditions of use of the intermediation service offered and the methods of referencing, ranking, and delisting the content, goods, or services to which this service provides access;

– the existence of a contractual relationship, a capital link, or remuneration in its favor, insofar as these influence the ranking or referencing of the content, goods, or services offered or made available online.

Other information must be provided to consumers depending on the nature of the interaction:

– When consumers are connected with professionals or non-professionals, consumers must be informed of the advertiser’s status and the parties’ rights and obligations under civil and tax law;

– When consumers are connected with non-professionals, the online platform operator must provide them with a space to communicate to consumers the information required under Articles L. 221-5 and L. 221-6 of the French Consumer Code (specific information for consumers regarding their rights and obligations in the context of distance selling and services).

The information provided must be fair, clear, and transparent.

A decree, not yet published, will specify the conditions for implementing Article L.111-7 of the French Consumer Code, which must take into account the nature of the online platform operators’ activities.

This decree will also specify, specifically for online comparison sites, the information provided to consumers concerning the elements of their comparisons. Note that from the date of entry into force of this decree, the articles relating to online platforms initiated by the Macron law (articles L.111-6 and L.131-3 of the Consumer Code) will be repealed.

Finally, pursuant to Article L.711-7-1 of the French Consumer Code, online platform operators whose activity exceeds a threshold of connections defined by decree must develop and disseminate “best practices” to consumers, aimed at strengthening obligations of clarity, transparency, and fairness. It remains to be seen what is meant by the notion of “best practices,” which is not defined by the legislator.

It should be noted that administrative authorities may conduct investigations to ensure that online platforms comply with these obligations.

2. Fairness and Publication of Online Consumer Reviews

In July 2016, we informed you of a new investigation by the DGCCRF (French Directorate General for Competition Policy, Consumer Affairs and Fraud Control) which noted the recurring problem of fake consumer reviews on the internet. At the time, no French regulations addressed this issue. Only the AFNOR Z74-501 standard existed, which, however, has no legally binding force.

The situation has changed since October 7, 2016, when the Digital Republic Act inserted Article L.711-7-2 into the Consumer Code to regulate this practice. The aim of this legislation is to allow for verification of the credibility of online reviews.

As such, Article L.711-7-2 of the Consumer Code requires “any natural or legal person whose activity consists, primarily or secondarily, of collecting, moderating, or disseminating online reviews from consumers” to “provide users with fair, clear, and transparent information on the methods of publication and processing of online reviews.“

This person must, in particular, indicate:

– whether or not these reviews are subject to moderation and, if so, the main characteristics of the moderation process;
– the date of the review and any updates;
– the reasons for rejecting the online publication of the review to the consumer concerned.

A decree will be issued, following consultation with the National Commission for Information Technology and Civil Liberties (CNIL), to establish the procedures and content of this information.

While a new obligation of fairness is imposed on online platforms regarding the information provided to consumers, it will only become truly effective once the decrees defining its implementation procedures are published.