Recent Development
On 18 July 2024, the Draft Law on the Amendment of the Consumer Protection Law and Certain Laws (“Draft Law”) was submitted to the Turkish Grand National Assembly. The Draft Law introduces significant amendments to Law No. 6502 on Consumer Protection (“Consumer Protection Law”) and Law No. 6563 on Regulation of Electronic Commerce (“E-Commerce Law”).
Provisions regarding the direct selling system and administrative fines to be imposed for violations of this system will enter into force 9 months after the publication of the Draft Law in the Official Gazette, while other provisions will enter into force on the date of publication.
The Draft Law is available here (in Turkish).
What does the Draft Law introduce?
The main regulations introduced by the Draft Law are as follows:
A. Amendments to the Consumer Protection Law
1. Consumer Loan Agreements
The agreements within the scope of Banking Law No. 5411 (“Banking Law“) can be concluded in writing or by means of distance communication tools such as an information or electronic communication device and that allow the verification of the consumer’s identity, which may replace the written form within the framework of the relevant legislation, whether by means of distance communication or not. To comply with the Banking Law, it is envisaged that consumer loan agreements between creditors and consumers can be established in writing as well as by means of distance communication.
2. Direct Selling System
The direct selling system has been regulated in detail under Article 47/A of the Consumer Protection Law. In this regard, first, the direct selling system is defined as a sales system in which direct sellers, who are appointed by the direct selling company, are not employed under a labor contract and who operate as independent representatives, distributors, consultants and similar titles in return for benefits such as commissions, premiums, incentives and rewards, market goods or services to consumers. Furthermore, certain rules regarding the direct selling system have been set forth.
Direct selling companies are required to be established as stock corporations and to meet other conditions to be determined by a regulation to be enacted later. The direct selling system should not be built on bringing new direct sellers into the system and distributing the benefits arising from it, but rather should be based on the sale of goods or services to consumers and should comply with other rules to be specified by a regulation to be enacted later. An administrative fine of TRY 5,000,000 (approx. USD 151,136) for each violation is stipulated for those who are found to be in violation of these obligations.
It is prohibited to receive any payment from the direct sellers under the names of renewal, package, fee, contribution etc. that does not include the goods or services foreseen to be sold to the consumer or any document that bind them in order for them to be included in the system or to remain in the system. The purchase of goods or services in the amount or value specified by the direct selling company will not determine the level of the direct seller within the system. Consumers who purchase goods or services within the scope of the direct selling system will be entitled to withdraw from the agreement within 30 days without the need for any justification and without a penalty clause. Notification of the withdrawal is deemed sufficient if it is addressed to the direct seller or the direct selling company within this period. An administrative fine of TRY 2,200 (approx. USD 67) will be imposed for each transaction that is found to be in violation of these provisions.
The direct selling company must establish a system that enables consumers to be informed about the matters specified by the Ministry of Trade and to submit their requests and notifications. Three months will be given to the companies who violate this obligation to remedy the violation. If the violation is not remedied at the end of this period, an administrative fine of TRY 1,000,000 (approx. USD 30,227) will be imposed.
3. Sanctions
The Draft Law updates the amounts of administrative fines to be imposed for certain violations under the Consumer Protection Law, in particular as follows;
- Activities may be suspended or ceased for up to three months or administrative fine from TRY 60,000 (approx. USD 1,814) to TRY 600,000 (approx. USD 18,136) may be imposed on those who violate the obligations specified in Article 62 of the Law on Consumer Protection regarding unfair commercial practices. The Advertisement Board may impose these fines together or separately depending on the nature of the violation. If the violation is nationwide, administrative fines ranging from TRY 600,000 (approx. USD 18,136) to TRY 6,000,000 (approx. USD 181,363) may be imposed.
- If the obligations specified in Article 62 of the Law on Consumer Protection regarding unfair commercial practices are violated;
- through a television channel broadcasting at local level, an administrative fine from TRY 110,000 (approx. USD 3,325) to TRY 1,100,000 (approx. USD 33,260) will be imposed,
- through a television channel broadcasting nationwide, an administrative fine from TRY 2,210,000 (approx. USD 66,802) to TRY 22,100,000 (approx. USD 668,021) will be imposed,
- half of the above-mentioned administrative fines will be imposed in case of violation through periodical publications,
- through a radio channel broadcasting at local level or through satellite, an administrative fine from TRY 60,000 (approx. USD 1,814) to TRY 600,000 (approx. USD 18,136) will be imposed,
- through a radio channel broadcasting nationwide, an administrative fine from TRY 600,000 (approx. USD 18,136) to TRY 6,000,000 (approx. USD 181,363) will be imposed,
- through a television channel broadcasting via satellite or via the internet, an administrative fine from TRY 600,000 (approx. USD 18,136) to TRY 6,000,000 (approx. USD 181,363) will be imposed,
- through a text message, an administrative fine from TRY 280,000 (approx. USD 8,464) to TRY 2,800,000 (approx. USD 84,636) will be imposed,
- through other means, an administrative fine from TRY 60,000 (approx. USD 1,814) to TRY 600,000 (approx. USD 18,136) will be imposed.
- An administrative fine of one percent of the annual gross income at the end of the fiscal year preceding the date of the violation and not less than TRY 80,000 (approx. USD 2,418) will be imposed on those who act contrary to the obligation to provide all kinds of information and documents to authorized persons or institutions, or to provide the original or certified copies of the documents upon request regarding the issues falling within the scope of the Consumer Protection Law, if the violation continues despite the warning to provide the information and documents correctly within 7 days or to provide the opportunity for on-site inspection. Where the gross income is not declared or declared incorrectly, an administrative fine of TRY 6,000,000 (approx. USD 181,363) will be imposed for prepaid housing sales and TRY 1,000,000 (approx. USD 30,227) for other sales. An administrative fine of TRY 50,000 (approx. USD 1,511) will be imposed on those who are not obliged to declare their gross income.
Additionally, Article 77/A-(2) of the Consumer Protection Law, which stipulates that a reconciliation request can be filed against administrative fines imposed by the Ministry of Trade and governorships, except for administrative fines imposed by the Advertisement Board, will be annulled.
The relevant provisions of the Turkish Criminal Code No. 5237 will apply to those who initiate, organize or disseminate a pyramid sales system by means of meetings, electronic mail or other methods enabling the participation of many other persons or who support the dissemination of such a system for commercial purposes in violation of the rules set forth in Article 80 of the Consumer Protection Law.
B. Amendments to the E-Commerce Law
With the amendments to the E-Commerce Law back in 2022, license obligation was introduced for e-commerce intermediary service providers. However, with the said amendments, certain exemptions were also stipulated for the transactions made abroad. Accordingly, transactions made abroad through the electronic commerce marketplaces of the e-commerce intermediary service providers and the e-commerce intermediary service providers with which they are in economic integrity are not included in the calculation of the license fee. The Proposal introduces additional exemptions:
Provided that the net transaction volume of the e-commerce intermediary service provider is not more than 20% of the sum of the net transaction volumes of the e-commerce intermediary service provider and e-commerce service providers calculated using ETBIS data, 2 times of the following will be deducted from the net transaction volume for that calendar year during the calculation of the license fee:
- the amount of sales made abroad through the e-commerce marketplaces of the e-commerce intermediary service provider and the e-commerce intermediary service providers with which it is in economic integrity,
- the amount of the investment expenditure incurred by obtaining an investment incentive certificate from the Ministry of Industry and Technology in accordance with the legislation on project-based support of investments.
Additional exemptions are also envisaged for the years 2024 and 2025. Accordingly, while calculating the license fee for the year 2024, the 20% condition mentioned above will not be sought and 4 times the specified amounts will be deducted from the net transaction volume of the e-commerce intermediary service provider.
While calculating the license fee for the year 2025, 3 times of the specified amounts will be deducted from the net transaction volume of the e-commerce intermediary service provider.
Conclusion
Companies should take note of the amendments and updated administrative fines and their effects on their operations in Türkiye and take steps to ensure compliance with the applicable legislation.
