St Petersburg University scholars: existing online marketplace legislation requires revision

The authors of the study are academics from St Petersburg University: Professor Oleg Gorodov; Associate Professor Iuliia Kovalevskaia; and Lecturer Aleksei Petrov.

E-commerce aggregators have captured a significant part of the market. In some business areas — for instance, in taxi services — they have transformed the ways customers interact with service providers. The modus operandi of all e-commerce aggregators and marketplaces is similar: the company collects (or aggregates) the sellers or service providers on their website and allows the customer to purchase such goods or services from their website or their application.

Despite the scale and dynamic growth of online sales, the current legislation does not contain a definition of an online platform that hosts e-commerce transactions with the participation of consumers. Neither is there a definition of a marketplace in the legislation.

First steps to resolve the challenging issues in the regulatory framework for e-commerce aggregators were taken four years ago. Amendments were made to the Consumer Protection Law: the concept of a company that aggregates information pertaining to goods and/or services was introduced. According to the new version of the law, an aggregator of information pertaining to goods and/or services is a software program, a website or a dedicated webpage that enables: reading the offer documents; concluding a contract with the chosen seller or service provider; and making an advance payment. All three conditions must be met. Based on a literal interpretation of this definition, contrary to popular belief about e-commerce aggregators, not every e-commerce platform will be subject to the new regulation.

For instance, some giant e-commerce aggregator platforms, such as AliExpress, do not accept payments on their website, using other payment gateways and different legal entities. AliExpress orders are paid through AliPay, which is part of the Alibaba Group. In practice, there have been cases when marketplaces intentionally disabled the option of payment on the site. Thus, in 2018, Yandex.Market removed the "basket" from the site, leaving only product listing and contact seller links.

Over 80 court decisions have been analysed by legal experts from St Petersburg University.

The experts note that customers tend to perceive marketplaces as full-fledged online stores, whereas according to the law, they are just storefront windows. ‘At the same time, their functions often go well beyond the information support for buyer-seller interactions. For example, in the court cases involving taxi aggregators that we have studied, the aggregator organises and manages the transportation of passengers, selects partners and gives them access to the application, corrects orders and accepts payments,’ said Oleg Gorodov, Professor in the Department of Commercial Law at St Petersburg University.

The study revealed that problems may also arise if the buyer finds defects in the product because in the current legislation governing relations with the consumer, there are no clearly defined procedures for filing a claim. Most of the disputes about the quality of purchased goods pertain to consumer electronics — phones, tablets, laptops, etc. These high-tech products are more prone to shipping damage than other goods because they often pass through a long supply chain from order placement to delivery. The buyer, dissatisfied with the quality of the goods, is forced to order expert assessment of defective products that will show at what point they were damaged.

If the matter comes to litigation with an online marketplace, the courts analyse the terms of the user agreement, which is a legally binding contract between the e-commerce platform owner and a consumer. It is not infrequent, however, even in such agreements, to find provisions that infringe on the rights of the consumer. For example, the buyer cannot always file a claim against the pickup point where he or she collected the product. Some aggregators insist that the claim must be filed against the seller.

The current wording of the law allows e-commerce platforms to avoid liability for selling low-quality goods through their service (since the aggregator itself does not sell anything) and even for the publication of false information (since the information was provided by the seller).

The scholars are confident that such problems can be avoided by revising the consumer protection legislation. Thus, it is necessary to define the legal status of e-commerce platform owners and expand their area of responsibility.