E-commerce in Brazil: A brief overview of regulation from a consumer protection perspective

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Consumer protection in Brazil is rather strictly regulated, and this applies to both the offline marketing of goods and services as well as to e-commerce. Moreover, consumer protection authorities are active and usually effective in their enforcement actions, generally resolving consumer protection claims in favor of the consumer. Knowing your rights and responsibilities as an e-commerce marketer is essential before doing business in Brazil. Below, we provide a brief overview of some of the key laws and responsibilities to be aware of in respect of e-commerce activities.

All commercial relationships in Brazil are regulated by the Consumer Protection Code (CDC), which was amended in 2013 by Decree No. 7962/2013, in reaction to the growing number of online transactions in Brazil. It introduced a number of new obligations, especially on e-commerce.

Generally speaking, the CDC regulates dealings between consumers and suppliers, establishing obligations and rights for both sides, in order to prevent abuse of customers by suppliers, to repress unfair competition, and introducing sanctions (in specific cases, also including criminal penalties). It applies in offline as well as online dealings. To comply with its general principle of transparency, suppliers must in particular provide clear, complete and unambiguous information to consumers regarding all aspects of the contractual relationship.

It is important to highlight that the CDC has extraterritorial application. In other words, the duty to comply with the law exceeds the geographical limits of Brazil and also applies to foreign entities offering products or services (including online services) on the Brazilian market, regardless of whether they have physical presence in Brazil.

The CDC defines consumer as the final intended party that purchases goods or contracts services, while supplier is any “individual or legal entity, public or private, domestic or foreign, as well as any depersonalized entity, engaged in the activities of production, assembly, creation, construction, transformation, import, export, distribution or marketing of products or services.” Therefore, even legal entities can be consumers. However, due to the lack of settled case law, the determination of whether a particular legal entity acts as a consumer always requires a case-by-case assessment.

According to the CDC, “products” include any “movable or immovable good, tangible or intangible,” while service is “any activity supplied for remuneration in the consumer market, including banking, financial, credit and insurance activities, except for those that are supplied under labor agreements.” Given the broad definition, CDC applies also to digital content and digital services.

Considering the specific nature of e-commerce activities, we would additionally highlight the following aspects of the CDC, which may impose challenges to business offering goods or services online:

  1. Any provisions that prevent, exonerate or diminish the supplier’s liability for defects of any nature in the products or imply a waiver by the consumer of its rights may be considered abusive under the CDC and are, therefore, null and void.
  2. Arbitration may be offered to the consumer as an option, but it cannot be imposed as the only option for dispute resolution. The consumer will always be entitled to file a lawsuit before the courts of its domicile, as it is less burdensome to the consumer. Any provision imposing mandatory arbitration as well as any venue clauses may be considered abusive under the CDC for being unreasonably onerous to the consumer and, therefore, null and void.
  3. Consumers must have access to local support in Portuguese. While it is not required for the support to be Brazil-based, consumers must be able to reach it “locally”. For example, this means that a telephone helpline may only operate on local phone numbers. Not providing local support may also be considered abusive under the CDC.

For e-commerce activities, the CDC’s requirements are not unlike those in many markets around the world. The supplier must (i) provide clear information about themselves and the products and services being offered, (ii) facilitate assistance to customers, and (iii) allow the consumer to cancel the contract within seven days from the purchase or receipt of the product.

The CDC established a strict and subsidiary liability regime. That is, in addition to liability being independent of fault, entities from the entire chain involved in the marketing of products/services must comply with consumer protection rules and obligations, subject to being held liable for infringements, even if not directly caused by them.

There are a number of draft bills currently being discussed in Brazil regarding the regulation of different aspects of e-commerce activities. However, in view of the social and political situation, especially considering the impact of the COVID-19 pandemic as well as the presidential election later this year, we do not expect these discussions to develop in any significant way or for the related bills to be enacted in the following months.

In addition to this brief overview of what to expect when doing business online in Brazil, there are other aspects that must be taken into account and that may bring regulatory challenges. They include regulations on online advertisements, data protection and privacy requirements, labeling and standardization obligations, conditions for in-app purchases as well as tax-regime specificities.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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