Consumer protection in Brazil is rather tightly regulated, and this applies to both the offline marketing of goods and services as well as e-commerce. Additionally, consumer protection authorities are active and generally effective in their enforcement actions, usually resolving consumer protection complaints 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 when it comes to e-commerce activities.
All business relationships in Brazil are governed by the Consumer Protection Code (CDC), which was amended in 2013 by Decree No. 7962/2013, in response to the growing number of online transactions in Brazil. It introduced a number of new obligations, in particular with regard to electronic commerce.
Generally speaking, the CDC regulates the relationship between consumers and suppliers, establishing obligations and rights for both parties, in order to prevent the abuse of customers by suppliers, to suppress unfair competition and to introduce sanctions (in specific cases, including criminal sanctions). It applies to both offline and online transactions. To comply with its general principle of transparency, suppliers must in particular provide consumers with clear, complete and unequivocal information on all aspects of the contractual relationship.
It is important to emphasize that the CDC has an extraterritorial application. In other words, the obligation to comply with the law goes beyond the geographical limits of Brazil and also applies to foreign entities offering products or services (including online services) in the Brazilian market, whether whether or not they have a physical presence in Brazil.
The CDC defines the consumer as the intended end party who purchases goods or contracts services, while the supplier is any “natural or legal person, public or private, national 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 persons can be consumers. However, due to the lack of consistent case law, determining whether a particular legal entity is acting as a consumer still requires a case-by-case assessment.
According to the CDC, “products” include any “movable or immovable property, tangible or intangible”, while service is “any activity provided for remuneration in the consumer market, including banking, finance, credit and insurance, except those provided under collective agreements.Given the broad definition, the CDC also applies to digital content and digital services.
Given the specific nature of e-commerce business, we further highlight the following aspects of CDC, which may impose challenges on businesses offering goods or services online:
- All provisions that prevent, exonerate or reduce the supplier’s liability for defects of any kind in the products or imply a waiver of the consumer’s rights may be considered abusive with regard to the CDC and are, therefore, null and void. .
- Arbitration can be offered to the consumer as an option, but it cannot be imposed as the only dispute resolution option. The consumer will always have the right to take legal action in the courts of his domicile, as this is less burdensome for the consumer. Any provision imposing binding arbitration as well as any venue clause may be considered abusive under the CDC for being unreasonably onerous to the consumer and, therefore, null and void.
- Consumers should have access to local support in Portuguese. While the support does not have to be based in Brazil, consumers must be able to reach it “locally”. For example, this means that a hotline can only work on local phone numbers. Failure to provide local support may also be considered abusive under the CDC.
For e-commerce activities, the CDC’s requirements are not unlike those of many marketplaces around the world. The supplier must (i) provide clear information about itself and the products and services offered, (ii) facilitate assistance to customers and (iii) allow the consumer to terminate the contract within seven days of purchase or receipt of the product.
The CDC has established a strict and subsidiary liability regime. That is to say that, in addition to liability independent of fault, the entities of the entire chain involved in the marketing of products/services must respect the rules and obligations of consumer protection, under pain of being held responsible for the infringements, even if they are not directly caused by them.
A number of bills are currently under discussion in Brazil regarding the regulation of different aspects of e-commerce activities. However, given the social and political situation, particularly given the impact of the COVID-19 pandemic as well as the presidential election later this year, we do not expect these discussions to expand. significantly or that the related bills are 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 need to be taken into account that can pose regulatory challenges. They include online advertising regulations, data protection and privacy requirements, labeling and standardization requirements, in-app purchase terms, and tax regime specifics.