The Rules for Mandatory and Prohibited Provisions of Standard Contracts for Online Retail Businesses ("Online Retail Businesses Rules"), which govern online transactions of physical products, were promulgated by the Ministry of Economic Affairs ("MOF") under the authorization of Article 17 of the Consumer Protection Act.  On July 15, 2016, the MOF announced the amendment to Article 5 of the Online Retail Businesses Rules, which will take effect on October 1, 2016.  Below are the key features of the amendment to Article 5 of the Online Retail Businesses Rules.

1. Obligation to set up confirmation mechanism

The newly amended Article 5 of the Online Retail Businesses Rules clearly stipulates that the business operator shall set up a confirmation mechanism to ensure that the customer confirms the type of item, number of item(s), price, and other material matters concerning the purchase order.

2. Deletion of the mandatory procedures to confirm the purchase order   

Prior to the amendment, the original Article 5 of the Online Retail Businesses Rules provided the following procedures concerning the confirmation of the purchase order.

  1. The business operator, if justified, may refuse the purchase order made by the consumer within two work days upon receipt of the order. If the business operator fails to do so within the two-day period, the order shall be deemed to be accepted by the business operator.
  2. If the payment has already made by the consumer, the transaction will be deemed to be completed.

The abovementioned provisions were deemed not suitable for every kind of transaction and were deleted in the newly amended Article 5 of the Online Retail Businesses Rules, so as to lower the potential consumer disputes.  For instance, the development of technology has changed the environment of consumption, and for a payment through credit card, the proviso of Paragraph 2 of original Article 5 caused disputes regarding the identification of the point in time that the consumer completed the payment, as credit card payment generally takes a period of time to process after the consumer placed a purchase order. As such, the above-mentioned provision of (2) has been deleted. Furthermore, as the method and model of online transactions are changing rapidly (for example some business operators provide the service to deliver the product that is purchased within few hours), in such cases it would not be appropriate to stipulate that "the business operator, if justified, may refuse the purchase order made by the consumer within two work days", and the above-mentioned provision of (1) has also been deleted.  In addition, according to MOF's press release, after the amendment, the business operator may offer the confirmation mechanism and information that is required to protect the rights of the consumer in line with the needs of its operation or service model.

In short, the amendment would remove inappropriate limitations on businesses and have the online transaction more flexible, while the consumer interests are still well protected.