Introduction
Distance selling amendment
Impact on operators
Comment
The Ministry of Industry, Trade and Labour recently published a memorandum of law that aims to combat unwanted charges in mobile phone bills attributed to either internet transactions or acquisitions of mobile content services, mostly by minors. The memorandum is awaiting public comment before being brought before the Israeli Parliament (the Knesset) as a government bill and voted into law.
The ministry believes that too many mobile phone users discover, upon receiving their phone bills, that they have been charged irregular sums of money for unknown services amorphously named 'content and information services'. Baffled by these charges, they call their providers only to discover either that they missed the small print of a lengthy legal document when they entered an online service or that someone else (usually their young sons or daughters) is to blame - for example, they used their parents' mobile phone number to enter an online competition or acquire another form of mobile service. As the games or services are provided by third parties and not the wireless communications service providers themselves, the mobile phone operator "shirks his responsibility" (in the wording of the memorandum) when asked to cancel the charge. The operator typically refers its subscribers to the content provider, with which the subscribers have had no previous contact.
Due to the growing number of such complaints, the ministry is now promoting an amendment to the Consumer Protection Law 1981. Its aim is to block, or at least limit, such practices in relation to distance selling transactions. The law forms the equivalent of a 'distance contract' under Directive 97/7/EC on the protection of consumers in respect of distance contracts. A 'distance selling transaction' is defined in Israeli law as contracting to sell goods or services upon receiving marketing information from afar (eg, by mail, email, telephone or fax) and without the mutual presence of both parties in one place. Thus, for example, ordering a service online is considered a distance selling transaction.
In such cases the Consumer Protection Law requires the seller to provide comprehensive information to the consumer before the transaction is made. This information includes:
- the provider's name and address;
- the main features of the goods or service;
- the price, including delivery fees;
- payment options; and
- details of the customer's right to cancel the transaction.
The law further entitles the consumer to withdraw from a distance selling transaction and cancel it within 14 days of receiving the details or products ordered.
The bill published by the ministry for public comment states that one of the major concerns is the charges imposed on consumers who often are not even aware that a transaction has taken place or of the transaction details and have not given their consent to it. A number of amendments are listed that aim to eradicate the phenomenon; the most significant are as follows.
Landline and mobile operators will be prohibited from collecting distance selling fees from subscribers unless they have obtained the subscriber's explicit consent.
The burden of proof to show that a subscriber explicitly agreed to the terms of the transaction will be imposed on operators. However, the ministry has explained that operators will have to request that content service providers supply adequate evidence and prove that the subscriber explicitly agreed to the charges; thus, both parties will share responsibility.
Communication providers will be required to state clearly and prominently the fees attributed to content and games services in subscribers' monthly bills.
The future amendment does not affect content service providers' obligations under the Consumer Protection Law, in particular those relating to distance selling. Providers are thus still required, upon marketing the service, to elaborate all substantial details of the service and to send the consumer a written document with these details.
The memorandum further states that consumers will have the right to request that the phone company cancel the transaction. The company will be required to do so even if the consumer initially consented to such a transaction and has withdrawn from it within the timeframe provided by the law.
The intended amendments do not address the definition of 'explicit consent'. However, it is proposed that the relevant minister be given the authority to intervene in certain cases in order to declare that a specific form of consent is not explicit.
The memorandum reflects a growing tendency of Israeli regulators to limit the operations of mobile network operators due to perceived excessive profits and a lack of real competition.
For further information on this topic please contact Haim Ravia at Pearl Cohen Zedek Latzer by telephone (+972 9 972 8000), fax (+972 9 972 8001) or email ([email protected]).