E-merchant responsibilities for listing of payment options under the Payment Services Act (PMCA, PMT 10634-23)

Introduction

To what extent are e-merchants responsible for compliance with the presentation restrictions of credit payment options in relation to non-credit options provided for in the Payment Services Act (lag om betaltjänster)? In this case, this important and commercially highly interesting question for the e-commence industry was litigated before the PMCA. However, due to a seemingly poorly structured action by the Consumer Ombudsman the court never got to the core of the issue but still made some general statements on the neighbouring issue of the extent of the liability of payment service providers. In short, payment service providers that do not control the set-up of an e-merchant’s platform can, generally, not be held liable for the listing of credit payment options before non-credit payment options or presentations of credit payment as the preselected payment option. At the time of publishing, the case is pending before the Supreme Court which is yet to rule on the issue of leave to appeal.

Background

The Consumer Ombudsman brought an action against a Swedish online clothing company on the basis that its web-shop listed invoicing and credit card payment – i.e. credit options – as the default payment options in relation to debit card payments. Some, but not all the payment services provided on the platform were provided by a foreign payment service provider. The Consumer Ombudsman claimed that the order of the payment options listed on the e-merchant’s web-shop constituted unfair marketing and thus violated the prohibition of listing and preselecting credit payment options before non-credit options under Chapter 7a Section 1 of the Payment Services Act. After the PMC rejected the claimant’s action, the case was appealed to the PMCA. 

Decision

The PCMA initially clarified that the responsibility under the Payment Services Act not to preselect, nor list credit payment options before non-credit payment options rests with payment service providers, even if the e-merchant operates the e-commerce platform. Moreover, the court referenced the legislative bill where it is explained that payment service providers may include conditions on how payment options should be presented in its contractual relations with e-merchants to ascertain compliance.

Considering that payment service providers generally do not have any direct control of the structure and order of the payment options on their platforms, the PMCA held that it cannot be presumed that payment service providers have any direct control over the presentation of the payment options. In cases such as the one at hand, when the payment service provider does not provide all payment methods on the e-commerce platform, a primary responsibility for the content under the Marketing Act cannot be attributed to the payment service provider, except under special circumstances. As the Consumer Ombudsman had not invoked any circumstances that could be considered to constitute a primary liability for the payment service provider, the PMCA concluded that the payment service provider had not violated Chapter 7a Section 1 of the Payment Services Act. Consequently, the e-merchant had no contributory responsibility for the incorrect presentation of the payment options under Marketing Law. The Consumer Ombudsman’s action was thus rejected in its entirety.

Comment

It is unfortunate that the Consumer Ombudsman failed to invoke any facts that could form a primary responsibility for the payment service provider since the e-merchant’s contributory responsibility under the Marketing Act turned on that circumstance. Accordingly, the PMCA never got to the core of the issue in this case, and the outer limits of responsibility of the e-merchant and the payment service provider, respectively.

The PMCA’s judgment creates an intriguing dynamic between e-merchants and payment service providers from a responsibility standpoint as neither party was held primarily responsible for the incorrect presentation of payment options in this case. The payment service provider’s lack of control of the listing of the payment options on the platform proved to be a free card for both parties since it prevented primary responsibility for the payment service provider and thereby also any contributory responsibility for the e-merchant. The PMCA’s finding thus forms a seemingly hard-pierced veil protecting both e-merchants and payment service providers from enforcement of the presentation restrictions of credit payment options.

An interesting take-away is the PMCA’s statement on control in situations where all payment options on a platform are provided by same the payment service provider. Seemingly, the PMCA’s view is that the provision of all payment options to a web-shop may indicate more control which in turn speaks in favour of a primary responsibility for such payment service providers. However, the PMCA’s reasoning is vague in this part, and it is prudent not to make any advanced conclusions in this regard. Hopefully, the Supreme Court will grant leave to appeal and clarify the core of these issues.