Portolano Cavallo | Italian Consumer Code: The new regulatory framework for the sale of goods and the supply of digital services and content

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Italy has published Legislative Decrees No. 173/2021 and No. 170/2021 in the Official Journal (Gazzetta Ufficiale), which marks completion of the transposition of Directive (EU) 2019/770 on certain aspects concerning contracts for the supply of digital content and digital services and Directive (EU) 2019/771 on certain aspects concerning contracts for the sale of goods.

These decrees amend the Consumer Code (Italian Legislative Decree No. 206/2005) by introducing new rules specific to contracts for the provision of digital services and digital content between professionals and consumers and by amending the rules on the sale of goods; the rules in these two decrees will take effect from January 1, 2022 and will apply to contracts executed henceforth.

Legislative Decree No. 170/2021 reforms, inter alia, the rules on the conformity of goods and, in particular, rules concerning the legal warranty remedies available to the consumer in the event of a lack of conformity. Legislative Decree No. 173/2021 introduces into the Consumer Code similar provisions with regard to the supply of digital services and digital content, as well as additional ad hoc provisions tailored to these specific types of services and content.

The new rules provided by Legislative Decree No. 173/2021 apply to contracts for the provision of digital services or content under which the consumer either (i) pays a price as consideration for the services or content received or (ii) provides personal data and such data is processed for purposes other than what is strictly necessary for the provision of the digital service or content or for compliance with a legal obligation. The new rules do not apply to goods incorporating digital elements, which are covered by the regulations on the sale of goods.

Both decrees close a regulatory gap that has been progressively exacerbated by technological development in recent years. Digital content and digital service are defined, respectively, as (i) “data which are produced and supplied in digital form” and (ii) “a service that allows the consumer to create, process, store or access data in digital form; or a service that allows the sharing of or any other interaction with data in digital form uploaded or created by the consumer or other users of that service.”

Legislative Decree No. 170/2021

In addition to introducing other rules, the decree covering conformity requirements for goods makes a distinction between objective and subjective requirements.

In a nutshell, subjective requirements state that the goods must:

• be of the description, type, quantity and quality, and possess the functionality, compatibility, interoperability and other features, as required by the sales contract;
• be fit for any particular purpose for which the consumer requires them and which the consumer made known to the seller at the latest at the time of the conclusion of the sales contract, and in respect of which the seller has given acceptance;
• be delivered with all accessories and instructions, including on installation, as stipulated by the sales contract;
• be supplied with updates as stipulated by the sales contract.

Under objective requirements, the goods must:

• be fit for the purposes for which goods of the same type would normally be used, taking into account, where applicable, any existing Union and national law, technical standards or, in the absence of such technical standards, applicable sector-specific industry codes of conduct;
• be of the quantity and possess the qualities and other features, including in relation to durability, functionality, compatibility and security normal for goods of the same type and which the consumer may reasonably expect given the nature of the goods and taking into account any public statements made by or on behalf of the seller or other persons in previous links of the chain of transactions, including the producer, particularly in advertising or labeling, unless the seller proves—alternatively—that:
  • it was not aware of the public statement in question and could not reasonably have been expected to be aware of it;
  • at the time of execution of the contract, the public statement had been corrected in the same manner in which it was made or in a manner comparable to it;
  • the decision to purchase the item could not have been influenced by the public statement;
• where applicable, be delivered along with such accessories, including packaging, installation instructions or other instructions, as the consumer may reasonably expect to receive; and
• where applicable, be of the quality and correspond to the description of a sample or model that the seller made available to the consumer before the conclusion of the contract.

This new framework is also applicable to the sale of goods that incorporate digital content or services without which the goods would not perform their function (“goods with digital elements,” such as smart devices). With respect to the conformity of such goods, in addition to the requirements already mentioned, the seller shall ensure that the consumer is informed of all updates, including security updates, necessary to keep such goods in conformity and shall provide him/her with those updates within a reasonable time. If the seller is compliant with the informational obligations on the updates imposed by the decree, the seller is not liable for any lack of conformity due to the consumer failing to install an update.

Overall, consumer protection has increased. Mainly, the burden on the consumer to report any lack of conformity within two months of discovery has been lifted and any lack of conformity that becomes apparent within one year of delivery is presumed to have existed at the time the item was delivered (previously the presumption lasted for 6 months). The duration of the warranty remains 26 months.

As for the remedies available to consumers in case of lack of conformity, precedence is given to the remedy consisting the good’s brought into conformity (meaning that this is the first option for the consumer) through repair or replacement, unless this would be impossible or would impose disproportionate costs on the seller. In the latter scenario, the consumer shall be entitled to a remedy in the form of price reduction (if the item is provided for a price) or termination of the contract. However, if the lack of conformity is serious or the item has been given for provision of personal data, the consumer is entitled to terminate the contract immediately.

Legislative Decree No. 173/2021

Legislative Decree No. 173/2021 introduces into the Consumer Code an entire new section dedicated to contracts between a trader and a consumer for the supply of digital content and services.

The rules in the section above regarding subjective and objective conformity requirements also apply to these contracts, and the one-year timeframe for presumption of non-conformity, beginning from the time the digital content or service is provided, applies here as well. However, the burden of proof regarding the lack of conformity shifts to the consumer in the event that the trader proves (i) that the consumer’s digital environment is not technically compatible with the goods or service or the consumer refuses to cooperate with the trader to verify compatibility, and (ii) that the trader clearly pointed out technical incompatibility before the contract was signed.

Envisaged remedies in case of lack of conformity reflect those provided for the sale of goods, meaning that the consumer is entitled to have the content or service brought into conformity or to obtain a proportionate price reduction or termination of the contract.

The trader must comply with obligations deriving from data protection law, including with regard to potentially suspending processing of the consumer’s personal data upon termination of the contract. In case of termination, the trader must refrain from making use of any content other than personal data that was provided or created by the consumer while using the digital content or service and must make it available to the consumer, at the consumer’s request, free of charge and without obstacles, within a reasonable period of time and in a commonly used, machine-readable format.

Finally, where the contract provides that the digital content or service is supplied or made accessible to the consumer over a period of time, the trader may modify it beyond what is necessary to keep it in conformity, if this is permitted by the contract and as long as such a change is made at no additional cost to the consumer. The consumer must be informed—within a reasonable time in advance and through a durable medium—inter alia of his or her right to withdraw from the contract (if such a change adversely affects use of or access to the digital content or service) or the possibility of retaining the digital content or service without such a change.

Authors:

• Fabiana Bisceglia, Associate | fbisceglia@portolano.it
• Donata Cordone, Counsel | dcordone@portolano.it

Compliments of Portolano Cavallo Studio Legale – a member of the EACCNY.