Online retail vs high-street retail from a legal perspective

Digitization has entered and affected myriad aspects of our society in recent years, including the way in which we buy and sell our goods. Online retail is increasingly replacing high-street retail. In this blog post, you will find out what online retail is allowed to do and what high-street retail is unable to do.

The benefit of buying online is that there is no set time period in which the purchase needs to be made (store opening hours), which means that consumers can shop at any time of the day or night. As a consumer, you can enjoy the benefit of having the goods delivered to your home and not needing to carry them around with you. But if you want to order something from an online shop in another country, you are often redirected to the provider’s website in your own country, where the prices are frequently higher. In EU and EEA countries, this practice is due to end with the adoption of the EU Regulation on addressing unjustified geoblocking, which is designed to legally abolish and prohibit these barriers. However, this applies only to the EU area and therefore only to Swiss online providers who advertise and deliver to consumers in the EU.

According to the Swiss Foundation for Consumer Protection, the Federal Council should also enact a similar ban on geoblocking to enable Swiss consumers to make purchases at fair prices online.

However, there is a crucial difference between high-street and online retail, namely the right of cancellation. In the EU, retailers are not permitted to sell goods or services without granting a right of cancellation of 14 days after the online purchase is made. This is also mandatory for Swiss companies selling in the EU area. Swiss policymakers, however, have again affirmed that they do not wish to introduce a right of cancellation along the lines of the EU’s e-commerce legislation (see www.konsumentenschutz.ch). This means that Swiss residents buying from a online shop run by a Swiss company are in a worse position than those buying from an online shop based in the EU. This puts Swiss online retailers at such a competitive disadvantage that an increasing number of them are voluntarily granting a right of cancellation of 14 days or even longer in their GTCs.

When it comes to processing personal data in online shops, there is also a massive difference at present between the EU GDPR requirements that need to be complied with for EU consumers (including by Swiss online shop operators) and the requirements that apply to Swiss customers. EU online shop operators now need to present comprehensive and transparent data protection declarations based on GDPR. These must disclose the purpose of the personal data processing and in particular show in detail all the cookies that are used. This leaves any consumers who use EU-based online shops better informed than consumers buying from Swiss online shops. In the EU, express consent to process consumers’ personal data must also be obtained (particularly with regard to the use of cookies), and consumers must be given the right at all times to revoke consent that has been previously granted. The new Swiss Federal Act on Data Protection, currently pending for reading in the Council of States, does not yet apply to these matters, as it has not yet come into effect. It should be enacted soon, however, meaning that Swiss companies would be well advised to start providing data protection-compliant online shops which also comply with the new Swiss Federal Act on Data Protection. There will not be much time available after enactment of the new Swiss Federal Act on Data Protection to implement the necessary changes in online shops (data protection declaration, express consent through “click-wrapping”, etc.). The planned transition period of two years was scrapped in the National States’ debate on the Data Protection Act, with no replacement being put forward for the time being. It remains to be seen whether a majority is reached in the Council of States.

In any case, there is an urgent need for action on the part of Swiss online providers to meet the new data protection provisions (be it the GDPR or the new Swiss Federal Act on Data Protection). Start making preparations before it’s too late.

There is still one more key difference, and this concerns obligations to provide publication details. In Switzerland, only the minimum requirements are defined, while there are in-depth regulations on publication details and the information they must contain within the EU. Failure to provide this information constitutes a violation of competition law for which warnings can be issued and Swiss companies may pay dearly.