Technology | The Norwegian Act relating to digital consumer purchases came into force 1 January 2023 and contains new obligations and requirements for providers of digital content and digital services
Who does the Act apply to?
The Act is mandatory and applies to all enterprises in Norway who supply consumers with digital content or digital services for renumeration. “Digital content” is defined in the Act as data which are produced and supplied in digital form, while “digital service” means either (i) a service that allows the consumer to create process, store or access data in digital form; or (ii) a service that allows the sharing of any other interaction with data in digital form uploaded or created by the consumer or other users of that service. Renumeration in the context of the Act, includes more than monetary payment, e.g. consumers submitting personal data. The broad scope of the Act means that it is applicable more often, than not. There are a few exceptions to the applicability of the Act, within the described scope, these are listed in § 2 as:
- Healthcare services that are prescribed or performed by healthcare personnel
- Gambling services
- Presentation of digital content in a performance or an event
- Electronic communication services with the exception of number-independent interpersonal communication services.
- Financial services as mentioned in the Financial Contracts Act § 1-3 second paragraph and insurance services.
Furthermore, the Act does not apply when the digital service is incorporated in or inter-connected with with a physical product in such a way that it is necessary for the function of the product, e.g. smartphone applications that are necessary for the smartphone to work.
Given that the Act is incorporated into Norwegian law, its jurisdiction is limited to companies governed by Norwegian law. However, the Directive lays down common rules for all EU/EEA-states, a Norwegian consumer can therefore expect the same level of protection when purchasing digital content/-services in other EU/EEA countries.
New obligations, restrictions and rights
The Act follows much of the same structure as the Norwegian Act relating to consumer purchases (Forbrukerkjøpsloven) and other similar Norwegian consumer protection legislation. However, given that Norway have never had a separate Act relating to digital consumer purchases, some of the obligations and rights introduced in the Act can be considered as new. These include:
- The supplier is obligated to provide the latest version and update of the digital product/service, unless otherwise stipulated in the agreement.
- The consumer shall be able to terminate an agreement after six months, unless a longer commitment period is followed by an advantage for the consumer that is in proportion to the length of the commitment period. (This may be the case where the consumer is offered a promotional offer where they get a reasonable annual price, a reduced monthly price or an offer for additional services or extended access to the service.)
- Restrictions on billing the consumer for digital services the consumer no longer uses. As an example, if periodic advance payment has been agreed with automatic deduction from the consumer’s bank account and no lock-in period applies, the agreement is considered terminated if there is no cover on the account on the due date and the consumer does not rectify the situation upon request from the supplier. The same applies if the payment card that the consumer has registered is no longer valid.
- The consumer can receive compensation even if no financial loss can be demonstrated as a result of a shortage or delay.
First course of action?
The first course of action for any company wondering whether the Act applies to them, should be to assess which of the company’s products that are affected by the Act and consider appropriate actions. If the Act applies to your companies’ interactions with consumers, all contracts relating to the delivery of digital content or digital services to the consumer for renumeration must be in accordance with the Act from 1 January 2023. Furthermore, the company should review its routines and make sure that these are also updated, given that the Act also restricts certain business practices. If the company is non-compliant or makes an infringement, it may result in daily fines or larger infringement fees from the Norwegian Consumer Authority and the Norwegian Markets Council.
The Act will have a large impact on companies that provide consumers with digital content or digital services. The Act is mandatory, does not differentiate between small or large companies and is not limited to specific sectors. In other words, the Act has a wide scope and large impact. The lack of previous regulation related to consumers purchase of digital services makes the transition from old practices to compliance with the Act even more difficult. In sum, the Act may present a challenge for a wide range of companies and may even result in some companies having to change their business models.