The new year has only just begun and retailers already have to prepare for legal innovations in e-commerce. What should they be prepared for in 2020? We know the answer!
Legal requirements for online retailers
Everyone is talking about personalization and the indispensability of addressing each customer according to needs and across channels. The requirements for online retailers are becoming more and more stringent as the online market develops rapidly. Due to all cases of data misuse, further restrictive laws in the EU are to ensure transparency between online retailers and their customers in addition to the GDPR from 2020.
A survey by Bitkom found that nine percent of Internet users refrain from online banking for security reasons. For this reason, it is all the more important that security remains a top priority for online shoppers.
Generating data in online commerce
The GDPR came into force in 2018 - long after online retail had reached its growth phase. Since 1999, online retail has been growing in double digits in almost every year - a development to be proud of! Not only do big-name and well-known (online) retailers benefit from digital growth, but medium-sized and small companies also record solid increases in sales and awareness.
In the unfathomable world of online commerce, however, everyone unknowingly leaves behind a multitude of data records. The so-called digital footprint is not only generated by online purchases. Mere "surfing" the Internet also leaves behind any amount of data derived from our usage behavior. Our mobile device is always tracked, the content we see or hear is noted, and the time of day and use of our online activities is analyzed.
It is no longer a secret that our digital data is of great value and interest to many companies and can therefore (still) be sold to third parties almost without difficulty.
Why generating user data is so important
We are not, after all, rationally controlled homo economicus who always make sensibly weighed decisions. Rather, we are impressionable by advertising and masters of cognitive distortion. This is why our mobile data, our digital footprint, is of great value to many companies: Only with the help of our most intimate data, such as when we call up which content and where, can companies target advertising. Everyone has probably wondered at some point why, after buying a cooking set online, ads for similar products suddenly appear. That's just the beginning! However, in order to counteract this, to regulate the use and sale of user data and to ensure more transparency, the ePrivacy Regulation is to come into force this year.
What's in store for online retailers in 2020
With the new packaging law, the geoblocking regulation as well as the DSGVO, online retail has already had to overcome a number of hurdles in recent years. However, retailers will also have to deal with a number of challenges in 2020.
The ePVO (ePrivacy Regulation) has already been under discussion since the introduction of the GDPR and is expected to be adopted this year. The ePVO is intended to expand the TMG (Telemedia Act) and the TKG (Telecommunications Act) and extend the GDPR. In this context, data protection in the private sphere and in electronic communication is to be addressed in particular. As a result, collecting data will be more difficult for companies in the future. Only with transparently communicated cookies and with the express permission of the user may their data be recorded and used.
Customer authentication will also come under stricter scrutiny in the future. Anyone who has not adapted payment processes in online stores to the PDS2 procedure (Payment Services Directive 2) by the end of the year now faces trouble. What does this mean exactly? PSD2 requires strong customer authentication (SCA) as of September 14, 2019. The customer must be authenticated via two different factors (two-factor authentication: knowledge, possession or inherence). The aim of PSD2 is to increase security for consumers and customers when making payments and to improve cooperation between banks and payment service providers.
A new Platform-to-Business Regulation (P2B Regulation) is also set to ensure greater transparency and fairness on online platforms from July 12, 2020, strengthening the rights of businesses against platform operators in all EU and EEA states. Not only well-known online platforms that sell products will be affected, but all online-based marketplaces, app stores, social networks and price comparison portals.
First of all, operators are obliged to design their GTCs in a comprehensible manner and to communicate them transparently so that users can view them at any time. The operator must always inform users about planned changes so that they have the opportunity to react to them. In addition, ranking parameters must be disclosed. This means that the terms and conditions must describe the criteria according to which products are listed and how they are weighted. Algorithms do not have to be disclosed, but a detailed description of how the ranking methods work. For the benefit of users, platform operators are also required to set up an internal complaints management system so that customers can contact them at any time.
But what do the new laws bring to users and what difficulties do they create for merchants? The adoption of the laws will mainly ensure more transparency between online merchants and customers: opaque rankings and hidden clauses will be curbed, regardless of the fact that unfair practices will not be completely prohibited. The fact is: Merchants are forced to deal with their T&Cs and follow the rules of the game. After all, consumer protection authorities are authorized to block online stores if the new laws are disregarded. In any case, the playground of online commerce will become a monitored institution from 2020 onwards, which will impose strict sanctions in the event of non-compliance with the rules.
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